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Goldman Warns CBO Report Will Substantially Delay Obamacare Repeal

After CBO's much-anticipated estimate of the GOP's Obamacare replacement proposal showed that the legislation could result in as many as 24 million Americans losing coverage by 2026, we wondered just how much of an additional bottleneck this report would present to the already conflicted passage of the controversial "Trumpcare." We got the answer overnight, when Goldman's government economists Alec Phillips said that the CBO scoring would likely slow the passage of the Obamacare repeal process. Specifically, he said that "CBO’s estimates of the Obamacare replacement legislation's effects on coverage were somewhat worse than expectations and suggest changes are likely to be necessary before the bill can pass the Senate. We continue to expect enactment of ACA replacement this year but probably not by the early April deadline that Republican leaders have highlighted." And since the Obamacare process timeline is closely tied to Trump's tax reform, a delay in the former, will mean yet another delay in the latter, leading to further market disappointments, which however so far have yet to materialize as the "market" seems oblivious of the practical realities of Trump's economic policies.

Here are the main points from Goldman:

CBO Estimates Could Slow Passage of Obamacare Replacement Bill


BOTTOM LINE: CBO’s estimates of the Obamacare replacement legislation's effects on coverage were somewhat worse than expectations and suggest changes are likely to be necessary before the bill can pass the Senate. We continue to expect enactment of ACA replacement this year but probably not by the early April deadline that Republican leaders have highlighted.




  1. The Congressional Budget Office (CBO) released its estimate of the effect of the American Health Care Act (AHCA). It estimates that the bill, which replaces the Affordable Care Act (ACA, or Obamacare) would reduce the federal deficit by $337bn over the next ten years and would reduce coverage by 24 million by 2026.
  2. The estimates of coverage loss are at the more negative end of expectations. CBO had previously estimated that repeal of the individual mandate would reduce coverage by 15 million by 2026; combined with other changes in the bill, CBO’s new estimate is that 24 million fewer individuals would have insurance coverage than under current law by 2026, or nearly all of the coverage expansion CBO attributed to the ACA. This reduction would occur over several years; in 2018, the coverage decline is estimated at 14 million, due mainly to the proposed elimination of the individual insurance mandate; the subsequent decline would be due mainly to the phase-out of the ACA’s Medicaid expansion.
  3. The fiscal estimates contained few major surprises. The bill as a whole is estimated to reduce the budget deficit by $337bn over ten years (through 2026). Phasing out the Medicaid expansion would reduce spending by $880bn over ten years. Another $673bn in savings is attributed to the elimination of the subsidies in the individual insurance market, but this would be nearly offset by new tax credits, grants to states, and the revenue loss associated with repeal of the individual and employer mandates. The repeal and/or delay of the taxes established by the ACA would increase the deficit by $592bn/10yrs, resulting in net budgetary savings of $337bn.
  4. Individual market premiums are projected to rise and then fall. In the short-run (prior to 2020), the estimate suggests that premiums are expected to rise by 10-15% more than without the legislation. This is a notable finding, since Republican leaders had already raised concerns about high premiums under the program. However, in the longer run (in 2020 and beyond) CBO estimates the bill would lower the average premium by 10% relative to current law, as higher premiums and reduced enrollment for older people would be offset by lower premiums and greater enrollment among younger people. Funding for states to limit the costs to insurers of high-cost patients and the loosening of benefit rules also contribute to the lower estimated premiums.
  5. The details of the CBO report make passage somewhat more difficult, in our view. While few aspects of the CBO estimate are surprising many Republican lawmakers who were already willing to support the bill are likely to continue to support it, the new estimate could lead some uncommitted Republicans to oppose the bill unless additional changes are made. Additional changes to the bill are likely, in our view, before it reaches the House floor the week of March 20. The greater obstacle remains the Senate, where the bill is unlikely to come up for a vote until the week of March 27, at earliest. While it is possible that ACA replacement legislation could reach the President’s desk in April, as Republican leaders have predicted, a delay until May or later continues to look more likely, particularly in light of today’s CBO estimate.

Meanwhile, as the Hill reports this morning, leading House Republicans are "fighting to defend their ObamaCare replacement bill in the face of a Congressional Budget Office (CBO) report that found the measure would result in millions of people becoming uninsured." As expected, Democrats are on the attack, hoping the findings — and the eye-popping estimate that 24 million additional people will be without coverage by 2026 — will stop ObamaCare repeal in its tracks.

“Numbers are quite eloquent things; they speak very clearly,” said House Democratic Leader Nancy Pelosi (D-Calif.) Monday evening after the CBO’s report was released.  “I would hope that they would pull the bill,” she added. “It’s really the only decent thing they could do.”


Republicans had long expected that the CBO score would produce uncomfortable headlines that could sap support. The task ahead, for Speaker Paul Ryan (R-Wis.) and his lieutenants, is to weather the storm.  Ryan went on Fox News soon after the report was released and said he was “encouraged” by the findings. He pointed to items like the deficit reduction and decrease in premiums that the report found, while seeking to downplay the coverage losses.


Much of the change in the uninsured rate, Ryan said, would simply be due to people choosing not to buy coverage once the mandate for having coverage is repealed. "What I’m encouraged [by] is, once our reforms kick in, what the CBO is telling us is, it’s going to lower premiums — it will lower premiums 10 percent. It stabilizes the market. It’s a $1.2 trillion spending cut, an $883 billion tax cut, and $337 billion in deficit reduction,” Ryan said. “So of course the CBO is going to say if you’re not going to force people to buy something they don’t want to buy, they won’t buy it.“

Confirming the Goldman take, many Senate Republicans were already voicing skepticism of the House bill before the CBO score was released. They are urging their colleagues to slow down on the legislation. Sen. Bill Cassidy (R-La.) called the score “awful.” 

Sen. Susan Collins (R-Maine) said it  “should prompt the House to slow down and reconsider certain provisions of the bill.” Added Sen. Lindsey Graham (R-S.C.): "If half of the CBO is true I think we should slow down.”

Trump himself has expressed doubts about the political wisdom of pressing ahead, repeating his frequent musing again Monday that it would be easier to just let ObamaCare fall under its own weight.  “The best thing you could do politically is wait a year, cause it’s going to blow itself off the map,” Trump said. “But that’s the wrong thing to do for our country. It’s the wrong thing to do for our citizens.”

But House Republican leaders are pressing ahead. The House Budget Committee is set to hold a final markup of the legislation on Thursday, setting the stage for a floor vote next week that could turn into a cliffhanger. “This week, a third House committee will debate the American Health Care Act as part of an open, transparent process,” Ryan said in a statement.

“We have set out a clear goal — to give every American access to quality, affordable care — and a clear plan to achieve it. Now we must keep our promise and deliver.”

The only question is when, and after how many changes.