We Don’t Need No Stinkin’ CBO Score

The House leadership, that is. According to The Hill:

The House will vote without waiting for a new Congressional Budget Office (CBO) analysis of Upton’s changes or the amendment from Rep. Tom MacArthur (R-N.J.) that won over the House Freedom Caucus. That analysis will eventually provide insight into the bill’s effects on coverage and its cost.

What’s the difference between what went down in flames earlier, and what is coming now? The text is not accessible to me yet (I searched here), but my understanding is it allows to waivers so states can drop the pre-existing conditions… and adds $8 billion over ten years to fund high risk pools.

Here’s some illustration of the sheer insufficiency of $8 billion. From CBPP:

The details behind this additional $8 billion are unclear; some accounts suggest it would go to fund state high-risk pools, while others suggest it would go for other purposes. But either way, the additional funding wouldn’t come remotely close to addressing the severe problems that the bill creates for people with pre-existing conditions. Notably, the $8 billion would restore less than 1 percent of the nearly $1 trillion the House bill cuts from programs that help people afford coverage.

This seems in some ways even worse for coverage than the first plan, which CBO assessed thusly:

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.

Well, I can’t be sure it’ll be worse. For certain, the representatives voting tomorrow won’t know for sure because the House leadership is heck-bent on a vote without knowing. For them, it is clear, more knowledge is not helpful.

So much for the party of fiscal responsibility. Or expertise, for that matter.

Update, 6:10PM Pacific:
Vox assesses.
CRFB says the deficit will be increased by the bill.

45 thoughts on “We Don’t Need No Stinkin’ CBO Score

  1. baffling

    so premium costs for individuals will go up, and the number of people insured will go down. this is exactly what the conservatives want. so let’s vote on it before the numbers get out.
    the conservative view of pre-existing conditions: we won’t let the insurers deny you coverage. we will let them charge you $30,000 per year in premiums, plus massive deductibles. if you “choose” to not get coverage for a mere $50k per year, that was simply a market choice. its all about choices in the market. from the conservative perspective, they just “saved” that person $50k in health care costs, and increased the supply of health care to others in the process! compassionate conservatives.

    1. Anonymous

      “…and the number of people insured will go down. this is exactly what the conservatives want.” You are right – conservatives do want the number of insured people to go down… because a lot of people don’t need insurance!!! Dropping the personal mandate will improve millions of younger people’s lives because they will no longer have to pay monthly premiums that they don’t use.

      1. Menzie Chinn Post author

        Anonymous: Hmm. Let’s take your logic and run with it. “Millions of people don’t need car insurance. Take me for instance. I’m certain I’ll never get into an accident, since I’m really careful driving. Why does the government mandate me to have insurance?”

        Aren’t you the same guy (or gal) who wrote:

        Trump saying growth is going to be high is a good thing! (And I’m not a Trump supported at all, but I give him props for being optimistic in the face of likely stagnant growth going forward).

        So you are saying the President should lie.


        1. Anonymous

          Menzie, a typical idiotic analysis: there is no law saying you have to have car insurance to cover yourself, you only have to have LIABILITY insurance. So there is no comparison between a $350 Obamacare insurance premium to cover yourself and a $30 liability car insurance to cover other people (that you only have to have if you CHOOSE to drive). But keep up the high quality non-bias analysis.

          1. Menzie Chinn Post author

            Anonymous: I guess these states don’t exist in your alternate universe: Arkansas, Delaware, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon, Pennsylvania, and Utah.

            BY the way, still advocating the President lie about what expects the economy to do?

          2. PeakTrader

            What if you need medical care, can’t afford it, and have no insurance. Then, other people have to pay the tab.

            Everyone should have health insurance, because everyone should contribute something.

            If you choose not to have health insurance and need medical care you can’t afford, you should be sent to a special hospital or clinic that specializes in charity and will likely be inferior to the other hospitals (e.g. beds in hallways and bed pans).

          3. baffling

            ” you should be sent to a special hospital or clinic that specializes in charity and will likely be inferior to the other hospitals”

            who will run these clinics? the patients cannot afford care, so there is no profit to be made. in fact, there is probably no revenue period. and at what point during the treatment of an acute patient do you make the decision to move them to this inferior medical facility. and how will you retain competent physicians to work in an inferior medical facility? will the private sector do this? or will you set up yet another government agency to oversee this project? and what will you do with the rural population where you cannot provide access to one of these inferior medical facilities?

          4. PeakTrader

            That could be easily and cheaply resolved. I’d allow Veterans to choose any hospital they want. So, of course, they wouldn’t choose VA hospitals. I’d add big hallways that can accommodate hundreds of beds and allow foreign doctors to practice at VA hospitals. So, those who don’t buy insurance and can’t afford health care can have somewhere appropriate to go.

          5. baffling

            peak, i think you have a failure in understanding why the VA exists in the first place. the reason vets get treatment at the VA is because they are especially prepared to handle the unique issues common to military vets. sure, some case are easily handled in a regular hospital. but many cases are better handled by those with experience handling vets.

            in any event, it appears your goal is to turn the va hospitals into a sick ward, with patients overflowing into the hallway. with our ongoing wars, this is probably not the best policy for a strong VA in the future. i expected a conservative to have a stronger position in protecting our injured service members.

      2. Steven Kopits

        The mandate should remain, for the simple reason that the sick and injured can compel their treatment in the emergency room or otherwise.

        If we allow the rather impractical notion that only paying customers will be allowed access to an emergency room, then the mandate is unnecessary. But that’s not realistic, and therefore the system may reasonably compel all to have insurance. It’s a quid pro quo.

      3. mike v

        What an asinine statement. Honestly, I’ve read a lot of ridiculous stuff on this site, but this comment might be the worst.

        You clearly don’t understand how insurance works, or that lacking insurance just forces everyone else to pay for coverage of the uninsured through higher premiums. The point of insurance is spreading risk. If you take healthy people – who are not impervious to accidents, cancers, etc. – and remove them from the risk pool, you will make insurance more unaffordable for people who do need healthcare. And when those people do get sick, they will still get care, regardless of their coverage or ability to pay. Those costs are socialized, and hospitals, governments, and people with insurance lose. That is called a “free rider” problem, and it is a fundamental concept in traditional conservative policy making.

        Honestly, if you went to a college graduation and told all of the healthy young people “my advice is that you don’t need insurance”, every mother in that room would flip their shit on you, and it would be justified. What a stupid, stupid comment.

    2. Steven Kopits

      If you segregate high risks patients from the ordinary risk pool, the premiums for the ordinary pool should decline (although I think deductibles are more likely to show the most improvement).

      This move will, of course, adversely affect the high risk pool, which will now have lost a key source of subsidies. In order to compensate, a the Federal government will kick in some amount to help subsidize these high risk pools, and it is this program which makes the deficit worse. At the same time, $8 bn is pretty modest, really more a token that any wide scale assumption of high risk costs by the Federal government.

      The underlying issue is the on-going deficit at the top of the cycle. A new program without a tax increase is essentially unsupportable, and I think there is very little appetite for a tax increase.

  2. Steven Kopits

    From a policy point of view, I think the Republican initiative is correct.

    People in the ordinary risk pool should be segregated from those in the high risk pool. Ordinary risk is insurable; pre-existing, high cost conditions are not. These latter properly belong in a segregated pool where participation is not determined by ordinary market economics, which do not apply, but rather by national and state budget constraints. The ordinary risk pool can be considered a business; subsidizing a high risk pool counts as charity.

    1. baffling

      steven, you still need to address the high risk pool participants. either obamacare covers them, or the state covers them and subsidizes them through funds raised from taxes. in the latter case, it really is no different than if that subsidy came from obamacare itself. at this point it becomes nothing more than political contortionist. the costs are still socialized. republicans replace obamacare with………..a backdoor version of obamacare. such an approach feels nauseating and political, but in the end we can provide good healthcare to the people. if republicans want to rename obamacare as trumpcare to ease their ego…go ahead.

      on the other hand, if you create a separate high risk pool and do not subsidize it, you have effectively decided to sacrifice those in the high risk pool, because they cannot cover their costs in a high risk pool. you will choose to defend your actions behind market forces and choice. but you have a neighbor in need, and you chose to shut your door rather than help. for a compassionate conservative who follows the ways of jesus, that is certainly not following the christian teaching of helping those in need. but perhaps His teachings are not as important to a compassionate conservative as i was led to believe.

    2. macroduck

      Actually, high risk, high cost pre-existing conditions are entirely insurable, unless by “insurable” you mean a the insurance customer carries the entire cost of the premium. Risk math is well established. Costs for high cost conditions can be estimated. There is nothing about creating a risk pool blending high and low risk customers that is beyond the realm of possibility. Any claim to the contrary is an assertion of personal preference, not fact.

      High cost pools will be paid for by the wider public, or not at all. If medical care is going to be available to the unfortunate, healthier people will necessarily pay most of the bill. Questions to be answered are 1) will the US have a system that cares for the medically less fortunate? and if so, 2) what system will be used to extract payment for the system from the public.

      Answers to the latter question could include 1) mandatory enrollment to assure that everybody contributes to the cost of funding high-cost care, 2) taxation, 3) over-billing the well-off to pay for care for the less well-off.

      In the absence of mandatory enrollment, not only do we end up with either taxation or over-billing, but we also need a program to care for those who guessed wrong about their future medical needs. Mandatory enrollment is a simple, transparent solution, relative to the other two. Taxation is also mandatory, so the “bad to force people to pay for things they don’t want” argument is pretty vacuous.

      If you prefer taxation or over-billing, can you tell us why?

      1. Steven Kopits

        There are lots of issues here, Duck.

        High cost pre-existing conditions are not insurable conceptually because they are a known cost. Insurance involves paying a modest amount to offset the small risk of a high expense. If there is no risk — if the outlay is certain — then the funding model is not insurance, but at best, subsidization.

        “There is nothing about creating a risk pool blending high and low risk customers that is beyond the realm of possibility.”

        If market-based approaches are to be used, this statement is pure nonsense. A very small number of high risk patients can double or triple pool cost, thereby making the proposition unattractive to those carrying ordinary risk. This is exactly why Obamacare fell apart.

        “High cost pools will be paid for by the wider public, or not at all.”
        It is a matter of cost-sharing, who takes what share of the burden. But yes, to your point, the public, as embodied by Republican representatives, has limits on its willingness to spend. This is not a bottomless well, and therefore not all high risk costs will be covered, just as you suggest.

        We have systems for the less fortunate, but they are not unbounded, not in the US or anywhere else.

        Mandatory enrollment is separate from the high risk pool. Mandatory enrollment also applies to ordinary risk patients, just as Menzie suggests. It is very much the seat belt analogy–and it is not the same thing as taxation. Taxation can be used for anything. Mandatory premiums, properly sized, are actuarial health insurance payments.

        Let me again emphasize that we are running a 3.5% budget deficit on a 75% public debt-to-GDP ratio. Our expectations of what the government can provide us are running about three years ahead of reality.

        1. Phil

          “Our expectations of what the government can provide us are running about three years ahead of reality.”
          It is all a question of priorities.
          Republicans just dumped billions more into the bloated military machine. Yet we can’t afford to subsidize health insurance for sick kids.
          Not only is it immoral, it is bad public policy.

        2. baffling

          “High cost pre-existing conditions are not insurable conceptually because they are a known cost. Insurance involves paying a modest amount to offset the small risk of a high expense.”

          this is why we have a mandate and community ratings. health insurance and life insurance are two different animals, especially once you enforce the mandate.

  3. joseph

    Steven Kopits: “People in the ordinary risk pool should be segregated from those in the high risk pool.”

    Yes, Republicans have a decades long love affair with segregation. There is nothing they enjoy more than separating the genetic winners from the losers.

    Steven apparently has difficulty with math. Segregating health insurance into two groups saves not one dime — unless the real aim is to stiff those segregated into the losers group. Oh, wait! That’s exactly what the Republican plan does.

    So this abomination creates winners for the young and healthy and creates losers for the old and unhealthy. Folks like Steven who support this are moral monsters. There’s no polite way to put it.

    1. Steven Kopits

      You are suggesting, Joseph, that vast intergenerational transfers from children and families to the elderly is a good thing. I think you have to be very careful as a society how much you do of that. Wants will always exceed the resources to pay for them.

      If productivity were increasing by 2.5%, GDP by 3%, the budget were balanced and the debt-to-GDP ratio was 40%, I’d probably be more accommodating. But productivity is growing at 0.6% per year, GDP by less than 2%, the deficit is 3.5% of GDP and the IMF would have declared our current debt to GDP ratio a national crisis just a few years ago. There is a bigger picture here.

      For the record, I suggested to staffers of the Freedom Caucus that we should use the proceeds of a market-based immigration system — worth $30 bn per year just for current undocumenteds — to subsidize pre-existing conditions. And if you ran the H-1Bs up to 2 million instead of 85,000 and ran it as a profit center, you could subsidize pre-existing conditions to your heart’s content.

      So, sure, there are solutions, but also choices.

      1. baffling

        “You are suggesting, Joseph, that vast intergenerational transfers from children and families to the elderly is a good thing. I think you have to be very careful as a society how much you do of that.”

        you could easily implement the opposite. right now, baby boomers have an enormous amount of wealth stockpiled in retirement funds. many of the wealthy in this group want to pass this onto their heirs. without care, you will rebuild the idea of an aristocracy. however, estate taxes and less subsidy to the wealthy retirees can avoid this. right now the older wealthy want the ability to accumulate that wealth and pass it onto their heirs, while at the same time accessing subsidized medical care (medicare). there is a problem with this approach to transfer of wealth. the higher obamacare taxes on the wealth helped to address this problem.

        so steven, you can allow a temporary passing of benefits to the elderly for health care. but you need to balance this by removing the greedy expectation that same group can control who their wealth passes back to.

          1. baffling

            most boomers will not be collecting medicare for decades. how long do you think many of these folks will live past retirement? this is what i mean by temporary-for each person. i am all for providing the necessary medical care they need. but we do need to address the cost for that care. rather than protect somebody’s inheritance. a medicare surtax on the higher incomes helps to address this issue.

  4. joseph

    Steven Kopits: “The mandate should remain, for the simple reason that the sick and injured can compel their treatment in the emergency room or otherwise.”

    Yet this Republican bill creates exactly the opposite financial incentive — to avoid buying insurance as long as possible. Under this new bill, there are no penalties for non-insurance. If you are young or healthy, simply never buy insurance, removing yourself from the risk pool, raising premiums for those remaining.

    Then if you do get sick, requiring very high health expenses, you are free to buy a plan with the most generous benefits and only pay a 30% premium surcharge for the next year. What a wonderful hedge bet for never buying insurance until you need it.

    This is adverse selection on steroids. At least before Obamacare there was always the risk that if you did not buy insurance before you got sick that insurance companies could refuse to sell it to you later. Under the Republican bill, insurance companies can’t refuse, even if you never before in your life bought insurance. Talk about free-riding.

    Republicans, and those who support them, are idiots.

    1. Steven Kopits

      Many Republicans dislike the mandate.

      Let me state again, if the individual can compel healthcare from the system, then the system by rights can compel insurance payments from the individual.

      My opinion is not bounded by the limits of any party.

      1. baffling

        “Many Republicans dislike the mandate.”

        probably because they are ignorant of its purpose, or blinded by ideology.

        rick stryker railed against the mandate, illustrating how his boy would simply pay the penalty rather than pay for insurance. he would only sign up if medical needs compelled him to. in our new bill, he will pay a 30% premium for one year, and then sign up for insurance if needed. this will be less than the penalty built into obamacare. so republicans railed against a mandate, claiming young people were better off paying the penalty and avoiding insurance, and introduced a weaker bill that encourages even more avoidance of health insurance by making it cheaper to be irresponsible.

        deep down, those that created this new bill understood the need for the mandate. but they could not accept that obama was right on the matter, so they presented their alternative solution, to avoid saying “i was wrong and you were right”, and end up with a worse situation than before. this is an example of crappy leadership from the republican party. party politics at its worst.

  5. joseph

    Steven Kopits: “Let me again emphasize that we are running a 3.5% budget deficit on a 75% public debt-to-GDP ratio. Our expectations of what the government can provide us are running about three years ahead of reality.”

    Right, Republicans are so concerned about deficits that they were compelled to put $1 trillion of tax cuts for the rich in their health bill.

    Do you even listen to yourself talk? Apparently not or you wouldn’t spout so much nonsense. Please spare us your hand wringing about the debt. Republicans have never cared about the debt. What offends them is spending for the poor.

    1. Steven Kopits

      I can’t claim to have been a fan of the Obama healthcare taxes. On the other hand, I have not called for tax cuts, either.

      I continue to believe that fiscal consolidation is second only to increasing the underlying, organic GDP growth rate as a national priority.

  6. joseph

    Trump Deputy Press Secretary Sarah Sanders said. “I think even if they were to score it, it is impossible to score a lot of the things that would go into this.”

    Well, okay then. There’s your answer, Menzie Chinn. It’s impossible to score! That explains everything.

    Republicans. The party of dumb. Is there any Republican here who’s willing to go on record as saying they are embarrassed by this abomination? Do you really approve of this or are you too cowardly to say otherwise? The silence is deafening.

  7. 2slugbaits

    The obvious problem with segregating people into high risk and low risk pools is that people move between those risk pools through time. A person is typically in a low risk pool until they are not. Eventually just about everyone moves into a high risk pool. And typically a person’s ability to pay is negatively correlated with their risk. And it is bad public policy to discourage people from identifying risk factors, which is exactly what would happen if you have segregated risk factors with coverage and access differential. You don’t want people to hide latent problems out of fear that they’re family coverage might be canceled if they reveal that they have a health issue. That only drives up costs for everyone.

    Anonymous’ comment is ridiculous. The young people that overpay today will underpay when they get old. That’s one part of the generational compact. Anonymous’ comment assumes young people will always be young. And apparently Anonymous never heard of consumption smoothing across a lifetime.

    The one silver lining that will come out of this latest GOP brain fart is that it will likely move us closer to single payer. The problem is that thousands of people will have to die unnecessarily until that day finally arrives. The GOP has well earned its reputation as the party for stupid people.

  8. Charles

    I’d like to see an economic analysis.

    We know that those who cannot get coverage will stop spending on anything the slightest but optional to try to cover higher medical expenses. Or their communities, if any exist that can still help the indigent, will. Or, of course, those who aren’t covered can get sicker and/or die.

    Those who can get coverage will shift all their spending into medical care. Increased

    And then there are the lucky ones with high incomes who get a huge tax break, and will spend their windfall on asset accumulation. Overall, this sounds like roughly a 2-5% drag on the economy, depending on how much of the additional spending on the medical system improves the economy. One would guess not much, since we’re already into the crowding out zone.

    Which means that the first effect of passage of ACA repeal will be a recession.

    Care to comment, Menzie? The CBO never had time to evaluate the macro effects of the last swing at ACA repeal, so I can see why you might not want to guess. But even a SWAG would be helpful.


  9. joseph

    Steven Kopits also has a brilliant plan to decrease the cost of fire insurance. When your house catches on fire, you are immediately moved to the high-risk pool which will bear the cost of replacing your house. Insurance rates in the normal pool will be unbelievable low. Unfortunately, in the high risk pool, your insurance premium will be $200,000 a year but that’s a small price to pay to get cheaper rates for everyone else. But never fear, Republicans will allocate $10 a year to help out those in the high risk pool — and then give themselves cookie by cutting taxes for the rich by $1 trillion.

    Republicans just love segregation.

    1. Steven Kopits

      I have a brilliant plan to end illegal immigration and use the proceeds to pay for pre-existing conditions. Yes, I do.

  10. Tom

    The Constitution says nothing about health care, but the Constitution does include the tenth amendment.

    1. The Social Democrat

      Tom: Does not the Declaration of Independence not guarantee us the right to LIFE, liberty, and the pursuit of happiness? How might we have life without healthcare?

    2. 2slugbaits

      The Preamble identifies the raison d’etre for the Constitution as a vehicle for promoting the general welfare. I think I’m pretty safe in assuming that most people would say healthcare falls under the umbrella of general welfare. And the Constitution does give Congress the power to tax, and SCOTUS ruled that the ACA’s enforcement tool is a tax. And the Constitution also restricts property rights to serving the public good (see the clause on granting patents and copyrights). And that power is key to controlling healthcare costs. Finally, the Constitution also has a ninth Amendment.

      As an historical note, the Anti-Federalists insisted on the tenth amendment because they (wrongly) feared that the federal government would restrict individual freedom. Back then state governments were seen (again, wrongly) as the defenders of individual freedoms. Today no person with a warm pulse seriously believes that state governments promote individual freedoms. State governments are hotbeds of rampant corruption, stunning ignorance and ethical confusion. All of this just goes to show that our Founding Fathers had feet of clay. They made lots of mistakes. Hamilton was right all along; the states should have been abolished. Too bad he let Madison talk him out of it with the promise to effectively abolish the states through the commerce clause after the Constitution was ratified.

  11. randomworker

    I needed Healthcare when I was in my 20s. My condition was quite expensive to treat. Fortunately my state had some pretty strong regs re: preX and though my work insurance tried to deny treatment, they failed. Had I not had insurance my prognosis would have been quite poor.

    I’ve used virtually no health care since, but I’ve had insurance the whole time.

    I would be in the high risk pool today, though I’ve been healthy for 35 years. ACA guaranteed issue makes it possible for me to buy insurance on the exchange even though I don’t qualify for a subsidy.

    If TrumpCare were to pass in its present form, I would get to maintain continuous coverage, and get a fat tax credit of $7,000 even though I have done well through the years.

    Some poor 23 year old kid (like me back then) might die for lack of appropriate treatment.

    That sucks. That’s one more reason why I vote for Democrats.

    1. randomworker

      Edits: 23 is not a “kid” haha. But you get the idea.

      The $7,000 tackle credit thing as I understand it is for a couple age 50+. That’s from the old bill.

    2. Beeker25

      The law passed by the House the credit range from $2,000- $4,000 based on age.
      The maximum credit you will get under the AHCA is $3,500 for those 50 and over. It does not include variation in locality rates (rural vs. urban).

  12. Beeker25

    I also left out the another thing: it gets phased out at $75,000 for single (150,000 for a couple).

  13. Beeker25

    What is forgotten is that Senate rules requires the parliamentarian to receive the CBO’s report before they can proceed with AHCA. Judging from the last time around, it will become unpopular.

  14. joseph

    Oh, my. In response to press criticism that Republicans voted before getting a score on the AHCA,
    the national press secretary for Speaker Paul Ryan says: “While we’re setting the record straight: AHCA was posted online a month ago, went through 4 committees, & has been scored by CBO — twice.”

    Much like his Dear Leader Trump, Paul Ryan has taken to outright lying to the public. The last CBO score was done on a previous version of the AHCA back in March. That bill was pulled for lack of Republican support. It was then rewritten and amended in order to make it even worse in order to appeal to the radical right wing Freedom Caucus. The bill Republicans voted on was not scored.

    Wait any minute for Megapixel Stryker to jump in with his claims of FakeNews and his “alternate facts.” Stryker is very loyal. If someone in the Republican administration lies, he is at the ready to defend them, no matter how preposterous or how ridiculous it makes him appear. Now that is true devotion.

  15. baffling

    no need for a new CBO analysis. the death pools promoted by the conservative health care bill will control costs tremendously. this certainly solves the problem of the death panel. no need to make an individual decision, when we can create a blanket piece of legislation and place them all in the death pool.

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