The GOP Circus and the Future of the ACA and Health Care!

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I know that I was going to start the discussion this week reviewing the Australian health care system. But anybody watching the recent debates and listening to the questions and answers, repeated many times by the various media commentators, wonders how the GOP believes that they can defeat Hillary Clinton. Even with all the possible problems that Hillary has in her computers, the cloud, previous legal problems, etc., the GOP candidates seem to be shooting themselves in their proverbial feet. This is never to be a political blog, but this situation where we have now 17 candidates running for the Republican presidential candidate who will most likely face off with Hillary is almost laughable.

I know that I was going to start the discussion this week reviewing the Australian health care system. But anybody watching the recent debates and listening to the questions and answers, repeated many times by the various media commentators, wonders how the GOP believes that they can defeat Hillary Clinton. Even with all the possible problems that Hillary has in her computers, the cloud, previous legal problems, etc., the GOP candidates seem to be shooting themselves in their proverbial feet. This is never to be a political blog, but this situation where we have now 17 candidates running for the Republican presidential candidate who will most likely face off with Hillary is almost laughable.

I know that I was going to start the discussion this week reviewing the Australian health care system. But anybody watching the recent debates and listening to the questions and answers, repeated many times by the various media commentators, wonders how the GOP believes that they can defeat Hillary Clinton. Even with all the possible problems that Hillary has in her computers, the cloud, previous legal problems, etc., the GOP candidates seem to be shooting themselves in their proverbial feet. This is never to be a political blog, but this situation where we have now 17 candidates running for the Republican presidential candidate who will most likely face off with Hillary is almost laughable.

It show that there is no leadership in the Republican party. Chairman Reince Prebius is silent when we ask, “What the heck is happening in your party? The money is being diluted and the issues and what the candidates represent is often confusing.

Where this site comes into play with regard to our main purpose is when you listen to the whole 2 sets of debates all we hear from the mouths of the GOP leaders is that they all want to repeal the Affordable Care Act. But no one, even some one that I consider a friend, Dr. Ben Carson, comes up with an alternative to the ACA. No one outlines the alternative or how to transition to their possible alternatives of the ACA or more importantly, what they would do with all the people who are included in the “exchange program.” Remember, that number varies between 9 and 14 million people.

Consider what the cost would be to repeal the ACA. Remember our previous discussion as the Supreme Court was considering the possibility that the ACA could be unconstitutional. The Congressional Budget Office/CBO and the staff of the Joint Committee on Taxation estimate that, over the next decade, a repeal of the Affordable Care Act would probably increase budget deficits with or without considering the effects of macroeconomic feedback.

Over the past several years, a number of proposals have been advanced for repealing the Affordable Care Act (ACA), which became law in March 2010. The candidates in their debates just wanted to repeal the ACA. In their report, the CBO and the staff of the Joint Committee on Taxation (JCT) analyzed the main budgetary and economic consequences that would arise from repealing that law.

To conduct the analysis, CBO and JCT first considered the effects of the ACA’s repeal on health insurance coverage and on the federal budget over the next 10 years, holding gross domestic product (GDP) and other macroeconomic variables (such as interest rates) constant—assumptions that underlie most cost estimates used in the Congressional budget process. The agencies then examined the macroeconomic effects of repealing the ACA and estimated the consequences of the resulting feedback for the federal budget over the next decade (involving changes in tax revenue, for example, that stem from changes in GDP). Finally, CBO and JCT considered the budgetary and economic effects of repealing the ACA for the period beyond 2025.

As has been the practice for past analyses of the ACA, CBO and JCT estimated the budgetary implications of a repeal in two broad categories: the effects of repealing the act’s provisions concerning insurance coverage—including subsidies provided through the insurance exchanges, added costs for Medicaid, revenues from certain penalties and taxes, and related effects—and the effects of repealing other provisions of the act, which would mostly be related to Medicare spending and tax revenues. For the purposes of this analysis, CBO and JCT assumed that a repeal would take effect on January 1, 2016, and would not change federal law retroactively. As discussed below, all of the resulting estimates are subject to substantial uncertainty.

Now remember the major effects, the specifics of repealing the ACA.

CBO and JCT estimate that repealing the ACA would have several major effects, relative to the projections under current law:

  • Including the budgetary effects of macroeconomic feedback, repealing the ACA would increase federal budget deficits by $137 billion over the 2016–2025 period. That estimate takes into account the proposal’s impact on federal revenues and direct (or mandatory) spending, incorporating the net effects of two components:
    • Excluding the effects of macroeconomic feedback—as has been done for previous estimates related to the ACA (and most other CBO cost estimates)—CBO and JCT estimate that federal deficits would increase by $353 billion over the 2016–2025 period if the ACA was repealed.
    • Repeal of the ACA would raise economic output, mainly by boosting the supply of labor; the resulting increase in GDP is projected to average about 0.7 percent over the 2021–2025 period. Alone, those effects would reduce federal deficits by $216 billion over the 2016–2025 period, CBO and JCT estimate, mostly because of increased federal revenues.

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  • For many reasons, the budgetary and economic effects of repealing the ACA could differ substantially in either direction from the central estimates presented in this report. The uncertainty is sufficiently great that repealing the ACA could reduce deficits over the 2016–2025 period—or could increase deficits by a substantially larger margin than the agencies have estimated. However, CBO and JCT’s best estimate is that repealing the ACA would increase federal budget deficits by $137 billion over that 10-year period.
  • For many reasons, the budgetary and economic effects of repealing the ACA could differ substantially in either direction from the central estimates presented in this report. The uncertainty is sufficiently great that repealing the ACA could reduce deficits over the 2016–2025 period—or could increase deficits by a substantially larger margin than the agencies have estimated. However, CBO and JCT’s best estimate is that repealing the ACA would increase federal budget deficits by $137 billion over that 10-year period.
  • Repealing the ACA would cause federal budget deficits to increase by growing amounts after 2025, whether or not the budgetary effects of macroeconomic feedback are included. That would occur because the net savings attributable to a repeal of the law’s insurance coverage provisions would grow more slowly than would the estimated costs of repealing the ACA’s other provisions—in particular, those provisions that reduce updates to Medicare’s payments. The estimated effects on deficits of repealing the ACA are so large in the decade after 2025 as to make it unlikely that a repeal would reduce deficits during that period, even after considering the great uncertainties involved.

Repealing the ACA also would affect the number of people with health insurance and their sources of coverage. CBO and JCT estimate that the number of nonelderly people who are uninsured would increase by about 19 million in 2016; by 22 million or 23 million in 2017, 2018, and 2019; and by about 24 million in all subsequent years through 2025, compared with the number who are projected to be uninsured under the ACA. In most of those years, the number of people with employment-based coverage would increase by about 8 million, and the number with coverage purchased individually or obtained through Medicaid would decrease by between 30 million and 32 million.

So, all you GOP candidates, if you are going to suggest repealing the ACA tell us all how, and what the better system will be and how will you all transition the change. Remember, also, that we have heard the term “change” before and were shocked with the specifics.

Now some additional information that points to the future problems of the ACA.

The New York Times reports that the Obama administration is urging states to cut back or reject big premium increases for next year proposed by some insurers selling ACA plans on state and federal exchanges.

While insurers’ rate hike requests have been modest in many markets, some firms have requested hikes ranging from 10% to 40%.

Administration officials are urging state insurance

commissioners to reject (in the number of states where commissioners have such power) or at the very least push back on outsize premium increases to secure lower rates, arguing that these hikes are unnecessary given current claims data. Several large insurers have pushed back on that narrative, asserting they have had to pay out more in claims than they’ve received in premiums.

The nascent years of the Affordable Care Act have amounted to an experimental phase, where various players in the health system have been feeling out how many customers would rush into the new marketplaces, how much healthcare these people would consume, and whether or not the initial rates that these insurers set were adequate to cover those costs.

In some cases, insurers have found that their Year One and Year Two coverage cost estimates were not sufficient in relation to the number of healthcare services consumed by newly-insured patients. And those insurers have, in some cases, requested big rate hikes in order to make up for the miscalculation.

But the administration argues that the overall trend of the market is a healthier-than-expected enrollee pool—and that this is a trend that may very well continue, since the health law’s individual coverage mandate penalty will strengthen significantly next year. That, the White House argues, should nudge some healthier enrollees who have avoided obtaining insurance thus far towards the marketplaces and help insurers recoup some of their costs.

Part of the problem here is that insurers have had to use age as a proxy metric for enrollees’ health when estimating costs. While this method may, for the most part, be accurate, it doesn’t always reveal the full extent of a person’s healthcare needs. And it’s possible that sicker patients more in need of care were among the first to sign up in the ACA’s first years, thus inflating the costs of the risk pool.

Regardless, this is sure to be a contentious battle between payers and the administration—one that plays out in the overtly political context of the ongoing 2016 presidential campaign cycle. As we have already started to see in the recent debates.

Next on to a discussion of the Australian health care system, unless something else erupts.

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