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Economists Weigh in on Disastrous Effects of GOP Health Care Plan

Mar 8, 2017

Commentary: WASHINGTON – Following the rollout of the disastrous Republican plan to gut the Affordable Care Act and take health insurance away from millions of Americans, the Joint Economic Committee Democrats today released a “GOP Health Care Plan Scorecard” with evaluations by a group of distinguished economists assessing the magnitude of the harm caused by the bill. Economists examined how the GOP plan would affect access to coverage, the affordability of care and the quality of coverage.

The group of economists concluded that the GOP plan would decrease the number of insured Americans, increase premiums and out-of-pocket costs, and reduce federal funding for state Medicaid/Medicare programs. Without Congressional Budget Office projections of cost increases and loss of coverage, it is difficult to fully understand how bad this plan would be for the American people.

“The GOP plan to replace the Affordable Care Act is a harmful bill that burdens the middle class to give a tax break to the ultra-wealthy and forces the middle class to foot the bill,” said Joint Economic Committee Ranking Member Senator Martin Heinrich (D-NM). “Economists agree that the GOP plan is bad for working families, but we’re working to understand just how devastating its impact could be. The GOP plan would cut federal funding of Medicaid by $370 billion over the course of 10 years, shorten the life of Medicare by four years, and make it harder for Americans with pre-existing conditions to find coverage. It’s our duty to ensure Americans get the affordable care they deserve, and the GOP healthcare plan fails miserably.”

 

Jason Furman, Senior Fellow Peterson Institute for International Economics, said: “It is clear that the House bill will increase the number of uninsured Americans, increase premiums for low-income Americans, while resulting in substantially higher after-tax incomes for the highest income households. Getting a Congressional Budget Office score of the bill as well as a distributional analysis to understand how it will impact households at different parts of the income distribution is essential to understanding the magnitude of this impact.”

Sherry Glied, Dean of New York University’s Robert F. Wagner Graduate School of Public Service, said: “The continuous coverage provisions in this bill would substantially reduce the stability of the non-group insurance market, and poses a significant risk of generating an adverse selection spiral.  This would be exacerbated by the structure of the tax credits, which would lead healthier people to leave the market or to segregate themselves in very high-cost sharing plans that would be useless for people with pre-existing conditions.” 

“The plan is also likely to take a big bite out of employer-sponsored health insurance, because the credits go so far up the income scale that a large number of relatively high income, young, healthy people will choose to leave their employer-sponsored health insurance pools.  Over time, this kind of behavior may undermine employer-sponsored coverage and lead to employer dropping, leaving even more people in a very shaky non-group market.”

Richard Frank, Margaret T. Morris Professor of Health Economics in the Department of Health Care Policy at Harvard Medical School, said: “It is likely that the Medicaid per capita cap proposal will create large cost shift from the federal government to the states. Growing payments by MCPI will not account for large demographic shifts and improvement in treatment technologies—so states will have to bear the shortfall as their population of frail elders grows rapidly. The changes in the structure of the tax credit and the age banding for premiums will in effect levy a new tax on older adults.”

Matt Fiedler, Fellow with the Center for Health Policy, Brookings Institution (for identification purposes only), said: “The combination of reducing Federal funding for State Medicaid programs, reducing financial assistance for people purchasing individual market coverage, and repealing the individual mandate will result in very significant coverage losses, as well as increases in premiums and out-of-pocket costs for people who retain insurance coverage. The only real question is just how large those effects will be, something that CBO’s analysis will help to clarify when it ultimately becomes available.”

Benjamin Sommers, Associate Professor of Health Policy and Economics at the Harvard T.H. Chan School of Public Health, said: “Once states have no obligation to spend any of their own money on Medicaid in order to receive their federal share, simple economics predicts that states will contribute less to their Medicaid programs.  And some states will likely make draconian cuts, disproportionately harming the disabled, elderly, and children who make up the bulk of the program in non-expansion states."