CBO Estimates of Repealing the Affordable Care Act a.k.a. “Obamacare”

From the CBO yesterday:

CBO and JCT estimate that enacting [H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015, which would repeal portions of the Affordable Care Act (ACA) eliminating, in two steps, the law’s mandate penalties and subsidies but leaving the ACA’s insurance market reforms in place] would affect insurance coverage and premiums primarily in these ways:

  • The number of people who are uninsured would increase by 18 million in the first new plan year following enactment of the bill. Later, after the elimination of the ACA’s expansion of Medicaid eligibility and of subsidies for insurance purchased through the ACA marketplaces, that number would increase to 27 million, and then to 32 million in 2026.
  • Premiums in the nongroup market (for individual policies purchased through the marketplaces or directly from insurers) would increase by 20 percent to 25 percent—relative to projections under current law—in the first new plan year following enactment. The increase would reach about 50 percent in the year following the elimination of the Medicaid expansion and the marketplace subsidies, and premiums would about double by 2026.

Here is one estimate of how many people additional people are dying each year because of 25 states opting out of Medicaid expansion, as implemented under the ACA. I don’t know of a calculation for what happens if legislation like H.R. 3762 is implemented.

9 thoughts on “CBO Estimates of Repealing the Affordable Care Act a.k.a. “Obamacare”

  1. Steven Kopits

    Menzie –

    The linked article is a ‘benefit analysis’, not a cost/benefit analysis. It doesn’t say anything about costs, unless I missed it somewhere.

    A cost/benefit analysis should be in similar units, thus:

    – Taxpayer dollars paid / taxpayer dollars received
    This is the ultimate test. If healthcare provision an investment or consumption? If it enables you to work and pay taxes, it’s investment. If it merely enables you to feel better, it’s consumption.

    This is precisely why the high deductible matters, because it often prevents working age people from obtaining necessary, but not huge cost, care. When we are talking premature deaths, with the possible exception of depression, we are almost entirely speaking of retirement age people.

    – Taxpayer dollars paid / incremental man years of life, in dollar terms
    Using this metric, we are assigning some value to life regardless of productivity. This is a kind of ‘value-free’ number, but accounting for the remaining years of life for any given person. In this case, bringing a 40 year old back to health may be worth 20 times that of bringing an 85 year old back to health.

    – Total dollars paid / incremental man years of life, in dollar terms
    This is a broad measure of benefit, including both public and private sources of health care funding.

    Those would be examples of appropriate cost/benefit criteria. My problem with both the linked articles is that I see nothing on cost at all, with benefit defined as ‘lives saved’ without any further characterization.

    The CBO document does, however, note that premiums would increase if individual mandate were dropped and the pre-existing conditions requirement retained. This is certainly correct and would effectively kill Obamacare.

    I personally like the exchanges and the individual mandate. However, if pre-existing condition patients are handled in the pool, then the economics of the approach disintegrate. To ask a person making $60,000 to pay $5000 in premiums with a $6000 deductible is a non-starter. And that’s where we seem to be today.

    1. 2slugbaits

      Steven Kopits This is precisely why the high deductible matters, because it often prevents working age people from obtaining necessary, but not huge cost, care.

      Ahem…..you do know of course that the GOP plan calls for higher deductibles, don’t you. That’s what’s so damn funny (or sad) about all of these crocodile tears I keep hearing about some of the plans having high deductibles under Obamacare. But yet the GOP plan floating around the House calls for even higher deductibles.

      I wonder, are you equally concerned about the cost/benefits of taxpayer subsidized “Cadillac plans” so loved by overpaid investment bankers?

      Once again, let me point out that something consuming 17% of GDP must also consume 17% of GDI. Health insurance is expensive. It’s especially expensive when you try to manage it through inefficient private insurance arrangements.

      1. Steven Kopits

        I don’t know what follows Obamacare, Slugs. I haven’t endorsed any plan, and a Republican plan could be worse than Obamacare, for all I know. My comments were restricted to cost/benefit measurements, in this case, and the problems of mixing pre-exiting / chronic care patients in with a routine insurance pool when healthcare costs are as crazy as they are in the US.

        1. baffling

          “routine insurance pool”
          steven, this type of statement indicates you either do not understand the general purpose of insurance, or you are ignoring the reality of the world today. insurance companies like the idea of “routine” pools-because it is profitable and less risky. for insurance to work for the general public, the pool must be able to absorb high risk and low risk. otherwise it is not really insurance for the consumer, in a risk sense.

          “To ask a person making $60,000 to pay $5000 in premiums with a $6000 deductible is a non-starter.”
          you can usually get a deductible a good bit lower than that. almost all workers today, with an employer, pay over $5000 per year in premiums. there is nothing unusual about that price point. you really think, because your employer covers part of the premium, it does not come out of your own pocket. are you that naive?

  2. Joseph

    Steven Kopits is a typical Republican who believes in magic asterisks and that tax cuts that pay for themselves.

    He somehow believes that removing sick people from healthy in insurance pools magically saves money. It doesn’t. It simply distributes the costs differently — between winner and losers. If you are healthy, you get low cost insurance and if you are sick, you get high cost insurance.

    Of course this defeats the entire purpose of insurance which is to spread risk among the largest pool possible. Unfortunately, over a lifetime no one knows whether they will be a winner or loser in Kopits plan.

    But that’s just the way Republicans roll. Wealth proves your worthiness and poverty proves your unworthiness. The healthy are the deserving and the the sick are the undeserving.

    1. Steven Kopits

      Joseph –

      Regarding tax cuts that pay for themselves, I think you’ll see I made exactly the opposite comment with regard to the Kansas budget. Cutting taxes can be helpful, but they’re not a panacea. My focus would usually be on the spending and deficit side. It’s easy to spend a lot of money on stuff that ultimately puts drag on the economy, yes. Also, it seems to me that chronic budget deficits put a drag on growth, but I’m not sure I’ve ever seen compelling analysis to that effect.

      Insurance works when it pools people with similar risk and uncertainty. You cannot pool someone with a 100% certainty of a medical outlay with someone with customary risk and uncertainty. That is not insurance, that is a subsidy. This matters for two reasons. First, it makes the premium of the person with no conditions higher than it otherwise would be. Secondly–and this is a very important point–these differentials today as so great in absolute terms as to be deal breakers. Thus, if health insurance would otherwise cost $100, but costs $200 with high risk members, then it’s a bad deal, but not critical in absolute terms. However, when this high risk/normal risk pooling generates premiums of $5000 with $6000 deductibles, the system is no longer viable. That’s where we are today.

      1. baffling

        steven, those 100% certain cases still need to be paid for. either by the public, or by the hospitals themselves. unless you are willing to allow somebody to die because they have no insurance. in america today, most of society has decided against this outcome. so we allow those folks to be treated, and we pay for it. either we put them in the common pool, and premiums go up for everybody. or we make the hospitals cover the cost, they increase their cost for everybody else, and the premiums become increased to cover higher hospital rates. you are paying either way-unless you force health care providers to donate their services. the question becomes, which approach can most efficiently control the growth of premiums. excluding high risk cases from the insurance pool, leaves that group with effectively no negotiating positions with anybody. this group can provide distortions to the marketplace overall. that is why it is probably best to have them associated with the population as a whole. our current insurance marketplace was driven by large employer sponsored group insurance. the larger the insured group, the greater their bargaining power. segregating that group has the same effect as shrinking unions in labor.

      2. baffling

        steven, one more point. you should probably be using premiums and yearly out of pocket max limits as the comparison parameters. copays and coinsurance contribute quite a bit. at the end of the day, many of these policies probably have similar out of pocket limits. if you have significant medical conditions, the total cost between many different policies will basically be a wash. i noticed this at work. we had the choice of several different policies and premiums. but if you need medical care, the yearly out of pocket cost ended up the same for all plans. it is only when you don’t need any care you can save some money. the question is really, do you want to write one big check at once, or ten smaller checks throughout the year.

  3. Joseph

    Perhaps Steven Kopits can enlighten us as to his great plan for saving the insurance market. As he presents it, if you are young and/or healthy, you can buy cheap insurance. But if you get old and/or sick and actually need the insurance, you get kicked out of the cheap insurance pool and into the high risk pool where you get very expensive insurance.

    So the Kopits plan is to sell you cheap fire insurance but if your house catches on fire your insurance is instantly cancelled even before the firetrucks show up. Sounds like a scam to me.

    The Kopits magical thinking is that segregating insurance pools somehow saves money.

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