When You Lose Something You Don't Want, Is that Really a Loss?
By David Henderson
One of the big findings in the recent Congressional Budget Office (CBO) report on the Republican health proposal is that by 2018, about 14 million people who would have had health insurance will lose it.
That sounds bad, right? But here’s the interesting paragraph from the CBO’s summary:
CBO and JCT estimate that, in 2018, 14 million more people would be uninsured under the legislation than under current law. Most of that increase would stem from repealing the penalties associated with the individual mandate. Some of those people would choose not to have insurance because they chose to be covered by insurance under current law only to avoid paying the penalties, and some people would forgo insurance in response to higher premiums.
In the body of the report, the CBO writes:
In 2018, by CBO and JCT’s estimates, about 14 million more people would be uninsured, relative to the number under current law. That increase would consist of about 6 million fewer people with coverage obtained in the nongroup market, roughly 5 million fewer people with coverage under Medicaid, and about 2 million fewer people with employment-based coverage. In 2019, the number of uninsured would grow to 16 million people because of further reductions in Medicaid and nongroup coverage. Most of the reductions in coverage in 2018 and 2019 would stem from repealing the penalties
associated with the individual mandate. Some of those people would choose not to have insurance because they choose to be covered by insurance under current law only to avoid paying the penalties. And some people would forgo insurance in response to higher premiums. CBO and JCT estimate that, in total, 41 million people under age 65 would be uninsured in 2018 and 43 million people under age 65 would be uninsured in 2019.
That seems a little unclear. If most of the reductions in coverage stem from repealing the penalties associated with the individual mandate, why would some of these people forgo insurance in response to the higher premiums? If higher premiums will be what discourages them from buying health insurance, then what does the repeal of the mandate have to do with it? Maybe the CBO has in mind that some people find the lower premiums attractive and would buy it even without the mandate, but that with higher premiums, the only way they would buy it is if there is a mandate. That seems like the most likely explanation.
In any case, notice that presumably a few million of the 14 million who would lose health insurance are people who would want to lose health insurance even if the premiums weren’t higher. So for people who value the well-being of those people, this counts as a win, not a loss. Of course, you need to count their well-being from their viewpoint, not as a paternalist.