Their plans in shambles for a hurried vote to rewrite major parts of the Affordable Care Act, Senate Republicans are still reciting their mantra on what their conservative approach to health policy would do. Loyalists and rebels alike, GOP senators say the bill would help fulfill the party’s goal of driving down insurance premiums.
A growing body of scrutiny is finding that the claim is only partly true, however. And looking broadly at the overall costs for individuals buying coverage on their own, these analyses are concluding that the bill would place such large financial burdens on many people, especially those who are poor, that millions of Americans probably would decide they could not afford to be insured.
The affordability question for private health plans was not raised by the small band of Senate Republicans, from the party’s right and moderate wings, who on Tuesday derailed Majority Leader Mitch McConnell’s schedule this week. The moderates balked mainly over the legislation’s $772 billion impact on Medicaid, the main public insurance for low-income Americans.
Yet as McConnell (R-Ky.) and his allies now try to draft a more palatable version — with a goal of sending revisions to congressional budget analysts on Friday — many health-care experts contend that the future affordability of private insurance is a central issue that must be fixed.
“To put too much pressure on people financially . . . that is some of the reason the bill is in trouble,” said James Capretta, a resident fellow specializing in health care at the American Enterprise Institute.
The root problem is that the bill would cut back on Medicaid in favor of giving some low-income people tax credits to use in buying private coverage. But if those tax credits leave people of modest incomes with big bills for other insurance expenses, “that is going to be a pretty big impediment to care,” Capretta said.
For example, a person whose income is a little under the poverty line could, a decade from now, pay $300 in annual premiums with help of a tax credit under the bill — but could face a deductible of more than half their income, according to an analysis by the nonpartisan Congressional Budget Office.
Even looking just at the premiums that Republicans are touting, the future is not as simple as they suggest. The Senate GOP’s legislation would increase premiums for Americans buying coverage individually by about 20 percent next year, the CBO forecast. In 2019, those premiums would be about 10 percent higher.
The main reason, the budget office found, is that the measure would eliminate the ACA’s federal penalty for most Americans who fail to carry health insurance. In turn, people would feel free to drop coverage — particularly healthy people whose low use of medical care helps to keep insurance prices steady. So premiums would rise.
In 2020, though, the CBO predicts they would drop an average of 30 percent. The biggest reason: Starting that year, new tax credits created by the Senate bill would be tied to skimpier insurance plans covering a smaller share of customers’ health care. As a ripple effect, those individuals would be charged sharply higher deductibles before their insurer began paying.
This shift to tax credits attached to more meager insurance, a new Standard & Poor’s analysis points out, would occur the same year that the Senate legislation would eliminate subsidies that now help 7 million Americans with ACA coverage afford both deductibles and copays for care. The legislation would give states fairly large amounts of money — nearly $25 billion in 2020 and 2021 — to help insurers keep their prices steady. That “stabilization” money would plummet to roughly $5 billion the following year.
As a result, Standard & Poor’s wrote, “Expect a sharp drop in access for insureds after 2021.”
The GOP approach, notes Jonathan Oberlander, a professor who studies health policy at the University of North Carolina at Chapel Hill, “shows a philosophical divide about what constitutes health insurance. In the conservative conception, health insurance is very, very limited.”
Young adults are the one group that could have less-expensive insurance, analysts say, because the Senate’s Better Care Reconciliation Act would let insurers charge a bigger difference in prices depending on the age group.
To illustrate the bill’s effects on affordability, Kaiser Family Foundation analyzed how prices would change for various groups of Americans if they wanted to keep the level of coverage that most now have under the ACA.
For people ages 18 to 34 with incomes of twice the poverty level — about $24,000 for a single person or $49,000 for a family of four — the price of coverage under these popular “silver” plans would stay about the same. But for people ages 55 to 64 with the same income, the price would nearly triple, Kaiser’s analysis shows.
But the greatest financial hurdles would be for people below the poverty level. While they could get federal help in paying health insurance premiums for the first time, they would be stuck with large out-of-pocket costs.
As a result, “few low-income people would purchase any plan,” the CBO concluded.