The Republican Healthcare Plan Is Even Crueler Than You Think

Last week, when House Republican leadership introduced the American Health Care Act (ACHA), their watering down of the Obama-era Affordable Care Act, it received an enormous amount of criticism. But even as the GOP began the process of pushing it through the congressional sausage machine, no one was really sure what effect the AHCA would have on the country. That changed on Monday afternoon, when the Congressional Budget Office (CBO), a generally respected nonpartisan government agency, released its "score" of the bill, and the results weren't good for Republicans: Though the AHCA would reduce the deficit by $337 billion in the next ten years, it would also cause 24 million fewer people to have insurance over that time.

In the wake of the report, the Trump administration, which supports the AHCA, dismissed the CBO as incompetent, but House Speaker Paul Ryan seemed to accept the agency's findings, at least the parts of the report that said the deficit would fall and average premiums for plans on the individual market would fall by 2026 after rising before 2020. Democrats, meanwhile, continued to focus on the slashing of subsidies and damage to Medicaid that would result in 14 million people losing insurance next year and millions more after that. "If this legislation is passed and millions of people are thrown off health insurance… thousands of Americans will die," Senator Bernie Sanders told reporters in DC.

The AHCA is enormously complicated—it would remove the mandate for everyone to buy health insurance, strip away a lot of government funding that allowed people to buy insurance, and roll back the Affordable Care Act's Medicaid expansion. But would it also really reduce premiums as the CBO says? And how bad would it really be for older and poorer people? To sort out the answers to these questions, I called up Matthew Fielder, a fellow at the Brookings Institution's Center for Health Policy who previously served as the chief economist on Barack Obama's Council of Economic Advisers.

VICE: The headline here is obviously 24 million fewer people not having health insurance by 2026. Is that surprising at all?
Matthew Fielder: I would not say overwhelmingly surprising. Along with Lauren Adler here at Brookings, I wrote that we were expecting something upward of 15 million. I think this is broadly in line with what we expected, possibly at the high end of my personal range. It's what one should expect with what this legislation is doing in terms of how it's changing Medicaid and how it's changing the mandate and the individual market.

My layman's reading of this is that the government saves money because it's helping fewer people get insurance. Is that an oversimplification?
I think that's basically right. The savings in this legislation are coming because the federal government is going to spend less money helping particularly low-income and moderate-income people afford health insurance. And because health insurance is expensive, you save a lot of money that way. But the consequences for people can be pretty serious.

Could you talk me through the different groups of people who will lose insurance under this bill?  
One of the largest sources of losses of coverage here stems from states that have expanded their Medicaid programs to additional low- and moderate-income people rolling back those expansions, CBO expects, because the federal government will no longer pick up as much of the cost as it does under current law. So those people are likely to be left completely out of affordable options.

Then there's a second group of people who are facing higher premiums. That's particularly going to be lower-income people, who will receive smaller subsidies to purchase coverage, and older people, who will face substantially higher premiums and therefore elect not to purchase coverage.

Paul Ryan and other Republicans talk a lot about "freedom" when it comes to this bill, and there are people who will just be able to decide they don't want insurance, right?
Some of the people who are losing coverage because of the individual mandate are losing coverage because it causes premiums to rise, but there are some people who would elect not to purchase coverage—even if premiums stayed the same—if the mandate went away. The one thing to keep in mind about those people is that it's not only the people who decide to opt out of coverage who are affected by their decision. As CBO says very clearly, the people opting out of coverage because the individual mandate is repealed will tend to be relatively healthy, so that means premiums are going to rise for everyone else. The other thing to keep in mind is that when those people opt out of coverage, it means that when they get sick and need emergency care or whatever else, somebody else is going to be on the hook for that care. So it's not that all the costs go away; it's that the costs get shifted to some degree.

These folks are going to be much more exposed to higher out-of-pocket costs if they get really sick, and this is an area where we have some literature from behavioral economics indicating that the catastrophic risks are something that people don't think terribly well about. It's entirely possible that even the people who are opting out are going to end up worse off.

You're talking about people who will decide, I'm young and healthy, I don't need insurance, then they get hit by a car and someone has to pick up the cost of their medical bills.
More than that, my credit score is now ruined, and I'm scrimping on other needs in order to meet those medical bills; whereas if I had been covered, I would be protected from that catastrophic event.

The CBO prediction covers the next ten years, and there's a whole timeline of when different effects will kick in—for instance 14 million more people will be without insurance next year. Could you explain how the effects progress over the decade?
The biggest near-term impact is from repeal of the individual mandate, which CBO expects will reduce coverage across Medicaid, the individual market, and employer-based coverage starting in 2017 but starting in a big way in 2018. Then what happens gradually after that is that as federal support for Medicaid expansion goes away, CBO expects some states that would have expanded the program to decline to do so, and then some states that have already expanded the programs ratchet back their expansions. That leads to steadily growing coverage losses over the ten-year window.

This surprised me, maybe because I didn't understand it: The CBO says that average premiums for people on the exchanges would go up before 2020, then down after that? How does that work?
The effects on premiums are one of the more confusing parts of the CBO score. Yes, the average premium would go up before 2020 and then would fall after that—but the important thing to keep in mind is that the average premium is not necessarily a good measure of what's happening to any particular person. A lot of what's happening with that decline in the average premium after 2020 is that CBO thinks many more young people will come into the market, and many older people will leave the market.

The older people are leaving the market because they can't afford insurance anymore?
Right. Because the subsidies under this structure will be less generous to older people and the limits on how different insurers are allowed to set their prices for older and younger people will be less constraining. There will be very large premium increases for older people, particularly after taking into account [less generous] subsidies, so you have a change in the types of people in the market. A very rough calculation that I did is that once you account for how the actuarial value—which is to say the generosity of a plan—is changing, premiums are actually rising for pretty much everyone age 40 and up, and only falling for people 40 below.

There's going to be a lot of focus on the number of people who will be covered, but also plans will tend to get less generous as a result of this bill too, right?
There are two main reasons for that. One is that for people below 250 percent of the poverty level right now, there are what are called "cost-sharing reductions," subsidies from the federal government that cover a portion of people's cost sharing. For lower-income people, those are going to go away, and as a result, their costs are going to increase. The other thing that CBO thinks is going to happen is that because of changes to how individual market plans would be regulated, insurers would decide to only offer less generous plans or charge higher premiums for generous plans. The combination of those two things is that out-of-pocket costs would rise.

So people would be paying more overall and getting less care?
I think that's right. Particularly at the lower end of the income spectrum.

It sounds like this bill is going to be an incredibly hard sell politically. How do you convince the public that this is a good idea?
I'm an economist, not a political strategist, but speaking as an economist, this is a bill that is going to lead to significantly greater hardship—particularly for low- and moderate-income people—substantially greater insecurity and substantially increased fiscal burdens on state governments. From a policy perspective, it would be a step in the wrong direction.

A lot of critics of this bill from the left are focused on the idea that as a result of these coverage losses, people will die. The CBO doesn't talk about the number of deaths that will result, but is that something that anyone could calculate?
I think we do have evidence that having health insurance coverage reduces the risk of death. One could do certain back-of-the-envelope calculations on the basis of those estimates. I think you want to be careful in making sure you're matching the estimates you're using to the type of population that's affected here. But I think on the basis of the evidence here, it would be reasonable to assume that mortality would be higher.

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