On Monday, the Congressional Budget Office released its analysis of the Republican-backed American Health Care Act (AHCA). The nonpartisan agency found that the AHCA would reduce the federal deficit by $337 billion between 2017 and 2026. That shrinking deficit can be attributed to:
- Reducing Medicaid funding for 70 million Americans
- Reducing government subsidies of lower-income health insurance premiums
- Eliminating a hospital insurance payroll tax rate increase for high-income taxpayers
- Eliminating a net investment income surtax
- Eliminating annual fees on health insurers
The CBO also speculated how these cuts will impact the insured — estimating that 14 million more people will be uninsured by 2018 compared to the current system. By 2026, that number could jump to 24 million.
The CBO analysis reveals that the American Health Care Act is little more than fake health care. It saves money for businesses and high-income Americans. But it does so by reducing health care.
The AHCA is a budget bill, not a health care bill
The CBO’s findings align with the purpose of the American Health Care Act. The AHCA is a budget bill. It is designed to reduce federal expenditures on health care.
As a budget bill, the AHCA can be passed by a simple majority in the Republican-controlled Congress. If it were a healthcare public policy bill — seeking to create competitive bidding among drug companies or reform medical insurance to be more like life, car and home insurance — then it would require a 60 percent majority vote for passage.
By qualifying as a budget bill, the AHCA can be passed by majority vote even if it dramatically reduces medical care to 70 million lower-income Americans served by Medicaid. It can pass on a simple majority even if it creates 24 million uninsured Americans.
AHCA economic impacts on you
Will the AHCA put money in your pocket? Not unless you among the 1 percent.
The 1 percent, those making over $200,000 annually, will gain approximately $190,000 from the AHCA. If you are in the 99 percent of earners, the AHCA will either be of zero benefit to you or it will cost you money, according to the CBO analysis.
If you and your child on are on Medicaid, for example, the AHCA will probably cost you money. It may even cost you more while offering lower-quality health care.
And many analysts remain uncertain about how badly the proposed plan could hurt the 70 million Americans on Medicaid. The reason is simple: The AHCA places the funding and benefit size of Medicaid on individual states. Doing so makes where you live, rather than your health, the determinate of the care you receive.
AHAC impacts on economic growth
Another key economic question is whether the AHAC is a zero-sum game or if it will actually be a spark for economic growth. Two major reasons indicate the former.
First, the AHAC accounts for dramatic growth in the uninsured. We had millions of uninsured before Obamacare. They received medical care through free services provided by hospital emergency centers. The cost of the free service was recovered by increasing premiums on the insured. What are the odds that the AHAC will not recreate this past situation?
Additionally, the AHCA will dramatically shrink the medical insurance pool. Obamacare created large financial incentives for having medical insurance by imposing a tax on those who did not sign up for insurance. The goal was to create a larger pool of healthy individuals that would drive down insurance premiums for all. (This same principal applies to how we buy car insurance.) The AHAC has such a weaker financial incentive for the healthy to buy health insurance that the CBO estimates the purposefully uninsured will make up the majority of those uninsured in 2018. They will save money, for now, at the expense of higher insurance premiums for all.
But the reason we have a proposed AHCA is because Obamacare failed to make medical insurance affordable. What Obamacare did create was increased government funding of health care. Despite Obamacare, insurance premiums skyrocketed, insurance companies continued to dispute actual costs incurred, and deductibles grew to levels where our medical coverage only applies to catastrophic events.
During the last election, our politicians said they would repeal Obamacare and replace it with affordable health care.
The AHCA does not fulfill that promise. It is a budget bill that reduces the deficit without reducing healthcare costs. It will put money in the pockets of the 1 percent. And it will not do so for the rest of us. We’ll continue to be saddled with higher premiums, higher deductibles and the frustrations of insurance claim denials.
The AHCA offers no innovations to make health care affordable. The AHCA has no innovations that would promote individual health. And that is devastating to economic growth.
For the first time in American history, average annual medical costs are $10,000 per person. Our country annually spends over $3.2 trillion on health care. That is 20 percent of our annual gross domestic product. While we spend more, our health care ranks last among developed countries.
Solving for these issues, not shifting costs among income classes to achieve a budget deficit, is the path to providing affordable health care and economic growth. Will we take it?
Image credit: Pexels