Over-the-top Sunday spin on health care

I wanted to write about health-care reform for Monday, but it seemed that much of what needed to be said about the inherent problems in the Republican’s plan to repeal and replace had been said. Basically, their plan a) would cover many fewer people than the Affordable Care Act, and b) would lead to a big tax cut for the wealthiest households, insurers and drug companies.

Then I read this summary of what three administration officials and House Speaker Paul D. Ryan, R-Wisconsin, said, or more accurately “spun,” on the Sunday morning talk shows, and I was compelled to correct the record.

First, here’s Health and Human Services Secretary Tom Price, claiming that the new plan “means more people covered than are covered right now at an average cost that is less.” He added that “nobody will be worse off financially.”

He is likely to be contradicted. The expectation is that later Monday, the Congressional Budget Office will release an evaluation of the Republican plan that is expected to show, for reasons I explain below, that compared with the ACA, under the American Health Care Act, millions would lose coverage. To the extent that those who retain coverage replace lost Medicaid benefits and tax subsidies with out-of-pocket spending to pay for plans with much higher deductibles than they currently face, they surely would be “worse off financially.”

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Meanwhile, another Cabinet official, Office of Management and Budget Director Mick Mulvaney was busy preparing the public not to believe the forthcoming CBO score. After correctly pointing out that an early CBO score of the ACA – made well before it was in effect – overestimated coverage, he told ABC News’s George Stephanopoulos: “I love the folks at the CBO. . . . But sometimes we ask them to do things they’re not capable of doing, and estimating the impact of a bill of this size probably isn’t the best use of their time.”

Earlier in the week, White House press secretary Sean Spicer got into the same mode of playing the refs before the game starts: “If you’re looking at the CBO for accuracy, you’re looking in the wrong place.”

In a way, these are clever challenges, because it really is very hard to accurately forecast the outcome of policy measures, especially new ones. Back in 2010, the CBO guessed that incentives in the ACA would lead more employers to drop their workers’ coverage than actually did. Also, this was before the Supreme Court ruled that states did not have to accept the Medicaid expansion, and 19 states subsequently decided not to expand Medicaid coverage for low-income families.

But there’s a very good reason why Mulvaney and Spicer are wrong. CBO at first missed on the magnitude (they’ve since recalibrated their estimates to hew closer to the numbers coming in), but they were right on the directional sign of Obamacare: They recognized that the structure of the new law would put a significant dent in the number of the uninsured. In fact, recent measures show the lowest rates of those without coverage on record.

The reason we expect CBO’s score of the Republican plan to show reduced coverage is also structural. By losing the individual mandate for coverage, phasing out the Medicaid expansion and cutting the tax subsidies that offset premium costs, the Republican plan is structured to reduce coverage relative to the ACA. These points are well-covered in a March 9 Brookings analysis that predicts the CBO will find coverage to fall by at least 15 million.

That estimate, by the way, is based largely on getting rid of the individual mandate, a linchpin of universal coverage programs across the globe. But the Republican plan would phase out the Medicaid expansion and then turn the program into a type of block grant. Unfortunately, these facts got the “alternative treatment” from Trump economic adviser Gary Cohn, who told Fox News Channel’s Chris Wallace that “if you’re on Medicaid, you’re going to stay on Medicaid.”

Wallace: “But not the expanded Medicaid.”

Cohn: “If you’re on Medicaid, you’re going to stay. The expansion is not going to change. There is a roll-off period, there is a period of transition, and we’re very confident that the period of transition is going to work.”

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If this benighted plan ever sees the light of day, the Medicaid expansion is most definitely going to change, as in “functionally end.” Health-care financing expert Edwin Park pointed out that under the plan, “states that wanted to continue enrolling low-income adults in expanded Medicaid coverage after 2019 would have to pay 2.8 to 5 times their current-law cost for each new enrollee.”

Cohn has learned how to toss a D.C. word salad, so I’m not sure what he means by a “roll-off period.” In fact, the higher costs Park cited would apply to new Medicaid enrollees as well as to current expansion beneficiaries “who leave Medicaid for a month or more and then seek to return when they fall on hard times. Because most adult Medicaid enrollees use the program for relatively short spells, the higher cost would apply to the large majority of a state’s expansion program within just two or three years.” The House plan also limits the growth of per-beneficiary federal funding, “shifting additional costs onto states.”

I was ready to give Ryan points for at least admitting that the CBO score would probably show coverage declines, until I saw where he was going with it. When CBS’s John Dickerson asked him how many would lose coverage, he stopped making sense:

“I can’t answer that question. It’s up to people. Here’s the premise of your question. Are you going to stop mandating people buy health insurance? People are going to do what they want to do with their lives because we believe in individual freedom in this country,” he said. He later added: “It’s not our job to make people do something that they don’t want to do. It is our job to have a system where people can get universal access to affordable coverage if they choose to do so or not.”

Either Ryan fundamentally doesn’t understand insurance or is desperately playing the freedom card because it’s his only play. Forget for a moment that every single day government thankfully fulfills its job of not letting people do anything they want, such as drive at reckless speeds or take things that don’t belong to them. Insurance works because one group of people subsidizes another, as in the healthy subsidize the sick. If, in the interest of “freedom,” you ignore that reality and let people choose to have coverage whenever they want it, you’ll create two very large problems. First, the only people who will want it will be those who need it the most, and premiums will thus be prohibitively expensive. Second, when those free and healthy people have an accident, they’re going to go to the hospital, and because they have no coverage, they’ll get “uncompensated care,” which the rest of us pay for through higher premiums.

The ACA solves that “adverse selection” problem through risk pools. And if you want your risk pool to be balanced, you need a mandate. And because some people won’t be able to afford the mandate, you’ll need some type of subsidy.

Believe me, I’m no more shocked by the Sunday morning spin than you are. Nor am I suggesting the ACA is perfect. But, in the interest of tax cuts for people who are already rich, these guys are trying to sell America a vastly inferior health-care reform that will leave millions of people without coverage and thus sicker. They must be called out.

– Bernstein, a former chief economist to Vice President Biden, is a senior fellow at the Center on Budget and Policy Priorities and author of the new book ‘The Reconnection Agenda: Reuniting Growth and Prosperity.

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