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What will happen to North Carolina premiums if the AHCA replaces Obamacare?
One of the Republicans key to the American Health Care Act’s passage was North Carolina Rep. Ted Budd, who had said in March he would oppose the bill but in May ended up voting for an amended version of it.
He was one of about three dozen Republicans who flipped from a No to a Yes, according to a Washington Post tally. The bill needed 216 votes to pass and squeaked by with 217.
"Ultimately, the legislative process is a human process with all the flaws that entails," Budd said, explaining why he supported the AHCA. "The results of that process are never perfect, and this bill isn’t either. What I believe it will do is significantly reduce insurance premiums in our state, and help put the individual insurance marketplace on a more sound financial footing."
The claim that the AHCA will "significantly reduce insurance premiums" in North Carolina stuck out to us.
Budd clarified in an email that he was talking about premiums for people who don’t buy health insurance through work. So we kept our research focused on non-employer coverage.
Half a million North Carolinians buy their health insurance on the individual market.
A general summary
For people who get health insurance on their own, experts agree that premiums nationwide would likely rise in the short-term but decrease in the long-term if the AHCA replaces the Affordable Care Act.
So from that birds-eye view, Budd’s claim could be called right or wrong.
PolitiFact previously ruled Half True a claim by House Speaker Paul Ryan that "the American Health Care Act will lower premiums."
We asked Budd for proof about his claim that focused on North Carolina; he responded that national factors will apply to North Carolina as well.
"Reducing premiums by increasing flexibility will in turn provide the incentive for young and healthy people to re-enter the insurance market, making the insurance pool as a whole healthier," he said. "A healthier pool is more cost effective and sustainable."
He’s right that healthier pools are cheaper for everyone. But unfortunately for his argument, the AHCA is expected to do the exact opposite of what he described, at least in the beginning.
Short term vs. long term
By 2026, according to a report from the nonpartisan Congressional Budget Office in March, 24 million people are expected to drop their health insurance if the AHCA passes. The AHCA was amended since then, but there’s no new CBO analysis yet.
First, healthy people who don’t need coverage will drop it because the AHCA would get rid of Obamacare’s penalties for being uninsured. As they leave, the CBO found, premiums will rise and millions more will drop their health insurance as it becomes unaffordable.
And in those next few years, North Carolinians on the individual marketplace would be worse-off than people in every other state but Alaska, according to a study by the liberal Center for Budget and Policy Priorities, based on CBO data.
North Carolinians would face an average $5,900 premium hike, as we found in a previous fact-check of Democratic N.C. Rep. David Price.
As insurance becomes less affordable, that’s where Budd’s explanation about healthier people re-entering the market fits in.
"Over the long run premiums would go down as expensive-to-cover people (primarily older buyers) are priced out of the market," Duke University health care researchers David Anderson wrote in an email.
By 2026, the CBO estimated, premiums would be 10 percent lower under the AHCA than under Obamacare.
There are more caveats to Budd’s claim.
One is that North Carolina might not just be an outlier in the short-term, but also the long-term.
"North Carolina is an expensive state with high premiums," Anderson said, due in part to its unusually large rural population.
But right now there’s no way to know exactly what might happen to premiums by 2026 in North Carolina if the AHCA passes – either for us or for Budd – because no nonpartisan analysis at the state level goes that far into the future. Budd might well end up being right, but he has no evidence.
In general, Anderson said, young people and wealthy people will likely end up paying less while poor people and older people will either have to pay more or stop being insured.
It’s also impossible to gauge a last-minute change to the AHCA, to allow insurers to charge people with pre-existing conditions more than Obamacare would allow.
The House passed the bill before the CBO could analyze the financial impact it would have. For more on that procedural oddity, see PolitiFact’s "Full Flop" ruling for House Speaker Paul Ryan.
Another caveat is that long-term cost savings will only materialize if people accept plans with fewer options, since the AHCA would allow insurers to offer less coverage than Obamacare.
The Brookings Institution found that if people want to keep their same level of coverage, in 2026 premiums would actually be 13 percent higher under the AHCA – not 10 percent lower.
The final caveat is that even people with lower premiums might still pay more for health care.
That’s because the AHCA would also allow insurers to charge higher deductibles. Premiums are what you pay to buy insurance, and deductibles are what you pay before that insurance kicks in.
People who wouldn’t max out their deductibles under the ACA wouldn’t notice the difference, of course, but Anderson said people who would hit those caps under the ACA will certainly feel the pinch of having to pay even more money under the AHCA.
"Increasing out-of-pocket maximums harms people who are already at the limit," he said.
North Carolina Republican Rep. Ted Budd defended his vote for the American Health Care Act, saying it will "significantly reduce insurance premiums in" North Carolina.
In the short-term, insurance premiums on North Carolina’s individual market would actually increase. It’s not a small increase, either, but is rather expected to be the second-largest in the nation.
Budd does have a point that premiums are expected to decrease in cost nationally a decade from now. People can quibble over whether an expected 10 percent decline is "significant," but it is a decline. However, that’s a national estimate. There’s no solid analysis yet into how North Carolina specifically might fare, a point against Budd.
It's also just an average. Some people will see lower premiums, while others will see higher premiums – for many of them, high enough that experts believe they'll drop insurance entirely. And finally, even people with lower premiums might still pay more in the end, since their deductibles could be higher under the AHCA.
Since Budd’s claim is partially accurate but missing some important context, we rate it Half True.
PolitiFact Wisconsin, Jan. 5, 2017, "Testing Paul Ryan claim on Obamacare premium increases of up to 116 percent"
PolitiFact, March 23, 2017, "Obama: No premium hike for 'vast majority' covered on government exchanges"
PolitiFact, Jan. 9, 2017, "Mike Pence says under Obamacare, 'American families have seen an increase in premiums of $5,000'"
PolitiFact Wisconsin, March 14, 20176, "Paul Ryan's partially accurate claim on the Republican replacement for Obamacare lowering premiums"
North Carolina, May 4, 2017, "Does new version of the AHCA protect coverage for pre-existing conditions?"
The Washington Post, May 4, 2017, "How the House voted to pass the GOP health-care bill"
The Brookings Institution, March 16, 2017, "How will the House GOP health care bill affect individual market premiums?"
U.S. Department of Health and Human Services, 2015 summary of the Affordable Care Act in North Carolina
Congressional Budget Office report, March 13, 2017, "American Health Care Act cost estimate"
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