CBO to Lower Estimate of Uninsured Caused by Repeal of Obamacare Mandate

The Congressional Budget Office has found that the repeal of Obamacare’s individual mandate, which requires people to have health insurance or pay a fine, will result in fewer people becoming uninsured than it had projected.

In presentation slides made public Wednesday by CBO and the Joint Committee on Taxation, the nonpartisan agencies laid out the steps they had taken to arrive at earlier projections that 13 million more people would become uninsured in a decade if the individual mandate penalties were repealed. The groups also had estimated that gutting the fines would result in the government spending $338 billion less.

Republicans challenged the estimates, arguing that the effectiveness of the individual mandate had been overstated. Senators said they did not believe people would voluntarily drop out of programs in which they received government subsidies that largely covered their insurance costs. Democrats often cited the projections as they attacked bills to repeal Obamacare in floor speeches and press conferences.

Amid the backlash from Republicans, CBO and JTC said they would reevaluate their findings. Though they did not say in the latest report how much their projections would change or when they would release final figures, they concluded that estimates would be lower than they reported.

The agencies wrote that they had “undertaken considerable work to revise and update their methods” on how the repeal of the individual mandate penalties would affect the number of people without health insurance, the groups wrote in a slide at the conclusion of the presentation.

“The preliminary results of analysis using revised methods indicates that the estimated effects on health insurance coverage will be smaller than the numbers reported in this presentation,” they concluded.

The Obamacare fine will go to zero beginning in 2019, a provision that was included in the Republican-passed tax bill. Insurers have warned that without something to replace the mandate, more companies would leave the Obamacare exchanges, where people can buy tax-subsidized coverage, or they would raise premiums. The intent of the provision was to bring in customers who otherwise would choose to go uninsured, many of whom are healthier and rarely use medical coverage.

The CBO has said that it arrived at the 13 million estimate partly because it predicted that healthier people who didn’t think they would need coverage would no longer purchase it, causing premiums to rise overall to the point of being cost-prohibitive to customers who do not qualify for subsidies. Others would become uninsured because insurers would flee the exchanges and not offer coverage in some counties.

The groups said in previous estimates that it consulted “a range of outside experts” but didn’t name them.

If uninsured projections become lower in the next report, then projections in government savings also would be lower. The savings, the groups have said, would result from the government kicking in less money for subsidies but also less money for Medicaid. In previous estimates, JTC and CBO said 5 million of the 13 million people who would become uninsured would come from the Medicaid population.

Republicans have taken issue with that projection as well. Obamacare was written to require all states to expand Medicaid to people who make less than $16,000 a year, regardless of their medical or employment status. The Supreme Court made the provision optional, and as a result, 19 states have not expanded the program.

Republicans have argued that no-cost health insurance is what makes Medicaid coverage attractive to beneficiaries and that the penalty would not cause them to drop out of the program. People who qualify for Medicaid in states that did not expand it are exempt from paying the penalty.

The presentation made public by CBO and JTC lays out why the agency assumed the 5 million drop would come from Medicaid. It notes that it believed the mandate offered an impetus for some to sign up, but also that it presumed some people who think they have to buy health insurance because of the mandate head to the exchanges and then realize they qualify for no-cost Medicaid coverage instead.

The American Academy of Actuaries has said that it does not believe the mandate worked as well as intended because the penalty for some people costs less than health insurance and because there are many exemptions. Still, the group concluded that the mandate “increases enrollment above what it would otherwise be.” A Standard & Poor’s estimate concluded that 5 million or fewer people total would become uninsured as a result of the mandate repeal.

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