On Monday the Congressional Budget Office released its cost estimate of the Republican Senate Better Care Reconciliation Act.  CBO calculated that the proposed bill would reduce the deficit by $321 billion over the next decade. That is welcome news.

Less welcome, however, was CBO’s conclusion that the Senate bill would result in an additional 15 million uninsured in 2018 due to a lack of penalties. By 2026, CBO reports 22 million more Americans would be uninsured, primarily due to lower Medicaid coverage.

No matter that the number of Americans on the Obamacare exchanges is shrinking due to higher prices and fewer companies offering coverage.

Dave Hoppe, former chief of staff to House Speaker Paul Ryan, asked me in an email, “If there are few insurance companies offering insurance through the exchanges in 10 years, how are people without insurance losing anything?”

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Health insurance cannot really be insurance because human health is un-insurable: human beings are not machines or buildings whose function or condition can be ascertained objectively. Yet, an objective assessment of damages and costs is essential for any contractual arrangement to function in a sustainable manner.

Consider, for example, that medical care is based on the legal principle of “medical necessity.” Medical necessity is invoked when, presumably, there is an impairment in the patient’s health that could be remedied by a medical intervention. But medical necessity is a perniciously elastic concept that cannot possibly satisfy the precise contractual requirements of insurance.

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The new Senate bill  1) Reduces the number of people eligible for subsidies, reduces the values of the premium subsidies, and lowers the cap on total subsidy expenditure;  2) Eliminates the individual and employer mandates;  3) Restricts coverage for abortion;  3) Ends the cost-sharing reductions — but not before paying insurers back for the money they’ve already laid out;  4) Gives states a great deal more flexibility in the waiver program;  5) Gets rid of a lot of Obamacare taxes;  6) Provides market stabilization funds;  7) Winds down the Medicaid expansion funding, but not as fast as the House bill; and  8) Converts Medicaid to a per-capita allotment rather than an open-ended entitlement.

To estimate the impact of the AHCA, the CBO had to compare it to predictions of coverage under the current law, the ACA. If the prediction for the current law is incorrect the prediction of lost coverage will be too.Yet the CBO has consistently overestimated future ACA coverage gains. In 2012 it predicted an additional 28 million would gain health insurance by 2017. The actual figure is 20 million. It forecast 25 million would gain coverage on the ACA exchanges and 10 million would gain Medicaid coverage. Less than half as many actually enrolled on the exchanges and not all of them gained coverage – many were replacing non-exchange policies they lost after ACA passage. Conversely, about 14 million – 40 percent higher than predicted – newly enrolled in Medicaid. The CBO prediction that 5 million would lose employer coverage was also wrong – employer provided coverage was stable.

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The House-passed Obamacare repeal bill would leave 12.6 million more Americans uninsured over the next decade and reduce federal spending by $328 billion, according to an analysis released today by CMS’ Office of the Actuary.

The coverage estimate is well below the 23 million more uninsured that the CBO has projected under the American Health Care Act. The congressional scorekeeper additionally estimated that the American Health Care Act would reduce spending by only $119 billion over a decade.

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The CBO has refused to adjust its computations to the ever-more-apparent failings of the Affordable Care Act. When the CBO says that 23 million fewer people will have insurance coverage under the AHCA than under the ACA—a statistic that politics have converted into a mantra—that figure is predicated on fictional ACA participation. The CBO assumes 18 million people will be enrolled in ACA exchanges in 2018 and that enrollment will continue to grow until 2026. No one on any side of the political spectrum believes this to be true.

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If the Senate were simply to remove the House bill’s uniform tax credit and continue the hybrid model past 2019 through 2020 and beyond, the bill would most likely get a better coverage score from the CBO. The Senate would be able to direct more financial assistance to those who need it, whether because of old age, ill health, or low income. Indeed, the Senate could tweak the exact formulas for age and income adjustment to maximize the number of people with health insurance in the most cost-effective way.

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The Republican predicament is illustrated in the cultural response to a monologue by late-night host Jimmy Kimmel who, through tears, made an impassioned plea to President Donald Trump and the GOP not to decrease public funding for or access to health insurance.

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House conservatives rebelled over the original version of the American Health Care Act, which only partially deregulated insurance markets. The bill maintained the rule known as guaranteed issue, which requires insurers to cover all applicants regardless of medical history. It also relaxed community rating, which limits how much premiums can vary among beneficiaries.

The media and the left thus claim that conservatives want to allow insurers to charge sick people more, and some conservatives agree, which spooks the moderates. But the latest compromise between conservatives and centrists doesn’t repeal guaranteed issue or community rating. It keeps these regulations as the default baseline, and states could apply for a federal waiver if they want to pursue other regulatory relief.

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There’s no way around a simple truth: treating an expensive health condition costs (someone) lots of money.  There are four basic approaches that can be taken to this problem:  1) Leave sick people to face the costs of their own treatment, whether out of pocket or through high-cost insurance, no matter how ruinous those costs become;  2) Mandate that other, healthier people overpay for the value of their own health insurance, so that sick people can underpay for the value of theirs;  3) Spread the costs of paying expensive health bills throughout society, for example by having taxpayers pick up the tab; and  4) Require a targeted group to shoulder the costs.  [The AHCA opts for 3).]
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