osewalrus (osewalrus) wrote,

The more important headline in the CBO Report on Repeal and No Replace

The headlines were full of reporting on the Congressional Budget Office (CBO) report on the impact of repeal of the ACA (aka Obamacare). You can find the Report here: https://www.cbo.gov/publication/52371

As usual, everyone obsesses over the wrong headline from an advocacy perspective. Sure, 18 million people losing insurance is pretty awful -- especially if you are one of the 18 million. But the more significant headline is that everyone else with insurance is likely to experience a 25% increase in premiums.

Everyone. All those people who don't think it impacts them. It totally impacts them.

Why? Because of the way insurance works. The CBO used the 2015 repeal bill as the baseline for analysis. That bill eliminates a bunch of things like the individual mandate and the subsidies and the Medicaid expansion but keeps things like the ban on denying coverage based on pre-existing conditions. So costs for insurance providers will go up, and they will have many fewer customers over whome they can spread those costs. So the costs go up for everyone still in the pool.

Yes, this is a death spiral. This was true before 2010. Trying to get out of that death spiral was one of the reasons why the healthcare industry was interested in some kind of reform. The death spiral problem is now even worse, because the ACA did a lot to change the fundamentals of the industry and reallocate various costs. Eliminate a bunch of changes while keeping other things in place dramatically accelerates the death spiral for everyone. Not just the uninsured. Not just the rural hospitals. Not just the drug companies. Everyone.

It is against these funding issues that the plans proposed by Republicans must be measured. It is uninteresting to most people whether a "health savings account" gives people they don't know real health insurance coverage so they can continue to afford care or not. It is of great interest to almost all people if they will experience a 25% hike in premiums next year.

Likewise, insurance companies themselves are not indifferent to these price increases, and do not have absolute freedom to charge as they please. The large ones are aware that a 25% across the board hike makes them a target of state insurance regulators and popular anger. That won't stop them, of course, because cash is cash. But they will pressure members of Congress to come up with better ways to address the problems.

It has not yet appeared to penetrate most Republicans that a solution that results in a 25% insurance premium hike for all their constituents in 2018 is not a politically viable solution -- even if you can pass it. They may hope to blame it on Democrats. Who knows, they may even succeed. But Republicans appear unaware of the scope of the gamble they are taking, or how difficult it may be to undo the damage once it happens. It would help considerably if advocates worked to educate them -- and the public at large -- that we are all in this together. 

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