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Latest CBO Obamacare Repeal Analysis Is Much Ado about Nothing

by Demian Brady / /

 


Government agencies publish thousands of reports each year, yet few are more meaningless than the latest Obamacare-related study released yesterday by the Congressional Budget Office. While many reports are Congressionally-mandated through law, this report was conducted at the request of the Senate Minority Leader and the Ranking Members of the Senate Committee on Finance and the Senate Committee on Health, Education, Labor, and Pensions.

CBO found that the number of uninsured and the cost of premiums would both increase under a repeal of the so-called Affordable Care Act (ACA) without any replacement reforms -- a scenario that nobody is contemplating. CBO set out to examine how insurance coverage would be affected if the ACA is partially-repealed and no replacement reforms are enacted. The largest impact would result from repealing the individual mandate, the provision in the ACA that compels people to purchase health insurance or pay a tax-penalty known as the "Individual Shared Responsibility Payment." The was the first ever tax on non-participation in a marketplace. Everyone should remember that while pushing for passage of the ACA supporters of the plan assured the public that this wasn't a tax, but later when facing a challenge on whether the payment was constitutional the Administration successfully argued to the Supreme Court that it was in fact a tax.

CBO’s analysis was based on H.R. 3762, the Restoring Americans' Healthcare Freedom Reconciliation Act of 2015, which makes use of the reconciliation process to streamline passage of certain budget legislation by avoiding the Senate's filibuster rule (and which was used to pass the ACA). The reconciliation legislation only includes provisions to repeal the ACA. Reform legislation would be taken up separately.

While it is unclear what reforms would ultimately be included in a replacement package, there is no shortage of ideas ranging from the blueprint laid out by President-elect Trump during the campaign, the comprehensive legislation introduced previously by the Health and Human Services Secretary nominee Representative Tom Price, and reform ideas proposed by the Center for Health and Economy. And while the timing is still unclear regarding when the respective repeal and replacement components will be passed, nobody doubts that replacement reforms will ultimately be enacted.

In effect, this report represents CBO's best guess of what would happen if Obamacare is repealed and not replaced, so it shouldn’t whip anyone into a frenzy of concern. Moreover, there are significant problems with the methodology used. As Chris Jacobs points out:

CBO claimed in 2010 that the individual mandate would cause tens of millions of individuals to sign up for coverage. It hasn’t happened. Now CBO claims that effectively repealing the mandate while leaving insurance regulations in place will cause healthy individuals to cancel coverage en masse. Could that happen? Absolutely. But given their recent track record on this specific issue, should one really take CBO’s word as gospel…?

Similar controversy was caused by CBO’s previous budgetary estimates of repealing the ACA. Because the law was passed with even higher taxes than its massive expansion of spending, the media has concentrated on the bill’s impact on the deficit. This is a misguided focus. Repealing Obamacare will eliminate a slew of taxes and mandates that have hit consumers’ wallets and set back job growth and lead to significant outlay savings (even after replacements are enacted). As NTUF has noted previously, the costs of the ACA have steadily been revised upward of CBO’s initial estimates. CBO’s long-term cost analyses inherently contain a significant amount of uncertainty, but nothing comparable to the problems in this latest report based on an alternate reality in which Obamacare is repealed yet not replaced.