The Congressional Budget Office (CBO) has forecast that 14 million more people will be uninsured in 2018 under the House of Representatives’ American Health Care Act (AHCA) than under the Affordable Care Act (ACA) with the number rising to 19 million in 2020 and 23 million in 2026. The CBO acknowledges its estimates are “uncertain” because it is “difficult to predict” how states, federal agencies, physicians, hospitals, individuals, and employers will respond to the legislation. But their estimates are beyond “uncertain” – they are demonstrably wrong.
To estimate the impact of the AHCA, the CBO had to compare it to predictions of coverage under the current law, the ACA. If the prediction for the current law is incorrect the prediction of lost coverage will be too.
Yet the CBO has consistently overestimated future ACA coverage gains. In 2012 it predicted an additional 28 million would gain health insurance by 2017. The actual figure is 20 million. It forecast 25 million would gain coverage on the ACA exchanges and 10 million would gain Medicaid coverage. Less than half as many actually enrolled on the exchanges and not all of them gained coverage – many were replacing non-exchange policies they lost after ACA passage. Conversely, about 14 million – 40 percent higher than predicted – newly enrolled in Medicaid. The CBO prediction that 5 million would lose employer coverage was also wrong – employer provided coverage was stable.
The CBO’s ACA coverage forecasts in its AHCA report are also likely inaccurate. They are based on CBO’s March 2016 baseline which predicts that under current law marketplace enrollment will magically jump to 18 million in 2018 and stay steady until 2026. But we already know the March 2016 baseline estimate that 15 million would be enrolled on the exchanges in 2017 is wrong – only about 11 million are. Getting anywhere close to 18 million by 2018 is unlikely. Current exchange enrollees are unlikely to drop out by 2018 since almost all of them are receiving subsidies and will continue to do so until 2020. Hence, nearly all of 8 million in coverage losses in the nongroup market the CBO predicts for 2018 under the AHCA are accounted for by “lost” ACA coverage gains predicted by the March 2016 baseline that are unlikely to materialize.
The CBO’s March 2016 baseline also overestimates the number of people who will gain Medicaid coverage under current law only to lose it under the AHCA. The CBO predicts the AHCA will decrease Medicaid by 4 million by 2018, 9 million by 2020, and 14 million by 2026. It estimates 5 million of this loss will come from, “… people who CBO projects would, under current law, become eligible in the future as additional states adopted the ACA’s option to expand eligibility.” But there is little evidence that the 19 states which have thus far not expanded eligibility under the ACA would choose to do so in the future, particularly since under the ACA states will now have to start sharing some of financial burden for these newly eligible enrollees with the federal government.
Part of the CBO’s inaccuracy stems from overestimating the effectiveness of the ACA’s individual mandate in motivating people to buy insurance in the individual market or enroll in Medicaid. ACA architect, economist Jonathan Gruber, wrote in 2016 that the mandate had no significant impact on coverage gains. Lax enforcement of enrollment periods, excessive exemptions, weak penalties, and rapidly rising exchange insurance premiums undermined the mandate in the individual market. In 2016, 11 million people received exemptions from the mandate and 5.6 million paid the penalty rather than purchase insurance — far more than the CBO projected. While the mandate may have motivated some people to enroll in Medicaid (although increased awareness was probably more significant), repealing it should have limited impact on them. A significant percentage of the increase in Medicaid coverage came from people who were eligible to enroll in Medicaid before the ACA and will continue to be eligible after it. There is little reason to think these people who are receiving free insurance will drop it. Similarly, since the AHCA will continue enhanced federal funding for patients who enroll under the ACA expansion criteria before 2020, these people can maintain their free insurance for as long as their states maintain the expansion.
A final difficulty with the CBO report is its overestimate of coverage losses due to AHCA waivers allowing states to set premiums for people who fail to maintain continuous coverage on the basis of an individual’s health status (medically underwritten premiums) rather than the average health status of the community (community rating). CBO guesstimates that one sixth of the population resides in states that will seek waivers to substantially modify their rules and predicts healthier people in those states whose underwritten premiums would be lower than community rated premiums will refuse to document continuous insurance coverage to obtain cheaper, underwritten premiums. The community rated risk pool would become less healthy and drive up community rated premiums to unaffordable levels causing “…some people who would have been insured in the nongroup market under current law to be uninsured.”
But the solution to this problem is simple. States could mandate that people who fail to maintain coverage cannot purchase insurance for less than the community rated premium plus some penalty. Healthier people would lose any incentive they had to game the system, community rated premiums would not rise, and no one would lose insurance.
The CBO’s estimate of the AHCA’s coverage effects is marred by its continued reliance on flawed predictions of ACA coverage increases. There will undoubtedly be coverage losses under the AHCA stemming mostly from decreased federal support for Medicaid. But the total coverage losses, while uncertain, are unlikely to be nearly as frightening as CBO has predicted.
