CBO: Bipartisan health-care bill would reduce deficit by $4B over 10 years

RootBeerMan

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Jan 3, 2016
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While I am not a proponent of Romneycare and its ill gotten offspring, Obamacare it has become abundantly clear that it is not going to be repealed in whole, and free market solutions will not be allowed to be implemented. Going with something that at least does less damage than Trumps inane plans would seem to be the logical conclusion. The Bipartisan bill by Alexander and crew at least reduces the deficit caused by O'care and stabilises the the markets. This is the best bill that's been put forward, so far and one that the people in control up there need to get behind, to avoid the implosion and resulting chaos that Trump is seemingly begging for.

http://thehill.com/policy/healthcare/357091-cbo-bipartisan-deal-would-reduce-deficit-by-4-billion

A bipartisan deal to shore up ObamaCare's insurance markets would reduce the deficit by nearly $4 billion by 2027, according to a score released Wednesday by Congress's nonpartisan scorekeeper.

The bill, sponsored by Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.), would fund key ObamaCare insurer subsidies and give states more flexibility to change their ObamaCare programs.

The Congressional Budget Office (CBO) said in its report Wednesday that the bill would not substantially impact the number of people with health insurance.


On the flip side, a CBO report released in August concluded that not funding the insurer payments, called cost-sharing reductions, would increase the federal deficit by $194 billion through 2026.
Not funding the payments, which reimburse insurers for giving discounted co-pays and deductibles to low-income patients, could cause premiums for the most popular ObamaCare plans to increase by 25 percent by 2020.

Many Republicans have struggled to support the bipartisan agreement, calling the payments "bailouts" for insurance companies.

But Alexander and Murray have said that the bill would stabilize the insurance markets and reduce the deficit.

The score could give the pair more ammo as they try to convince Republicans and the White House to support the bill.

The CBO says the bill would save the government money because financial help people get to pay for ObamaCare plans are designed to increase with premiums.

If the insurer subsidies aren't funded, insurers are likely to increase premiums, meaning the government would end up spending more on financial assistance for low-income people.

The Trump administration announced earlier this month that it would not pay the insurer subsidies anymore, arguing they were being made illegally.

Trump has expressed openness to the Alexander-Murray proposal but has pushed for more conservative changes that Democrats aren't likely to support.

While it appears that the bill currently has enough support to pass the Senate, Majority Leader Mitch McConnell (R-Ky.) has said he won't bring it to the floor for a vote without Trump's approval.

“This nonpartisan analysis shows that our bill provides savings and ensures that funding two years of cost-sharing payments will benefit taxpayers and low-income Americans, not insurance companies," Alexander and Murray, the chairman and ranking member of the Senate Health Committee, respectively, said in a joint statement.

“Last week, an unusually large group of cosponsors—12 Republican and 12 Democratic United States Senators—released this legislation, which was based on four hearings in the Senate’s health committee plus four meetings for senators not on the committee. All in all, 60 senators participated in the process, and the sooner Congress and the president act, the better."
 

citizenzen

macrumors 65816
Mar 22, 2010
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Sure it will save billions of dollars ... but how many tens of millions of people will it kick off insurance rolls? ;)
 

RootBeerMan

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The deficit is not something that should ever be sustained. You wouldn't do it in your private economy or in your business, so it is painfully obvious to anyone that it should not be done on the national or even state and local level. All chickens come home to roost sometime and deficits
Sure it will save billions of dollars ... but how many tens of millions of people will it kick off insurance rolls? ;)
Virtually none, according to the CBO. Most importantly, it will stabilise things and continue the subsidies for low income people.
The Congressional Budget Office (CBO) said in its report Wednesday that the bill would not substantially impact the number of people with health insurance.
 

blackfox

macrumors 65816
Feb 18, 2003
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So...if you're talking about what I think you are...Points of Consideration:
1. The ACA has two subsidies built-in. The Alexander Bill eliminates one, but activates the other. This, in effect, makes Health Insurance cheaper for the poor and the rich (sorry middle). In several states, it would make Health Insurance free.
2. This will not be Cheaper.
3. I think this is hilariously ironic.
 

Zwopple

macrumors regular
Dec 27, 2008
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So...if you're talking about what I think you are...Points of Consideration:
1. The ACA has two subsidies built-in. The Alexander Bill eliminates one, but activates the other. This, in effect, makes Health Insurance cheaper for the poor and the rich (sorry middle). In several states, it would make Health Insurance free.
2. This will not be Cheaper.
3. I think this is hilariously ironic.
Correct the ACA has two subsidies, one cost sharing one to insurers and one directly applied to the cost of premiums of low-income individuals.

The cost sharing ones are the ones Trump has struck down, but without them insurers are posed to spike premiums massively to cover their losses. Because the low-income individuals are still entitled to the same % subsidy regardless of what happens with the cost sharing the Federal govt ends up spending a boatload more than what the cost sharing subsidies already cost.

So the CBO is correct, removing the cost sharing subsidies w/o a repeal of the premium subsidies for low income individuals is going to end up costing the govt more in the long run.
 

Carnegie

macrumors 6502a
May 24, 2012
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To be clear about a couple of things:

(1) This deficit reduction estimate is relative to the CBO's latest baseline (from June 2017) incorporating some adjustments relating to health care coverage which were made in September 2017. That baseline, as it is supposed to, assumes that the CSR payments to insurers will be made.

So this estimate isn't suggesting that, if the bill in question is enacted, deficits will be reduced by around $4 billion (over 10 years, but mostly over the next couple of years) as compared to what is likely to be the case as things stand now. As things stand now - with the administration, supposedly, not intending to make the CSR payments - deficits are likely to be larger than in the baseline estimate (from June 2017). The CBO has already estimated that effect. So the deficit savings from enacting this bill - which, among other things, appropriates the funds needed to make the CSR payments - would likely be larger than $4 billion.

(2) Although this bill does some other things, meaningfully all of the projected deficit savings come from 2 aspects of it: (i) certain provisions related to the CSR payments and (ii) an expansion of the availability of copper plans (i.e. so-called catastrophic plans). As for the latter, the expanded availability of those kinds of plans is estimated to save the federal government a little in premium subsidies. Those subsidies still wouldn't be available to those with copper plans, but such plans would now be part of the same risk pool as other (possibly subsidized) plans are and thus would reduce the premiums for those plans a little.

As for the CSR payments provisions I referred to, they require insurers to, in effect, return some of the funding they will be getting. As it is, uncertainty surrounding those payments has caused premiums to rise in some cases. So the federal government will have to pay more in premium subsidies than it otherwise would have had to. If, as a result of this bill, insurers got the CSR payments (they are owed under existing law) in addition to the elevated premiums caused by uncertainty surrounding not getting those payments, they'd be coming out ahead - they'd be double dipping, so to speak. That's not the fault of the insurers, it's proper for them to raise premiums if they don't know whether they're going to be paid what they're owed for the cost-sharing reductions they're required to make. But this bill seeks to undo that effect by requiring states to put in place plans to see that the effective overcharges are rebated - to, in effect, undo the damage (in increased premium subsidy costs for the federal government) caused by the uncertainty relating to CSR payments.

As I suggested previously, the deficit savings in this CBO estimate don't come from effectively undoing the damage (to the deficit) that is likely to result from stopping the CSR payments. That effect of this bill - of making an explicit appropriation for those payments - would likely be much larger than the estimated effects are. And those payments are likely to, eventually, be made regardless - perhaps as a result of suits brought by insurers which would then allow the payments to be made through the Judgment Fund appropriation. That route would be more problematic though.
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So...if you're talking about what I think you are...Points of Consideration:
1. The ACA has two subsidies built-in. The Alexander Bill eliminates one, but activates the other. This, in effect, makes Health Insurance cheaper for the poor and the rich (sorry middle). In several states, it would make Health Insurance free.
2. This will not be Cheaper.
3. I think this is hilariously ironic.
This bill doesn't eliminate either subsidy. Among other things, it appropriates the funds needed to make the CSR payments. It also seeks to recover a comparably small amount of what we might refer to as double subsidization that would otherwise result from the uncertainty over whether the CSR payments would be made - premiums (and premium subsidies) being increased because the CSR payments might not be made combined with the CSR payments being made.

With this bill both subsides - the cost-sharing reductions and the premium credits - remain.
 

samcraig

macrumors P6
Jun 22, 2009
16,609
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USA
4B over 10 years is a drop in the bucket when you're talking about a trillion dollars.

Yes, that money could be used elsewhere... but it's not a huge incentive.
 

Carnegie

macrumors 6502a
May 24, 2012
599
1,241
4B over 10 years is a drop in the bucket when you're talking about a trillion dollars.

Yes, that money could be used elsewhere... but it's not a huge incentive.
Yeah, $4 billion over 10 years isn't a large amount as compared to the size of our deficits. (I would note that almost $3 billion of the estimated deficit reduction comes in the first 2 years.)

But the $4 billion of estimated deficit reduction isn't as compared to the status quo. It's as compared to the existing baseline, which isn't based on the status quo - i.e., it doesn't take into account the CSR payments being stopped.

The bigger part of the deficit reduction that might result from this bill would come from those payments being made and the removal of some uncertainty regarding those payments. Based on prior CBO estimates, that might result in additional deficit reduction (as compared to the status quo) of $20 billion over the first 2 years.
 
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