- Jun 6, 2007
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The Republicans in their Tax Reform bill are planning to repeal the ACA mandate that Americans buy health insurance or pay a penalty because the Congressional Budget Office says doing so will reduce the national debt by $338 billion over ten years from reduced federal government subsidy payouts for exchange insurance enrollees and lower Medicaid payments resulting from reduced insurance enrollment due to the repeal. Aside from this move destroying the keystone of the framework of America 's Healthcare system created by the 2010 ACA law the framework being America has communal pricing of health insurance in the individual market even for people with pre-existing medical conditions and the way it is largely paid for is to create large insurance pools to spread out the cost of people with serious health problems and the way large pools are created (the keystone) is through this mandate, this repeal move is irresponsible economic stewardship by the Republicans because it comes from an estimate based on not very good and accurate modeling!
The repeal of this mandate in 2019 is not going to reduce the national debt by $338 billion by the end of fiscal year 2027. This CBO report is based on too many faulty and weak assessments. The first being that this repeal will reduce the Medicaid rolls by 5 million people by 2025 and the the federal government Medicaid costs by $179 billion through 2027. The CBO says the repeal will result in things like reduce the rolls of Medicaid by one million in 2019 and by four million in 2021 and by five million in 2025 for a savings in federal expenditures of $5 billion in 2019 and by $16 billion in 2021 and by $26 billion in 2025. This estimate in the reduction of the medicaid rolls is overblown medicaid insurance is free for people that are eligible which eliminates any compelling reason the country would see a big drop off in medicaid insurance sign-ups for this group. The CBO fails to fully consider that health care providers administrative staff will see to it that these eligible Americans sign up in high numbers when members of this group come into these medical practices looking for medical care by educating these individuals on the steps they need to take to enroll in Medicaid. Plus, once the ACA is stabilized and significantly improved and it likely will be in two to three years because the Republican Party has no better replacement health care system (12 months they've controlled Congress and the White House with no revealment) and the American public will demand it from Washington, state authorities will likely increase the Medicaid rolls by making application for Medicaid enrollment, if one is eligible, a requirement of signing up for food stamps and LIHEAP because the federal government is picking up ninety percent of the medicaid costs of these enrollees and many of these enrollees have a problem with holding down full-time work because of health issues and getting these individuals health insurance will ameliorate this problem for state officials. The American people should keep in mind the CBO doesn't have a stellar track record at predicting federal law changes affect on health insurance enrollment. On March 20, 2010 when the ACA was first enacted into law the CBO predicted that in 2019 the ACA would result in 24 million people getting health insurance on the exchanges and 16 million more people would be added to the Medicaid and Chip rolls because of the law, today the CBO estimates that in 2019 the exchange enrollment will be 12 million Americans and the increase in Medicaid and Chip enrollment will be 13 million clearly the CBO's initial predictions were inaccurate!
The other area of weakness in the CBO modeling is their projections on the economic savings in regard to the reduced federal government subsidy expense for exchange enrollees due to the drop in exchange enrollment resulting from the repeal of the mandate; CBO essentially estimates a savings of $185 billion in this area through 2027. Prudent analysis calls for the conclusion that premium prices for exchange insurance will dramatically increase because of the repeal, the CBO underestimates this impact. The CBO estimates the repeal will increase premium prices for exchange insurance by only ten percent per year, this is not good modeling! The vast vast majority of Americans not getting health insurance in the individual market because they don't face the mandate financial penalty will be healthy individuals that don't need health insurance, common sense dictates this, it will be mostly young people and again older people that don't have people with significant health problems in their family. What this means to insurance providers on the exchanges is that their group of enrollees that are healthy that don't submit a lot of medical claims the group they spread the cost of their health problem enrollees to just got a lot smaller therefore they will need to significantly increase their insurance premium charge to all their enrollees to cover the worsening health demographics of their insurance pool. In addition the executives of these insurance providers on the exchanges have a fiduciary duty to their stockholders and their ownership stake holders and will have to add a premium to their exchange insurance premiums to account for the risk of low sign-ups for their exchange insurance because there is no mandate penalty pressuring Americans to sign-up for exchange insurance. Prudent analysis calls for the conclusion that these two factors would cause exchange insurance premiums to rise at least twenty percent comparing the repeal of the mandate to maintaining the mandate (the baseline). Funny thing is that the December 8th 2016 CBO report estimates that very number a twenty percent impact on premiums from the repeal unlike the the CBO 2017 report which estimates only a ten percent impact; What happened here?
Let us for one year, for 2027, try to take a look at how this twenty percent increase in premiums will affect the Federal Government savings from a repeal and compare it to the CBO 2017 analysis which the Republican leadership is using to boot strap a way to pay for their tax reform bill. In 2027, the CBO estimates the repeal of the mandate will result in five million Americans not buying health insurance in the individual market that would have otherwise if there was no repeal. For sake of argument say 500,000 of those Americans are individuals that would have purchased low cost catastrophic health insurance available to young people and coverage through the Basic Health Program that is non-exchange enrollees, so we have the loss of 4.5 million enrollees on the exchange market for 2027. Today CBO's baseline projection (the estimate with no repeal of the mandate) is that the exchange enrollment in 2027 will be thirteen million with ten million getting subsidies. So assuming the same percentage means that in 2027 there will be 3.46 million less enrollees receiving subsidies on the exchange. Let us look at the baseline average subsidy cost (essentially for premiums) for 2027; the total subsidy cost per CBO is 71 billion, again the number of exchange enrollees receiving subsidies is ten millions so the baseline average subsidy/premium cost is $7100 per enrollee. We assumed that due to the repeal premiums will rise twenty percent and because the ACA fixes the amount of the premiums "eligible for subsidy" Americans pay based on their income the federal government will be picking up the entirety of this premium increase therefore we can reasonably conclude that the average subsidy per enrollee will be at least 1.2 times $7100 equaling $8520 and since there will be 6.59 million Americans receiving the subsidy in 2027 (pursuant to our calculation) the Federal Governments subsidy expense in 2027 will be $56 billion. Considering that the CBO baseline projection for the federal government subsidy expense for 2027 is $71 billion the estimate on the savings should be $15 billion not the $28 billion the CBO estimates in their 2017 report! When one adds up this disparity for each year from 2019 through 2027 one arrives at the conclusion that CBO's 2017 report way overestimates the savings from repeal of this mandate!
All Americans especially the politicians in Washington need to consider that the CBO has been giving this $300 billion saving assessment over ten years from a mandate repeal since at least Sept. 15 2015 ( CBO cost estimate) and at that time they did not have a lot of real world statistics to work with and there wasn't a lot of studies on the topic and so they gave great weight to what transpired in Massachusetts with Romney care where the mandate made a big difference and as organizations tend to do they stuck with their initial decision. What needs to be really highlighted here to the American public is that the CBO acknowledges that their modeling in their published reports isn't the best in their latest CBO report (11/8/17) the CBO acknowledged their working on a new model which they said will likely roll back the projections for the loss of insurance and the reduction to the national debt from a repeal. The fact that Republican leadership is pressing forward with CBO projections that are in fact under reconsideration by the CBO smacks of recklessness and irresponsibility!
The repeal of this mandate in 2019 is not going to reduce the national debt by $338 billion by the end of fiscal year 2027. This CBO report is based on too many faulty and weak assessments. The first being that this repeal will reduce the Medicaid rolls by 5 million people by 2025 and the the federal government Medicaid costs by $179 billion through 2027. The CBO says the repeal will result in things like reduce the rolls of Medicaid by one million in 2019 and by four million in 2021 and by five million in 2025 for a savings in federal expenditures of $5 billion in 2019 and by $16 billion in 2021 and by $26 billion in 2025. This estimate in the reduction of the medicaid rolls is overblown medicaid insurance is free for people that are eligible which eliminates any compelling reason the country would see a big drop off in medicaid insurance sign-ups for this group. The CBO fails to fully consider that health care providers administrative staff will see to it that these eligible Americans sign up in high numbers when members of this group come into these medical practices looking for medical care by educating these individuals on the steps they need to take to enroll in Medicaid. Plus, once the ACA is stabilized and significantly improved and it likely will be in two to three years because the Republican Party has no better replacement health care system (12 months they've controlled Congress and the White House with no revealment) and the American public will demand it from Washington, state authorities will likely increase the Medicaid rolls by making application for Medicaid enrollment, if one is eligible, a requirement of signing up for food stamps and LIHEAP because the federal government is picking up ninety percent of the medicaid costs of these enrollees and many of these enrollees have a problem with holding down full-time work because of health issues and getting these individuals health insurance will ameliorate this problem for state officials. The American people should keep in mind the CBO doesn't have a stellar track record at predicting federal law changes affect on health insurance enrollment. On March 20, 2010 when the ACA was first enacted into law the CBO predicted that in 2019 the ACA would result in 24 million people getting health insurance on the exchanges and 16 million more people would be added to the Medicaid and Chip rolls because of the law, today the CBO estimates that in 2019 the exchange enrollment will be 12 million Americans and the increase in Medicaid and Chip enrollment will be 13 million clearly the CBO's initial predictions were inaccurate!
The other area of weakness in the CBO modeling is their projections on the economic savings in regard to the reduced federal government subsidy expense for exchange enrollees due to the drop in exchange enrollment resulting from the repeal of the mandate; CBO essentially estimates a savings of $185 billion in this area through 2027. Prudent analysis calls for the conclusion that premium prices for exchange insurance will dramatically increase because of the repeal, the CBO underestimates this impact. The CBO estimates the repeal will increase premium prices for exchange insurance by only ten percent per year, this is not good modeling! The vast vast majority of Americans not getting health insurance in the individual market because they don't face the mandate financial penalty will be healthy individuals that don't need health insurance, common sense dictates this, it will be mostly young people and again older people that don't have people with significant health problems in their family. What this means to insurance providers on the exchanges is that their group of enrollees that are healthy that don't submit a lot of medical claims the group they spread the cost of their health problem enrollees to just got a lot smaller therefore they will need to significantly increase their insurance premium charge to all their enrollees to cover the worsening health demographics of their insurance pool. In addition the executives of these insurance providers on the exchanges have a fiduciary duty to their stockholders and their ownership stake holders and will have to add a premium to their exchange insurance premiums to account for the risk of low sign-ups for their exchange insurance because there is no mandate penalty pressuring Americans to sign-up for exchange insurance. Prudent analysis calls for the conclusion that these two factors would cause exchange insurance premiums to rise at least twenty percent comparing the repeal of the mandate to maintaining the mandate (the baseline). Funny thing is that the December 8th 2016 CBO report estimates that very number a twenty percent impact on premiums from the repeal unlike the the CBO 2017 report which estimates only a ten percent impact; What happened here?
Let us for one year, for 2027, try to take a look at how this twenty percent increase in premiums will affect the Federal Government savings from a repeal and compare it to the CBO 2017 analysis which the Republican leadership is using to boot strap a way to pay for their tax reform bill. In 2027, the CBO estimates the repeal of the mandate will result in five million Americans not buying health insurance in the individual market that would have otherwise if there was no repeal. For sake of argument say 500,000 of those Americans are individuals that would have purchased low cost catastrophic health insurance available to young people and coverage through the Basic Health Program that is non-exchange enrollees, so we have the loss of 4.5 million enrollees on the exchange market for 2027. Today CBO's baseline projection (the estimate with no repeal of the mandate) is that the exchange enrollment in 2027 will be thirteen million with ten million getting subsidies. So assuming the same percentage means that in 2027 there will be 3.46 million less enrollees receiving subsidies on the exchange. Let us look at the baseline average subsidy cost (essentially for premiums) for 2027; the total subsidy cost per CBO is 71 billion, again the number of exchange enrollees receiving subsidies is ten millions so the baseline average subsidy/premium cost is $7100 per enrollee. We assumed that due to the repeal premiums will rise twenty percent and because the ACA fixes the amount of the premiums "eligible for subsidy" Americans pay based on their income the federal government will be picking up the entirety of this premium increase therefore we can reasonably conclude that the average subsidy per enrollee will be at least 1.2 times $7100 equaling $8520 and since there will be 6.59 million Americans receiving the subsidy in 2027 (pursuant to our calculation) the Federal Governments subsidy expense in 2027 will be $56 billion. Considering that the CBO baseline projection for the federal government subsidy expense for 2027 is $71 billion the estimate on the savings should be $15 billion not the $28 billion the CBO estimates in their 2017 report! When one adds up this disparity for each year from 2019 through 2027 one arrives at the conclusion that CBO's 2017 report way overestimates the savings from repeal of this mandate!
All Americans especially the politicians in Washington need to consider that the CBO has been giving this $300 billion saving assessment over ten years from a mandate repeal since at least Sept. 15 2015 ( CBO cost estimate) and at that time they did not have a lot of real world statistics to work with and there wasn't a lot of studies on the topic and so they gave great weight to what transpired in Massachusetts with Romney care where the mandate made a big difference and as organizations tend to do they stuck with their initial decision. What needs to be really highlighted here to the American public is that the CBO acknowledges that their modeling in their published reports isn't the best in their latest CBO report (11/8/17) the CBO acknowledged their working on a new model which they said will likely roll back the projections for the loss of insurance and the reduction to the national debt from a repeal. The fact that Republican leadership is pressing forward with CBO projections that are in fact under reconsideration by the CBO smacks of recklessness and irresponsibility!
