Quick Take on CBO’s Coverage Estimates

The coverage provisions of the Congressional Budget Office’s (CBO) analysis of the American Health Care Act have garnered the biggest headlines in the wake of its release this afternoon. As NTUF noted in its new Issue Brief, however, CBO’s past estimates of heath care overhaul measures have been built on assumptions which later proved to be faulty.

CBO projects that the number of uninsured to climb to 14 million in 2018, due to repeal of individual mandate’s “tax-penalty.” Some would choose not to purchase health insurance, others would be dissuaded by higher premiums (because without the individual mandate, CBO foresees fewer healthy people purchasing insurance). Many individuals, in this portion of the insured population at least, are not “losing” their coverage in the sense that is being ripped away from them. Rather, many would be deciding to simply forego insurance they would otherwise be compelled to purchase under current law.

After that uninsured rates increase because of repeal and reform of the Affordable Care Act’s (ACA) Medicaid expansion. CBO estimates that:

  • Some states would discontinue their expansion of eligibility;
  • States that would have expanded in the future would choose not to do so; and
  • Per-enrollee spending in the program would be capped.

It is unclear however, to what degree states would continue to expand Medicaid eligibility, especially given that enrollment rates have exceeded CBO’s projections by more than half, and over time states would have to bear a larger share of the cost. Under ACA, states that expanded eligibility received a 100 percent match, but eventually the matching rate will decrease.

Among the least-reported developmentson the positive side, CBO expects that premiums will decrease starting in 2020, once reforms kick in, including repeal of ACA’s requirements on insurers’ plans and establishing grants for states to support individuals with high claims.

Perhaps most notably, CBO acknowledges that it did not have time to quantify and incorporate macroeconomic feedback into its estimate, which would be expected to increase enrollment figures as individuals gain coverage through employment or find it more affordable to purchase insurance. The repeal of the ACA will significantly reduce or eliminate dozens of taxes, many of which have an adverse impact on economic growth and consumer health care costs.

Policymakers must read behind the headlines and bear these factors in mind when evaluating CBO’s analysis.