Quick Take: CBO Report On Senate Health Care Bill

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Here are the highlights of the CBO analysis of the Senate health care bill (BCRA): 


If BCRA were to be passed, by 2026 22 million more people would be uninsured than if Obamacare stayed in place. Of that 22 million, 15 million would no longer be insured in 2018 mainly because they would no longer be mandated to purchase health insurance. In other words, for a variety of different reasons, they would choose not to be insured. Changes to Medicaid and changes that would result in people receiving smaller subsidies to pay for insurance, therefore making it unaffordable, would add to the total amount of people uninsured. Also, some who do qualify for subsidies would choose not to purchase insurance because of unaffordable out-of-pocket costs. Finally, if you think because you're not on Medicaid or don't get your insurance through the exchanges you won't be affected, think again. The CBO projects that 4 million people with employer-based health care will lose coverage in 2018. 


The subsidy formula change in BCRA will have a big impact on the cost of premiums for those eligible to receive subsidies. The CBO compared how much two types of plans, Bronze (skimpier coverage) and Silver (more comprehensive), would cost under both ACA and BCRA. Those closer to the poverty line in states that didn't expand Medicaid would make out better under BCRA. Also, younger people generally make out better under BCRA. Those 40+ generally pay much less under Obamacare, in some instances thousands of dollars less. 

Here's an example: A 21-year-old making $56,800 in 2026 who wants to buy a Silver Plan would pay $1,000 less. A 64-year-old would pay $13,700 more. A key factor is that right now insurers can only charge older people 3x's as much as younger people. Under this bill that could change to 5x's as much. 

By 2026, the CBO found that average premiums would be 20% lower. However, they initially project premiums to skyrocket upwards in part due to the fact healthier people would no longer be mandated to by insurance. As a response the CBO believes states will look to change the type of coverage that insurers currently have to offer, leading to skimpier plans that bring down costs. Essentially, you'll be able to afford insurance premiums but your out-of-pocket costs (deductibles) will go up and you could wind up with less comprehensive coverage. Less comprehensive coverage could include having to pay more for things like mental health treatment to prescription drugs. 


The president and congressional Republicans often talk about Obamacare being in a "death spiral" because of unstable markets and pockets across the country that offer no insurance coverage. They have repeatedly said they'd fix this. The CBO analysis not only says they do not fix this, but it actually says this bill could make things less stable. 


The CBO clearly lays out how BCRA would substantially reduce the amount of money allocated to Medicaid. Some would argue this isn't a cut since the overall amount is still increasing, but it's a big cut compared to what the increase would be under current law. Bottom line, you can call it whatever you want but this change will have a big effect on the program and the amount of people covered by Medicaid. 


BCRA cuts taxes and reduces the deficit. Most of the tax cuts will go to wealthier Americans. The deficit will be reduced by $321 billion between 2017-2026. The deficit reduction aspect of this bill is one of the main positives for Republicans. $772 billion in changes to Medicaid and $424 billion in changes to subsidies are what make the deficit reduction possible. 


President Trump promised three specific things during his campaign regarding health care: greater coverage, lower costs and no cuts to Medicaid. This bill doesn't accomplish the first promise in any way. While some people will drop their coverage by choice, many others will do so because it will become unaffordable and others will lose coverage due to the changes in Medicaid. There certainly won't be any increase in the percentage of Americans with health insurance. As for the promise to lower premiums and deductibles, this bill does lower premiums for a small group of individuals but it also raises them for others and increases out-of-pocket costs for most. This plan does nothing to address the cost of care issue that has led to our health care costs to become the highest among OECD countries. Finally, this bill does not keep President Trump's promise not to cut Medicaid. Some will argue that because total expenditures on Medicaid will still rise, just at a much lower rate, this technically isn't a cut. Think of it a different way. Let's say you plan on saving money each month of the year and plan to increase the savings by $10 each month. Halfway through the year you decide to change that increase per month to only $3 more a month. You are still increasing the amount you save each month, but you're cutting the amount compared to the original plan. That change will have an affect on how much you saved by the end of the year and could affect your plans for that money as well. That's the key point: the cut in the increase for Medicaid will change the outcomes for people relying on the program, including a reduction in the amount of people who have access to coverage via Medicaid. You can certainly support that policy, but it's not what the president campaigned on. 

The president and congressional Republicans would be better served going back to the drawing board and coming up with a policy that allows for greater cost transparency, allows consumers to make more informed decisions and focuses on bringing the cost of care down. The House and Senate plans, both supported by the president (though he's since backed away from the House plan by calling it "mean") try to address the symptoms but not the underlying issue. What we need is a complete overhaul, but what we're getting are quick fixes that don't even accomplish what they were originally meant to do. Whether a GOP bill passes or not, the American health care system isn't close to being cured. 

Graphics courtesy of CBO. Photo courtesy of Getty Images.

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