Make no mistake: This bill is about cutting Medicaid and giving tax cuts to the rich, with health care for everyone else an afterthought. According to the CBO:
The largest savings would come from reductions in outlays for Medicaid — spending on the program would decline in 2026 by 26 percent in comparison with what CBO projects under current law — and from changes to the Affordable Care Act’s (ACA’s) subsidies for nongroup health insurance (see Figure 1). Those savings would be partially offset by the effects of other changes to the ACA’s provisions dealing with insurance coverage: additional spending designed to reduce premiums and a reduction in revenues from repealing penalties on employers who do not offer insurance and on people who do not purchase insurance.The largest increases in deficits would come from repealing or modifying tax provisions in the ACA that are not directly related to health insurance coverage, including repealing a surtax on net investment income and repealing annual fees imposed on health insurers.
As it did for the House version of the bill, the CBO confirms that the individual insurance market is more stable than the GOP makes it out to be, although “a small number of people live in areas of the country that have limited participation by insurers in the nongroup market under current law.” Under the proposed Senate bill, “the agencies expect that the nongroup market in most areas of the country would continue to be stable in 2020 and later years as well, including in some states that obtain waivers that would not have otherwise done so.” However, there is far more uncertainty for some segments of the population:
In the agencies’ assessment, a small fraction of the population resides in areas in which — because of this legislation, at least for some of the years after 2019 — no insurers would participate in the nongroup market or insurance would be offered only with very high premiums. Some sparsely populated areas might have no nongroup insurance offered because the reductions in subsidies would lead fewer people to decide to purchase insurance — and markets with few purchasers are less profitable for insurers. Insurance covering certain services would become more expensive — in some cases, extremely expensive — in some areas because the scope of the EHBs would be narrowed through waivers affecting close to half the population, CBO and JCT expect. In addition, the agencies anticipate that all insurance in the nongroup market would become very expensive for at least a short period of time for a small fraction of the population residing in areas in which states’ implementation of waivers with major changes caused market disruption.
In other words, things may be tough for President Trump’s base.
Insurance premiums in the short run will rise. And — precisely as critics predicted — the changes in subsidies will bring back high deductible plans, something voters say they do not want. Given limits on out-of-pocket spending and prohibitions on annual and lifetime limits on payments for services within the EHBs, “all plans must pay for most of the cost of high-cost services. To design a plan with an actuarial value of 60 percent or less and pay for those high-cost services, insurers must set high deductibles — that is, the amounts that people pay out of pocket for most types of health care services before insurance makes any contribution.”) This goes to Sen. Rand Paul’s (R-Ky.) point that without looser regulations, insurance companies will need to resort to high deductibles to manage costs. And people will certainly be priced out of the plan:
Under this legislation, starting in 2020, the premium for a silver plan would typically be a relatively high percentage of income for low-income people. The deductible for a plan with an actuarial value of 58 percent would be a significantly higher percentage of income — also making such a plan unattractive, but for a different reason. As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan, CBO and JCT estimate …Some people enrolled in nongroup insurance would experience substantial increases in what they would spend on health care even though benchmark premiums would decline, on average, in 2020 and later years. Because nongroup insurance would pay for a smaller average share of benefits under this legislation, most people purchasing it would have higher out-of-pocket spending on health care than under current law. Out-of-pocket spending would also be affected for the people — close to half the population, CBO and JCT expect — living in states modifying the EHBs using waivers. People who used services or benefits no longer included in the EHBs would experience substantial increases in supplemental premiums or out-of-pocket spending on health care, or would choose to forgo the services. Moreover, the ACA’s ban on annual and lifetime limits on covered benefits would no longer apply to health benefits not defined as essential in a state. As a result, for some benefits that might be removed from a state’s definition of EHBs but that might not be excluded from insurance coverage altogether, some enrollees could see large increases in out-of-pocket spending because annual or lifetime limits would be allowed.
Critics of the plan will have a field day pointing out the inequities. (“Premiums for a 64-year old with middle income go from $6,800 under ACA to $20,500 under BCRA.”) Older and poorer people will get hit the worst, according to the CBO. “CBO and JCT expect that this legislation would increase the number of uninsured people substantially. The increase would be disproportionately larger among older people with lower income — particularly people between 50 and 64 years old with income of less than 200 percent of the federal poverty level.” The notion that the bill doesn’t cut Medicaid is given the back of the hand. (“Enrollment in Medicaid would be lower throughout the coming decade, with 15 million fewer Medicaid enrollees by 2026 than projected under current law in CBO’s March 2016 baseline … Some of that decline would be among people who are currently eligible for Medicaid benefits, and some would be among people who CBO projects would, under current law, become eligible in the future as additional states adopted the ACA’s option to expand eligibility.”)
And finally, the Senate bill may give employers an incentive to drop their group coverage. “Under current law, the prospect of paying the employer mandate penalty tips the scale for some businesses and causes them to decide to offer health insurance to their employees. Thus, eliminating that penalty would cause some employers to not offer health insurance.”
As we said, this is not a bill about providing cheaper, better health care to the masses. It’s not about helping older or rural Americans. It’s about taking hundreds of billions of dollars out of Medicaid and giving the money to rich people in the form of tax cuts. The CBO report makes clear what a total disgrace the bill really is.