Millions to Forgo Insurance Once the Government Stops Penalizing Them for It, Report Says | The Weekly Standard

Millions to Forgo Insurance Once the Government Stops Penalizing Them for It, Report Says | The Weekly Standard.

By Chris Deaton Chris Deaton The Weekly Standard ยท March 20, 2017
A budget estimate of the House GOP’s health bill has found that millions of Americans insured through Obamacare’s exchanges would opt out of purchasing coverage once the federal government stops penalizing them for doing so.

The report from the Congressional Budget Office also predicts that the legislation would price millions of presently covered individuals out of the market as a result of low-cost, low-risk individuals forgoing insurance. Such people help suppress the premiums of typically older and sicker individuals, and moderate overall costs.

This combination of effects from the American Health Care Act, the Republican party’s besieged gambit to begin repealing and replacing President Obama’s signature law, is partly responsible for what the CBO says would be a 14 million-person hike in the number of the uninsured by 2018, as compared to current law under the Affordable Care Act.

“Most of that increase would stem from repealing the penalties associated with the individual mandate. Some of those people would choose not to have insurance because they chose to be covered by insurance under current law only to avoid paying the penalties, and some people would forgo insurance in response to higher premiums,” the nonpartisan agency’s report reads.

The longer-term statistic the GOP will have to defend is a coverage estimate of 24 million fewer individuals insured by 2026. Most of it, 14 million, comprises a reduction in the number of people covered under Medicaid; the AHCA rolls back Obamacare’s Medicaid expansion. But by that same time, there would only be a net loss of 2 million Americans insured in the exchange and non-group markets, compared with current law. The GOP bill includes age-based tax credits in place of the ACA’s premium subsidies to incentivize purchases of coverage.

But one figure that ticks up over time and eats the second-largest share of the 24 million additional individuals estimated to be without insurance is the reduction in those receiving employer-sponsored coverage. The CBO explains:

“Roughly 2 million fewer people, on net, would enroll in employment-based coverage in 2020, and that number would grow to roughly 7 million in 2026. Part of that net reduction in employment-based coverage would occur because fewer employees would take up the offer of such coverage in the absence of the individual mandate penalties. In addition, CBO and [the Joint Committee on Taxation] expect that, over time, fewer employers would offer health insurance to their workers.”

The AHCA effectively repeals the penalty on “large” employers, or those with 50 or more full-time equivalent employees, that do not provide insurance to most of their workers.

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