If the Senate’s Republican leadership expected the Congressional Budget Office to provide any help in making their version of Affordable Care Act repeal more palatable to voters than the deeply unpopular bill that passed the House last month, the release of the agency’s analysis of the measure’s impact on insurance coverage rates must have left them bitterly disappointed.
Despite taking a different approach than the House on several issues, including the phase-out of the ACA’s Medicaid expansion, CBO found that the Senate bill would result in losses of insurance coverage very similar to those projected from the House bill: 15 million in the first year, compared to 14 million for the House version, and 22 million by 2026, compared to 23 million for the House bill.
Known as the Better Coverage Reconciliation Act, it would save the federal government more money than the House version, resulting in a $321 billion reduction in the federal deficit over 10 years, $202 billion more than the House version was projected to save.
But the budget numbers will be cold comfort to senators who have been on the fence about supporting the legislation. Senate Majority Leader Mitch McConnell has been calling for a vote this week, and his second-in-command reiterated that plan today. But even under special rules that make the bill immune to a Democratic filibuster, the GOP can afford to lose only two out of its 52 votes in the chamber.
As of Monday morning, there were at minimum five senators who were on the record as being against the bill as written, with more believed to be unhappy with it.
About half of them are against the bill because they are worried about the number of people it would cause to lose health insurance. The CBO score, which shows the Senate bill to be virtually identical to the wildly unpopular House bill in terms of its impact on coverage rates, won’t do anything to persuade them back into the GOP fold.
It’s also going to cause some heartburn for Republicans who said that they wanted to see a proposal that cut people’s premiums and out-of-pocket costs.
In the early years of implementation, CBO and the Congressional Joint Committee on Taxation find that health insurance premiums would rise. And while they would begin to decline by 2020, much of the drop in price would be attributable to plans covering a lower percentage of people’s estimated costs and charging higher deductibles. This would be true for plans across the coverage spectrum, including the lower-tier Bronze plans and the Silver plans that have long been considered the “benchmark” for subsidies under the ACA.
“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 report finds. “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.”
Like the House bill, the Senate version would hit many consumers who are older but not yet eligible for Medicare particularly hard. This would happen for several reasons: subsidies would be available to a smaller fraction of the population, and those eligible for subsidies would find that they cover a smaller percentage of their premiums. Additionally, the subsidies would be calibrated to policies that cover a smaller actuarial percentage of their expected overall health care costs.
For example, under the ACA, a 64-year-old earning 175 percent of the federal poverty level ($26,500 per year) has the full $12,900 cost of a Bronze level plan covered by subsidies. Should he want to upgrade to a Silver level plan, subsidies would cover all but $1,700 per year. Under the BCRA, that same person would pay $2,000 for a Bronze plan that covered 58 percent of the actuarial estimate of his health care costs rather than the 60 percent covered under current law. An upgrade to Silver would cost $6,500 out of pocket, and instead of the actuarial value of 87 percent currently covered by Silver level plans, his plan would cover 70 percent of his costs.
The hit would be even more painful, at least in dollar terms, for an individual earning $56,800 per year, or 375 percent of the poverty level. Under the current law, subsidies reduce the costs of Bronze and Silver plans to $4,400 and $6,800 per year, respectively. Under BCRA, that person’s subsidies go away completely, leaving him on the hook for the full $16,000 price tag of a Bronze plan, and $20,500 for a Silver plan.
For people living below the poverty line, the impact of the bill would have a lot to do with where they live. In states where the ACA’s Medicaid expansion was adopted, they could find themselves forced off the rolls and given subsidies to buy insurance on the open market. For a 64-year-old earning 75 percent of the federal poverty level, the premium costs for a Bronze policy would be a relatively manageable $300 per year to cover 58 percent of estimated costs. But the upgrade to a Silver plan covering 70 percent would mean annual premiums of $4,800.
For those below the poverty line in states that never expanded Medicaid, the provision of any subsidies at all would be a positive change, making at least minimal levels of insurance affordable for the first time.
As Senate leaders kick into deal-making mode over the next several days, the bill is likely to change significantly. Whether those changes can strike a balance that gets 50 senators on board is going to be the key to the Republican effort to do away with the ACA succeeds or fails.