Obama’s health insurance expansion eroding, CBO projects

Employee Benefit Advisor reports:

“The number of Americans projected to gain insurance from the U.S. health-care law is eroding, by at least 5 million people, as the Obama administration struggles to implement the $1.3 trillion overhaul amid Republican opposition.

About 27 million people are expected to gain coverage by 2017, according to a report today from the Congressional Budget Office. The CBO had projected when the law passed in 2010 that 32 million uninsured people would be on a health plan within a decade, and a year later raised its estimate to 34 million.

Expectations are being pulled back as the expansion relies on governors to build a network of insurance marketplaces and expand Medicaid, the joint federal-state insurance program for the poor. At least 22 Republican governors have said they’ll refuse to participate in the health exchanges and a Supreme Court decision lets them also opt out of the Medicaid expansion.

There is concern “about a combination of factors, including the readiness of exchanges to provide a broad array of new insurance options, the ability of state Medicaid programs to absorb new beneficiaries, and people’s responses to the availability of the new coverage,” the CBO says.

In addition, as many as 8 million people will lose health care plans now offered through their employers, the CBO estimates. After the health law was passed, the CBO projected that about 3 million people who would otherwise have employer- sponsored insurance would lose that coverage.

Health Exchanges

Some of the losses should be offset by enrollment in plans offered through exchanges, the CBO said. The CBO says that 26 million people will be in exchange plans by 2018, an increase from a maximum of 24 million in an earlier estimate.

The insurance estimates, which were part of a CBO report on the federal budget, are “a very gentle way of saying there’s a problem” with the implementation of the law, says Douglas Holtz-Eakin, a former CBO director who is now president of the American Action Forum, an advocacy group critical of President Barack Obama’s economic and health policies.

“They know that everything they do is subject to a lot of uncertainty,” Holtz-Eakin says. “If you see a systematic drift — more uninsured, less employer- sponsored insurance — what they’re saying is, ‘wow, the bad news outweighs the good news.’”

The federal government has said it will run exchanges in states that aren’t building their own, and all marketplaces will be ready to begin enrolling people by Oct. 1. The law requires most Americans to carry insurance beginning Jan. 1, 2014.

Court’s Effect

The CBO in July reduced its estimate of the insurance expansion to a maximum of 30 million after the Supreme Court’s ruling. Today’s revision shows the budget agency still thinks the law will work though the implementation may be bumpy, says Joe Antos, a health economist at the American Enterprise Institute who also advises the CBO.

“I think the states have proven that the slowness of getting these things going is not some political reaction that went away when the November election was over,” Antos says. “It’s complicated, and like most big reforms – – not just in health care, but anything the federal government says is a big reform — the amount of time that was allowed in the law probably wasn’t enough.”

A spokesman for the White House, Bradley Carroll, declined to comment on the CBO estimate.