In his sales pitch for the American Health Care Act, House Speaker Paul Ryan and other Republicans have maintained that the repeal and replacement of the Affordable Care Act is necessary because the law itself is “collapsing.“
The Congressional Budget Office, evidently, disagrees.
In the CBO’s report assessing the effects of the AHCA, the nonpartisan budget office said that the individual health insurance marketplace under both the current system and the proposed system would be stable.
“In CBO and JCT’s assessment, however, the non group market would probably be stable in most areas under either current law or the legislation,” said the report.
The CBO said the current ACA has maintained stability due mostly to its structure of providing tax subsidies for lower-income people to purchase insurance. While premiums have increased in the exchanges, Obamacare’s tax credits adjust for income and cost of living, so a vast majority of people on the exchanges could access coverage for less than $US100 a month.
“Under current law, most subsidized enrollees purchasing health insurance coverage in the non-group market are largely insulated from increases in premiums because their out-of-pocket payments for premiums are based on a percentage of their income; the government pays the difference,” said the CBO report.
On the other hand, the CBO said, the AHCA would maintain that stability despite lowered tax credits.
“Even though the new tax credits would be structured differently from the current subsidies and would generally be less generous for those receiving subsidies under current law, the other changes would, in the agencies’ view, lower average premiums enough to attract a sufficient number of relatively healthy people to stabilise the market,” the report said.
Some of this stability would come from the lower total number of people on the exchanges — the CBO projected that 24 million more Americans would be uninsured by 2026 under the new legislation, with a good chunk coming from the individual market. Other factors would come from the AHCA’s state innovation grants, which the CBO said would allow states to find ways to stabilise their markets.
This isn’t necessarily a new revelation from the CBO: They have said that the ACA would maintain a stable market in the past. Additionally, despite Ryan’s and other GOP leaders’ insistence that Obamacare is entering a “death spiral,” an analysis from the Brookings Institution showed that the ACA’s exchanges did not fall under that definition.
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