A CBO Full of Surprises: Obamacare Will Insure 2 Million Fewer in 2014

Obamacare will insure 2 million fewer people in 2014 than previously reported.  That number is in a new report just released by the Congressional Budget Office (CBO).

That may come as a surprise to you.  But it isn’t the biggest surprise in the report for me.  I’ll explain why later. 

First, let’s review the new numbers.

Last May, the CBO estimated that seven million people would sign up for insurance through exchanges this year.  That number is not a surprise – it has been reported widely in the media.

It also estimated that nine million previously uninsured people would be enrolled in Medicaid or CHIP.  In other words, a total of 16 million people would obtain coverage this year through Obamacare.

But last week, CBO released updated estimates.  It now says that only 6 million will sign up through the exchanges this year, and only 8 million will enroll in Medicaid or CHIP. 

Because some of the people who would have signed up are already insured, that means that the number of uninsured people will grow by 1 million over the CBO’s previous estimate.

Is that really a surprise?

It has been evident for some time that getting 7 million people to sign up for insurance through the exchanges was an ambitious target.  And the early glitches sure didn’t help.  But enrollments have been going much more smoothly lately, and reaching 6 million would still be impressive.

Also, taking into account the new enrollments in Medicaid and CHIP, the overall number of uninsured would still be reduced this year by 13 million.  That would reduce the total number of uninsured people from 58 million in 2013 to 45 million – halfway to Obamacare’s 2016 full-implementation target of 31 million.

That is still a pretty good result, and about what could have been expected.

And there is a little more good news on the fiscal side.  Lower enrollment numbers mean a little less spending for ACA each year, and in a program this big, that comes to $18 billion saved over ten years.

That would be enough to fund the prevention fund again, but I guess we shouldn’t go there.

So where’s the surprise?

The first is, of course, could be in the perception.  Much as the headline from the CBO report last week that Obamacare would cause the loss of over 2 million jobs was pretty surprising, another headline that it has fallen 2 million people short of its 2014 insured targets could be just as shocking. 

Of course, last week’s headline didn’t mention that the jobs “lost“ come about largely from among people who feel too sick to work, and who hold onto a job solely because they need the health insurance that comes with it.   The next headline may also not mention that the newly insured people also will come from among those who perceive that they need health insurance the most.

The second is also in the perception.  If Obamacare falls short of its targets, and those targets are recast as promises, then this will be perceived as another Obamacare promise broken.  People always seem surprised when they hear about politicians breaking promises, and they often make them pay at the polls.

But what may be the biggest surprise of all in the new numbers? 

It is this: that Obamacare is working almost exactly as it was intended, and appears to be having almost exactly the result that was intended. 

We are actually getting from the Affordable Care Act almost exactly what the President and Congress said we’d be getting way back in 2010.  And whether you like the law or not, this does suggest that members of Congress were a whole lot more knowledgeable about what they were voting for back in 2010 than most people give them credit for.

In other words, this law was put together out in the open.  The provisions in it were put together in a thoughtful way.  And those who made promises about what it would do were, in fact, telling the truth.  

And while a few of us may be surprised by how it has affected us personally, as a whole we all do know where we stand with this program.

I wish that were the case with all public policy initiatives. 

Paul Gionfriddo via email: gionfriddopaul@gmail.com.  Twitter: @pgionfriddo.  Facebook: www.facebook.com/paul.gionfriddo.  LinkedIn:  www.linkedin.com/in/paulgionfriddo/

Failure to Expand Medicaid: Just Another Death Penalty?

For many, the fight over whether or not to expand Medicaid is just about the money.  But they overlook the fact that the lives of more than 36,000 people may hang in the balance. 

That’s the conclusion that can be drawn from a study published last summer in the New England Journal of Medicine.  The study was entitled Mortality and Access to Care Among Adults After State Medicaid Expansions.  In it, the authors calculated the numbers of lives saved as a result of an earlier Medicaid expansion in three states.

The three states were Arizona, New York, and Maine.  And while none of these expansion populations matched exactly the expansion population in the Affordable Care Act, they were similar enough to suggest that we might see the same results in the ACA Medicaid expansion population.

The authors concluded that Medicaid expansions could save 19.6 lives for every 100,000 people between the ages of 20 and 64. 

There are over 185 million Americans between the ages of 20 and 64.  That comes to 36,301 lives saved.

These lives are more important than the money. 

These people have families and friends who care about them.  And while some would like to think they should be able to make it on their own, the truth is that they need our help.

Most elected officials seem to get this.  I don’t see why it should even be newsworthy that six Republican governors have now said they support the expansion.   They understand reality.

For example, Governor Jan Brewer of Arizona favors the ACA expansion.  Expansion will save her state money, and it could also save an estimated 723 lives.  For a pro-life governor, what’s not to like about that?

Arizona was the last state to embrace the original Medicaid program.  Perhaps the people of Arizona learned from that experience something that the rest of us take for granted – Medicaid makes a big difference in the lives of people in the state as a whole.

In the four most populous states alone, the numbers of lives hanging in the balance is in the thousands. 

California and New York are already moving forward with the expansion.  That’s good news for an estimated 6700 people, 4421 in California and 2325 in New York.  One of those California lives saved could be my son’s.

But in Texas and Florida, two states at the epicenter of the anti-expansion universe, over 5000 lives still hang in the balance – 2925 in Texas and 2162 in Florida.  The decisions of those state legislatures will have a profound effect on the lives of many other fathers’ and mothers’ sons and daughters.

But expansion means lives saved in every state.  North Carolina can save 1126, Connecticut 422, and Utah 304. 

The table I’ve created with the calculations for all the states is here.

Every study has its limitations, and this one is no exception. 

However, the authors openly acknowledged the limitations of their study when they published it.  They noted that other analyses of the data led to similar results.  By one alternate analysis, they found that for every 176 new adults covered by Medicaid, one death was prevented.

That doesn’t seem like many at first.  However, the ACA Medicaid expansion, if fully implemented by every state, will cover an estimated 15.1 million new adults.  By that measure the expansion would save even more lives – a total of 85,568 nationwide.

What about the money?

In March of last year, the Congressional Budget Office calculated the cost of a full Medicaid and SCHIP expansion to be roughly $103 billion per year.  (More recent CBO Medicaid cost estimates are lower because CBO assumes not all states will expand.)  That comes to $2.8 million per life saved. 

The state share of that cost would be about $198,000.

I’m sure that some might argue that we can’t afford $2.8 million per life – unless of course, the life is their own or their child’s.

But more objective researchers with no political agenda to promote have actually taken the time to calculate the economic value of a life.  It comes to $7 million or more, making the paltry $198,000 one of the best investments a state could make.

So the questions become first, how much are our lives worth to our states?  And second, is the failure to expand Medicaid just another death penalty – one that targets the sick and innocent?

To reach Paul Gionfriddo via email: gionfriddopaul@gmail.com.  Twitter: @pgionfriddo.  Facebook: www.facebook.com/paul.gionfriddo.  LinkedIn:  www.linkedin.com/in/paulgionfriddo/

Uncloaking the Two Percent

Should the Affordable Care Act be repealed so that over a million people making more than $123,000 per year can avoid paying $3,000 in taxes beginning in 2016?  And should they be allowed to pass on the cost of their health care to everyone else?

This week, a local newspaper quoted a lifelong Florida Democrat as saying she might vote for Mitt Romney because she believed ACA offered “a costly giveaway to freeloaders.”

The irony is that the law actually does just the opposite – and Mitt Romney knows this better than most.  It requires nearly all health care “freeloaders” either to get insurance or pay a tax penalty.

Eighty percent of those affected will get insurance.  But the Congressional Budget Office reported last week that it expects 6 million people to owe the tax penalty beginning in 2014.  The $8 billion the penalty will eventually raise will help defray the cost of uncompensated care.

Six million people make up less than 2% of our total population.  Should the Affordable Care Act be repealed because of them?

Like that Florida Democrat, at least half of us seem to think so.

According to a CNN poll taken just after the June Supreme Court decision upholding the tax penalty, 51% opposed the so-called individual mandate.  According to a Kaiser Family Foundation July tracking poll, 61% opposed collecting the tax penalty.  And according to a Rasmussen poll released this week, 52% still want to repeal the whole Act, largely because of this provision.

Just who are these 2%, for whom our collective hearts bleed?

They are hiding among the 30 million people who will still be uninsured after the Affordable Care Act takes full effect. 

The vast majority of those 30 million are exempt from the mandate, because they are Native Americans, undocumented immigrants, individuals who are so poor that their insurance premiums would exceed 8% of their income, and people who will be granted hardship exemptions.

The remaining 6 million comprise the 2%.  And most are fairly well-off.  In today’s dollars:

• 69% have Adjusted Gross Incomes (AGIs) of at least $46,100 for a family of four, roughly equal to the median household income in America;
• 49% have AGIs of at least $69,150;
• 31% have AGIs of at least $92,200; and
• 20% have AGIs of at least $115,250.

How much will it cost the 6 million to buy health insurance?  Not as much as you might think.

Beginning in 2014, a family with $69,150 in income will get a tax credit of $10,385 if they have to buy their own health insurance, limiting their total net insurance cost to just under $540 per month.

And families with incomes of $46,150 will get tax credits of $14,014.  They’ll pay just $237 per month net for their health insurance.

The 2% is made up almost entirely of these two groups.  The first is people with six figure incomes who can afford to buy insurance.  The second is lower income people who will be offered tax credits so big that their net cost of insurance will be far less than what many people are paying out-of-pocket today.

What these two 2% groups have in common is a sense of entitlement – a belief that if they become seriously ill then the rest of us should pay their health care bills as well as our own.

Or, as Mitt Romney characterized it for Glenn Beck in 2007, they want “free care paid for by you and me.  If that’s not a form of socialism, I don’t know what is.”

Is that fair?

As the Affordable Care Act is written, the free ride ends.  1.2 million wealthier people who today make more than $115,200 per year and choose not to buy health insurance will pay, on average, a tax penalty of around $3,160 per year when the penalty is fully phased-in in 2016 – to help cover health care costs that average more than five times that. 

And the 1.2 million middle-income people making between $46,100 and $69,150 will pay a tax penalty averaging around $583 per year– about the same as what other middle income people will pay for insurance every month or two.

Maybe people who oppose the penalty think it is too small.  I doubt it.

I think they’ve more likely been mesmerized by the wizardry of politicians and pundits, who are using the cloak of repeal to protect an entitled 2% at the expense of everyone else.

Questions or comments?  Post them below, or email gionfriddopaul@gmail.com.