The Republican-proposed Senate bill that may replace the Affordable Care Act (ACA) could reduce health insurance premiums for healthy singles by 30%, but it could also cause 22 million Americans to go without health insurance coverage in 2026, according to the Congressional Budget Office (CBO), a nonpartisan group tasked with crunching numbers to determine the impact of proposed legislation.
What's the deal?
To secure votes from moderate Republicans in states that expanded Medicaid under the ACA, commonly known as Obamacare, Senate Republicans have been reworking the American Health Care Act (AHCA) that passed in the House of Representatives last month.
Their newly reformulated Better Care Reconciliation Act of 2017 (BCRA) could go up for a full vote later this week, but it's not clear how senators will vote following CBO scoring of the proposal's potential impact.
According to CBO analysis, 15 million people will have willingly or unwillingly given up their health insurance one year after the BCRA's implementation. Those willfully canceling their plans would do so because the BCRA removes the health insurance mandate. Others will lose their coverage because of rising premiums and lower federal subsidies.
At the 10-year mark, the CBO calculates 22 million fewer Americans will have health insurance under the BCRA than under current law. The increase will largely be the result of the BCRA shifting Medicaid to per capita block grant funding, and then capping annual increases in funding at the inflation rate of all goods and services, rather than the medical cost inflation rate, which has historically been higher. The CBO estimates 8 million people will lose Medicaid coverage by 2020, 11 million by 2022, and 15 million by 2026.
What are the details?
The BCRA will have the biggest negative impact on health insurance enrollment among older, lower-income Americans. The percentage of people without health insurance will increase across all under-65 age groups; however, it will more than double for people between the ages of 50 and 64 whose income is below 200% of the federal poverty level. As a refresher, the federal poverty level for a family of four is $24,600, so the 200% figure would include families with income below $49,200.
Higher-income families will be less affected, but more of them will also be uninsured under the BCRA. The uninsured rate among families ages 50 to 64 with household income greater than 200% of the federal poverty level will increase to 9.4% from 6.8%.
Because of lower funding for Medicaid and smaller subsidies to individuals, the BCRA will reduce the federal budget deficit. The CBO estimates that the federal government will spend $772 billion less on Medicaid between 2017 and 2026, and $408 billion less on subsidies, including small-business tax credits. Those savings will be somewhat offset by BCRA spending, including tax credits to offset premiums, and lower tax revenue. Overall, the CBO estimates a $321 billion cumulative decrease to the budget deficit due to the BCRA.
Impact on premiums
Average health insurance premiums will increase in 2018 and 2019 as fewer healthy Americans choose to buy insurance, but thereafter, premiums will begin declining as more people give up comprehensive health insurance plans and buy "skinnier" high-deductible plans that pay for less healthcare.
According to the CBO, health insurance premiums for singles under the BCRA will be 20% higher than what they'd be otherwise in 2018, but widespread adoption of high-deductible plans will result in average premiums for singles that are 30% lower than they would be under current law in 2020.
Currently, insurers that sell the silver medal benchmark plan under the ACA must cover 70% of healthcare costs. According to the CBO, increasing deductibles and other cost-sharing allowed under Trumpcare will result in plans covering less than 60% of healthcare expenses.