As House Republicans passed legislation toppling large portions of the ACA, groups representing hospitals, doctors, consumers and some insurers made no secret of their displeasure. Now, in the Senate, which hopes to complete its own version of a health overhaul by August, Republicans are unambiguous about their intention to draft an entirely new bill in a more deliberate manner with input from outside groups. Sen. Orrin Hatch of Utah, the Senate Finance chairman whose committee is responsible for drafting much of the legislation, has specifically asked for suggestions from industry associations.

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The Congressional Budget Office released its latest Obamacare-related estimatelast week, predicting that the House-passed bill to repeal and replace the embattled law would lead to 23 million more uninsured people by 2026. Although CBO itself acknowledges that this latest prediction is “especially uncertain,” one thing is true: CBO is wrong. The Galen Institute’s Doug Badger explains why in a new Galen Institute paper that can be found here. The agency’s errors are not only significant—one prediction of 2016 exchange-based enrollment missed by 140%–but the agency is also consistent: it regularly over-estimates the number of people who would get insurance through the Obamacare exchanges.

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CBO claims that the House repeal and replace bill could degrade the quality of insurance. This editorializing could use some scrutiny. Without government supervision of insurance minutiae and a mandate to buy coverage or pay a penalty, CBO asserts that “a few million” people will turn to insurance that falls short of the “widely accepted definition” of “a comprehensive major medical policy.” Under the House reform, Americans won’t have any problem insuring against a bad health event, even if CBO won’t admit it. The House bill is designed is create more alternatives that can accommodate the diverse needs and preferences of a nation of some 320 million people. CBO has become a fear factory because it prefers having government decide for everybody.

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The political world waited with rapt attention Wednesday for the oracles at the Congressional Budget Office to release their cost-and-coverage predictions for the revised House health reform bill. CBO confirmed that the American Health Care Act (AHCA) is a major fiscal dividend, cutting taxes by $992 billion, spending by $1.1 trillion, and the deficit by $119 billion over 10 years. However, CBO says 14 million fewer people on net would be insured in 2018 relative to the ObamaCare status quo, rising to 23 million in 2026. The problem with this educated guess about enrollment is that CBO’s models put too much confidence in the effectiveness of central planning. CBO’s projections about ObamaCare enrollment are consistently too high and discredited by reality year after year.
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President Trump has proposed a budget that increases government spending from $4 trillion today to $5.5 trillion in 2027. Only in the alternative reality of Washington can this be described as “budget cuts.” Looking at individual programs, it is a gross mischaracterization to state that spending on Medicaid programs will be cut. The new budget proposes to increase federal Medicaid spending from $378 billion a year today to $524 billion a year in 2027. It shows how far removed Washington is from everyday Americans for this increase of $146 billion to be called a cut. The fundamental problem is that special interests are addicted to the rising path of spending. Altering this path by increasing spending at a slower rate opens change-makers to extraordinary attacks.

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The entire Republican reform effort hinges on getting the tax credits right. A poorly-designed credit will lead millions to lose their health insurance and incentivize them to remain poor. It will harm efforts to reform the Medicaid program, because the insufficient tax credits won’t form a viable alternative. On the flip side: there is great opportunity in getting health reform right. The right kind of means-tested tax credit could make individual health insurance markets work for tens of millions of Americans. That success, in turn, could improve the opportunities for long-term entitlement reform, by giving Americans a robust option to buy insurance on their own.

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Republican legislators and policy experts are kicking around a novel way to increase health coverage: automatically enrolling millions of uninsured Americans into low-cost insurance plans.

The idea has shown up on the opinion pages of the Wall Street Journal and been discussed in private meetings of the Senate working group on health care.

“It’s a viable idea,” says Andy Slavitt, who ran Medicare under President Obama and is an ardent Affordable Care Act advocate. “What’s appealing about it to Republicans and to Democrats is you want people to have free choice but not be free riders.”

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The Senate GOP will need to produce a bill that can claim to have significantly changed Obamacare, achieve at least the same amount of cost savings as the House bill did through the budgetary reconciliation process, and that will be able to garner support in both the Senate and the House. The Senate will also need to fix the simple fact that the age-adjusted, fixed-dollar tax credits to subsidize insurance coverage in the AHCA are too simple and insensitive to the income-related health needs of lower income Americans.

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GOP senators say they’re discussing a possible short-term bill if their health care talks drag on. It might include money to help stabilize shaky insurance markets with subsidies to reduce out-of-pocket costs for low-earning people and letting states offer less expensive policies. It’s unclear Democrats would offer their needed cooperation, but Republicans are talking about it. “We’ve discussed quite a bit the possibility of a two-step process,” said Sen. Lamar Alexander (R-TN), chairman of the Senate Health, Education, Labor and Pensions Committee. “In 2018 and ’19, we’d basically be a rescue team to make sure people can buy insurance.”

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House Republicans may face the possibility of having to vote again on the American Health Care Act (AHCA), which passed the House earlier this month. House Speaker Paul Ryan hasn’t yet sent the bill to the Senate because there’s a chance that parts of it may need to be redone, depending on how the Congressional Budget Office (CBO) estimates its effects. House leaders want to make sure the bill conforms with Senate rules for reconciliation, a mechanism that allows Senate Republicans to pass the bill with a simple majority. The CBO is expected to release an updated estimate next week.