Friday, May 26, 2017
The CBO Issues Yet Another Fundamentally Flawed ObamaCare Financial Report
The House of representatives passed a repeal and reform of ObamaCare. The bill is before the Senate, which will make substantial changes to it. The House acted without a scoring by the Congressional Budget Office (CBO). The Contortionist Budget Office issued its contorted report Wednesday. The headlines screamed “23 million to lose healthcare under Republican Plan.” Democrats are ecstatic. The numbers did not make sense, but it took a few days to get the details. Three major groups of individuals are in ObamaCare. The first is over a million individuals forced into Obamacare when their pre-existing health plans were cancelled by ObamaCare. They would love to get back that which they had before, but that probably can’t happen. Remember President Obama’s repeated claims “If you like your doctor, you can keep your doctor,” and “If you like your insurance company, you can keep it?” That was at best a gross misrepresentation. The second group are the young adults forced into ObamCare by the individual mandate. They want out. Many would have been satisfied with a catastrophic health insurance plan, but not the high premium, high deductible, poor coverage plans forced upon them. The CBO estimates 2 million dropping down to a limited benefits plan, such as catastrophic health insurance. THE CBO labels them “uninsured.” The third group are those who want to and need to be on ObamaCare – those with preexisting conditions who could not previously obtain health insurance. Contrary to Democratic demagoguery, the Republicans have clearly provided that these beneficiaries will not be stripped of their medical coverage. The CBO predicted enrollment in the exchanges of 7 million in 2014 13 million in 2015 24 million in 2016 26 million in 2017 The actual enrollment figures are 6 million in 2014 11 million in 2015 12 million in 2016 10 million in 2017 The CBO overestimated the exchange enrollment by 160%. It appears that the missing 16 million have already lost coverage under current ObamaCare. Yet with total enrollment of 10 million, the CBO projects 14 million Americans will lose their coverage in 2018 and 23 million by 2026 compared to the status quo of ObamaCare. A critical part of ObamaCare is to increase enrollment in Medicaid, enacted in 1966 as part of President Johnson’s Great Society to provide medical care to the poor. A major restriction was that eligibility would exist for those living under the poverty level. The ObamaCare Medicaid expansion raised the limit to 138% of the poverty level and eliminated other restrictions. 31 states and the district of Columbia signed onto the Medicaid Extension. The first three years brought a 100% reimbursement from the federal government to attract the state buy in. It is being phased down to 95% this year and 90% by 2020. About 12 million have taken advantage of the Medicaid extension. The 10 million in Obamacare and the 12 million in the Medicaid Extension add up to 22 million. Simple question: How did the CDC arrive at a loss of 23 million? The CDC estimated in 2014 that the Medicaid Extension would cost the federal government $42 billion in 2015. The actual cost was $68 billion, a 62% error. Why believe the CBO numbers? Medicaid is not necessarily a Godsend to beneficiaries. Reimbursement rates to medical providers are often very low, resulting in large numbers of doctors rejecting Medicaid patients. The beneficiaries are thus in many states subject to poor access with limited reimbursements. The CBO projections were hopelessly flamed for three reasons. The first was a poor model. With all due respect to Professor Jonathon Gruber, models cannot predict human and market behavior in situations like this. The second reason is poor assumptions that were plugged into the model. The old adage is at work: Garbage in, garbage out.” The third reason is that the “non-partisan” CBO spent months massaging the figures with Congressional Democrats to give the CBO figures a favorable number. The CBO has not acted in a non-partisan manner throughout the ObamaCare debate. The 2010 CBO projections showed a favorable $940 billion effect on the federal budget. This magic number was reached by including all 10 years of tax increases, but only 6 years of spending on ObamaCare. Like a magician, the CBO numbers disappeared. The CBO revised its numbers in 2012 to project a $109 billion budget deficit over 2013-2022 - a one trillion dollar, negative adjustment! The Contortionist Budget Office in 2015 predicted that repealing ObamaCare would add $353 billion to the budget deficit. The CBO now projects the Republican House bill will reduce the budget deficit by $119 billion. The CBO is clueless! Obamacare was always from the beginning an income redistributionist scheme. It raised and imposed dozens of taxes totaling over $1 trillion. The House Bill reduces taxes by $662 billion, which will provide a boost to the economy. ObamaCare is in a death spiral. Individual insurance premiums have risen 105% on the exchanges since 2013, according to the Department of Health and Human Services. Premiums are skyrocketing, deductibles are high, and coverage limited while insurers are bailing out. Supporters of the statute blame the current instability in the insurance market on President Trump, who has made it clear that he wants to stop the subsidies to the insurance companies. Aetna, Humana, and United Healthcare announced prior to the 2016 election, an election in which Secretary Clinton, was projected to win in a landslide, that they were baling out of the exchanges. The insurance companies have lost over $5.8 billion on the existing plans despite federal subsidies. The underlying problem in any plan is the pre-existing condition patient. That was the problem facing the ObamaCare planners. That is the problem facing the Republicans today. It is not easy to solve.