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Replies to post #115286 on Politics and Money
06/26/17 9:51 PM
So, was the Congressional Budget Office really “way, way off … in every aspect” of how it predicted that Obamacare would work, as the White House claims? No, it wasn’t.
The CBO actually nailed the overall impact of the law on the uninsured pretty closely. It predicted a big drop in the percentage of people under age 65 who would lack insurance, and that turned out to be the case. CBO projected that in 2016 that nonelderly rate would fall to 11 percent, and the latest figure put the actual rate at 10.3 percent.
It’s true (as Trump administration officials have repeatedly pointed out) that CBO greatly overestimated the number who would get government-subsidized coverage through the new insurance exchanges. But at the same time, CBO underestimated the number who would get coverage through expanding Medicaid.
And whatever the failings of CBO’s predictions, they were closer to the mark than those of the Obama administration and some other prominent forecasters.
Let’s look at the details.
Back on March 20, 2010, when the law had taken its final form and was working its way to President Obama’s desk, the CBO issued its official estimate of the cost and effects of the Affordable Care Act. And after the Supreme Court struck down a key part of that law — ruling that states could not be forced to expand eligibility for Medicaid — CBO updated its estimates accordingly in July 2012.
In what follows, we will cite CBO’s 2012 projections unless otherwise indicated, since we can never know how accurate the 2010 projections would have been had the law been allowed to take effect as written.
Coverage
As it normally does, CBO attempted to forecast the law’s effects in each of the following 10 years. And here we compare what actually happened last year with what CBO predicted for 2016.
CBO got the big picture right. It predicted that millions of people would gain coverage, and millions did.
It predicted that the number of nonelderly (under age 65) people lacking insurance would drop to 30 million in 2016. And that turned out to be pretty close. The actual number was 27.9 million during the first nine months of last year, according to the latest figures from the Centers for Disease Control and Prevention’s National Health Interview Survey. That’s a decline of 20.3 million since 2010, by CDC’s reckoning.
In percentage terms, CBO predicted 89 percent of the nonelderly would be covered by last year. CDC put the actual percentage at 89.7 percent.
Exchanges
Where CBO had trouble was predicting the number of newly insured who would get their coverage by purchasing private insurance through the new exchanges set up by the law. CBO predicted that in 2016 there would be 23 million getting policies through the exchanges. The actual number was 10.4 million during the first half of the year, according to the Centers for Medicare & Medicaid Services. That’s less than half the predicted total.
Medicaid
On the other hand, CBO was too low in its estimate of the number who would gain coverage through expansion of Medicaid, the state-federal program for low-income people and children. CBO estimated 10 million would be added to the Medicaid rolls by 2016, even with many states refusing to expand eligibility. But that was too low. As of the first quarter of last year, 14.4 million adults had enrolled in Medicaid as a result of the Affordable Care Act’s expansion of the program, according to an analysis by the nonpartisan Kaiser Commission on Medicaid and the Uninsured.
So to a large extent, CBO’s mistake was in estimating where the uninsured would get covered, not how many of them would gain coverage.
Other Estimates
In January 2016, the nonpartisan Commonwealth Fund published an analysis by New York University’s Sherry Glied of CBO’s forecast of the ACA’s effects. She called CBO’s predictions “reasonably accurate” compared with actual results in 2014.
The gap between CBO’s prediction and reality has widened now that 2016 figures are available for comparison. But Glied also found that CBO’s predictions were closer to 2014 reality than those of four other forecasters — the Obama administration’s own figures, and those of the RAND Corporation, the Urban Institute and the Lewin Group, a health industry consulting firm.
Glied concluded, “Given the likelihood of additional reforms to national health policy in future years, it is reassuring that, despite the many unforeseen factors surrounding the law’s rollout and participation in its reforms, the CBO’s forecast was reasonably accurate.”
And on March 13, CBO issued another, much-anticipated projection of the Obamacare repeal bill being considered by the Republican-controlled House. CBO estimated that under the GOP’s “American Health Care Act,” 14 million fewer people would have health insurance next year than under current law, and that number would rise to 24 million in 2026. “In 2026, an estimated 52 million people would be uninsured, compared with 28 million who would lack insurance that year under current law,” CBO said.
Earlier on the day the analysis was published, White House Press Secretary Sean Spicer — who had been denigrating CBO’s work for days — said, “The last time they did this, they were wildly off and the number keeps declining.” But as we’ve seen, CBO did better than the White House would have you believe.
06/26/17 10:59 PM
CBO and JCT estimate that enacting the Better Care Reconciliation Act of 2017 would reduce federal deficits by $321 billion over the coming decade and increase the number of people who are uninsured by 22 million in 2026 relative to current law.
...By 2026, an estimated 49 million people would be uninsured, compared with 28 million who would lack insurance that year under current law...
- The largest savings would come from reductions in outlays for Medicaid—spending on the program would decline in 2026 by 26 percent in comparison with what CBO projects under current law—and from changes to the Affordable Care Act’s (ACA’s) subsidies for nongroup health insurance (see Figure 1). Those savings would be partially offset by the effects of other changes to the ACA’s provisions dealing with insurance coverage: additional spending designed to reduce premiums and a reduction in revenues from repealing penalties on employers who do not offer insurance and on people who do not purchase insurance.
- The largest increases in deficits would come from repealing or modifying tax provisions in the ACA that are not directly related to health insurance coverage, including repealing a surtax on net investment income and repealing annual fees imposed on health insurers.
Under Current Law (Obamacare)
The subsidies to purchase coverage, combined with the effects of the individual mandate, which requires most individuals to obtain insurance or pay a penalty, are anticipated to cause sufficient demand for insurance by enough people, including people with low health care expenditures, for the market to be stable in most areas.
Under This Legislation
CBO and JCT anticipate that, under this legislation, nongroup insurance markets would continue to be stable in most parts of the country.
...In the agencies’ assessment, a small fraction of the population resides in areas in which—because of this legislation, at least for some of the years after 2019—no insurers would participate in the nongroup market or insurance would be offered only with very high premiums. Some sparsely populated areas might have no nongroup insurance offered because the reductions in subsidies would lead fewer people to decide to purchase insurance—and markets with few purchasers are less profitable for insurers. Insurance covering certain services would become more expensive—in some cases, extremely expensive—in some areas because the scope of the EHBs would be narrowed through waivers affecting close to half the population, CBO and JCT expect. In addition, the agencies anticipate that all insurance in the nongroup market would become very expensive for at least a short period of time for a small fraction of the population residing in areas in which states’ implementation of waivers with major changes caused market disruption.
Effects on Premiums and Out-of-Pocket Payments
The legislation would increase average premiums in the nongroup market prior to 2020 and lower average premiums thereafter, relative to projections under current law, CBO and JCT estimate. To arrive at those estimates, the agencies examined how the legislation would affect the premiums charged if people purchased a benchmark plan in the nongroup market.
...In 2018 and 2019, under current law and under the legislation, the benchmark plan has an actuarial value of 70 percent—that is, the insurance pays about 70 percent of the total cost of covered benefits, on average. In the marketplaces, such coverage is known as a silver plan.
In 2020, average premiums for benchmark plans for single individuals would be about 30 percent lower than under current law. A combination of factors would lead to that decrease—most important, the smaller share of benefits paid for by the benchmark plans and federal funds provided to directly reduce premiums.
That share of services covered by insurance would be smaller because the benchmark plan under this legislation would have an actuarial value of 58 percent beginning in 2020. That value is slightly below the actuarial value of 60 percent for “bronze” plans currently offered in the marketplaces. Because of the ACA’s limits on out-of-pocket spending and prohibitions on annual and lifetime limits on payments for services within the EHBs, all plans must pay for most of the cost of high-cost services. To design a plan with an actuarial value of 60 percent or less and pay for those high-cost services, insurers must set high deductibles—that is, the amounts that people pay out of pocket for most types of health care services before insurance makes any contribution. Under current law for a single policyholder in 2017, the average deductible (for medical and drug expenses combined) is about $6,000 for a bronze plan and $3,600 for a silver plan. CBO and JCT expect that the benchmark plans under this legislation would have high deductibles similar to those for the bronze plans offered under current law. Premiums for a plan with an actuarial value of 58 percent are lower than they are for a plan with an actuarial value of 70 percent (the value for the reference plan under current law) largely because the insurance pays for a smaller average share of health care costs.
...Under this legislation, starting in 2020, the premium for a silver plan would typically be a relatively high percentage of income for low-income people. The deductible for a plan with an actuarial value of 58 percent would be a significantly higher percentage of income—also making such a plan unattractive, but for a different reason. As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan, CBO and JCT estimate.
...Some people enrolled in nongroup insurance would experience substantial increases in what they would spend on health care even though benchmark premiums would decline, on average, in 2020 and later years. Because nongroup insurance would pay for a smaller average share of benefits under this legislation, most people purchasing it would have higher out-of-pocket spending on health care than under current law. Out-of-pocket spending would also be affected for the people—close to half the population, CBO and JCT expect—living in states modifying the EHBs using waivers. People who used services or benefits no longer included in the EHBs would experience substantial increases in supplemental premiums or out-of-pocket spending on health care, or would choose to forgo the services. Moreover, the ACA’s ban on annual and lifetime limits on covered benefits would no longer apply to health benefits not defined as essential in a state. As a result, for some benefits that might be removed from a state’s definition of EHBs but that might not be excluded from insurance coverage altogether, some enrollees could see large increases in out-of-pocket spending because annual or lifetime limits would be allowed.
