Tag Archives: ACA
Medicaid: Welfare or Health Insurance?
https://www.axios.com/the-great-medicaid-divide-2445011303.html
Republicans want to roll back the Medicaid expansion, cap federal Medicaid spending increases, and add work requirements, drug testing, time limits, copays and premiums to some state Medicaid programs. But almost no one else wants to do these things. One poll finding goes a long way toward explaining why: Republicans view Medicaid as a form of welfare, and pretty much everyone else views it as a government insurance program.
Why it matters: Welfare remains unpopular in our country; it’s always popular to limit or cut “welfare”. Whether it should be, and what this says about us, is a different question.
What the poll found: As the chart shows, Democrats (73%) and independents (62%) view Medicaid as an insurance program similar to others that help people pay for health care. But a slight majority of Republicans (52%), see it as more similar to welfare programs like food stamps.
Between the lines: One reason Medicaid limits are no slam dunk for Republicans in the Senate may be that not all Republicans view it as welfare: 46% see it as insurance, just as most Democrats and Independents do. Republicans who are more moderate are worried about the practical effects on citizens and states of rolling back the expansion or cutting federal Medicaid spending. One assumes they wouldn’t worry as much unless they viewed Medicaid as valuable health insurance coverage.
Perceptions of Medicaid as welfare don’t seem bothered much by facts, such as, for example, that two thirds of Medicaid spending goes for the low income elderly and disabled who don’t fit the Ronald Reagan era image of the welfare king or queen. But it’s not the majority view in any case. A little less than a third of voters identify as Republicans today, and about half of them see Medicaid as welfare.
It’s this group and their perceptions of the program, and elected officials who share their views, that seem to be driving debate about Medicaid today.
Premiums and Tax Credits under the Affordable Care Act vs. the Senate Better Care Reconciliation Act: Interactive Maps
This map includes premium and tax credit estimates by county for current ACA marketplace enrollees at age 27, 40, or 60 with an annual income of $20,000, $30,000, $40,000, $50,000, $60,000, $75,000, $100,000, or 351% of the federal poverty level (which is just above the cutoff for tax credits under the BCRA). The map includes estimates for premiums, tax credits, and premiums after tax credits for bronze and silver plans in each county in 2020.
Most current Healthcare.gov enrollees have lower incomes:
- About 66% of enrollees have incomes at or below 250% of poverty (approximately $31,250 for a single individual in 2020), with the bulk (44% of all enrollees) having incomes at or below 150% of poverty (approximately $18,750 in 2020).
- About 36% of enrollees are under age 35, 37% are age 35 to 54, and 27% are 55 or older.
Both the ACA and the Better Care Reconciliation Act include tax credits that take into account family income, local cost of insurance, and age. Eligible enrollees are expected to pay a certain percentage of income towards the cost of a benchmark plan, with tax credits covering the remainder of the premium. The premium caps as a percentage of income grow over time.
Under the ACA, people with incomes from 100% to 400% of the poverty level are eligible for tax credits. Premium caps in 2020 will vary from 2.4% of income for a household at the poverty level to 10.2% at 400% of poverty ($50,000), according to Kaiser projections. The caps do not vary by age. The benchmark plan under the ACA is a silver plan with an actuarial value of 70%, meaning enrollees pay for an average of 30% of their health care expenses through cost-sharing.
Under the BCRA, people with incomes up to 350% of the poverty level are eligible for tax credits (including people with incomes below poverty). Under the BCRA, premium caps vary by age and will range in 2020 from 2.4% of income for a household below the poverty level (<$12,500 in 2020), to 17.4% of income for a 60 year old at 350% of poverty ($43,750). The benchmark plan under the Senate bill is a plan with an actuarial value of 58%, meaning enrollees pay for an average of 42% of their health care expenses through cost-sharing.
Note: the map does not include cost-sharing assistance under the ACA that lowers deductibles and copayments for low-income marketplace enrollees. For example, in 2017, people making between 100 – 150% of poverty enrolled in a silver plan on healthcare.gov had an average deductible of $255; those with incomes between 150 – 200% of poverty had an average deductible of $809; and those with incomes between 200 – 250% of poverty had deductibles averaging $2,904. In 2017, the average deductible for a silver plan was $3,609 and $6,105 for a bronze plan.
Our method of estimating premiums before tax credits under the BCRA is based on Congressional Budget Office (CBO) projections for the AHCA, which suggest that the premium for a 40-year-old under the American Health Care Act (AHCA) would be similar to the premium for a 40-year-old under the ACA, before accounting for tax credits and for the same level of coverage. We therefore assume that the premium before tax credits for the lowest cost bronze plan and the second-lowest cost silver plan under the ACA is equal to the premium for a similar plan (with 60% and 70% actuarial values) under the BCRA for a 40-year-old. To arrive at the 60-year-old and 27-year-old premium under the BCRA, we use a 5:1 age curve, since the BCRA would change age rating from 3:1 to 5:1. We assume that states that have set their own age curves with ratios smaller than 3:1 (i.e. New York, Vermont, Massachusetts, and the District of Columbia) would maintain their state-specific age curves under the BCRA. We use the projected premium for the lowest cost bronze plan in each county as an equivalent for the BCRA benchmark plan to calculate tax credits under the BCRA. The BCRA makes it easier for states to waive certain provisions of the law, including the essential benefits insurers are required to cover. Such waivers would tend to lower premiums but increase out-of-pocket costs for health care. Our analysis is based on states not seeking waivers.
Explaining Medicaid’s Starring Role in the U.S. Health Debate
The biggest single change called for by the Republican health-care bill that may be voted on by the U.S. Senate this week is its reduction in federal spending on Medicaid, the program for poor and disabled Americans. The bill is being championed by Majority Leader Mitch McConnell and backed by U.S. President Donald Trump as a way to “repeal and replace” the Affordable Care Act, also known as Obamacare. The Senate bill, like one passed in May by the House of Representatives, would roll back Obamacare’s expansion of Medicaid and make other far-reaching changes to the program as well.
1. Who does Medicaid serve?
It’s the biggest health insurer in the U.S., providing benefits to about one in fourAmericans. It covers almost half of all births, almost two-thirds of people in nursing homes, almost 40 percent of all children and almost a third of adults with disabilities. Total Medicaid spending was $552 billion in the 2015 fiscal year, 17 percent of overall health spending. Along with education, Medicaid is one of the two largest components of spending by state governments, which administer the program and fund it in partnership with the federal government.
2. How did Obamacare change Medicaid?
It expanded Medicaid to cover those who were unable to afford private insurance but didn’t have incomes low enough to qualify for Medicaid before. After a Supreme Court ruling made the expansion optional, 31 states and the District of Columbia used the financial incentives offered under the Obamacare law to add about 12 million people to the Medicaid rolls. To congressional Republicans’ ire, the expansion was funded in part by tax increases on higher-income people. The federal government pays more than 90 percent of the cost of the Medicaid expansion.
3. What would the Republican bills do?
Reverse the expansion of Medicaid, at different paces. The House bill would wind down funding for the expansion starting in 2020. The Senate bill would phase out the expansion’s funding between 2021 and 2024.
4. How else would they change Medicaid?
Currently, the federal government generally reimburses states for a fixed percentage of Medicaid expenditures, regardless of total spending or number of people enrolled. The Republican bills would impose a per-person limit on Medicaid reimbursement that would increase over time at a rate linked to inflation. The Congressional Budget Office said that under the House bill, which uses the rate of medical inflation to set the pace of spending, federal Medicaid spending would decrease by $834 billion between 2017 and 2026. The Senate bill would set a lower growth rate starting in 2025 by using the general inflation rate as a benchmark for much of Medicaid’s spending, rather than the medical inflation rate.
5. What would the impact be?
The Congressional Budget Office estimates that between 2017 and 2026, 15 million fewer people would be covered by Medicaid under the Senate bill, and 14 million fewer under the House bill, than under Obamacare. In both cases, Medicaid would account for about two-thirds of the increase in the number of uninsured projected by the CBO.
6. How else could poor people get coverage?
The House and Senate bills would make them eligible for subsidies for individual insurance policies, meaning people who are dropped from Medicaid could use the subsidies to buy their own coverage. Critics say the bill would make those policies unaffordable to low-income people by increasing deductibles.
7. What’s the debate about the bills like?
8. What’s Trump’s position?
During the 2016 campaign, Trump said that unlike other Republican candidates he would not cut Medicaid, Medicare or Social Security. But he did support the House health-care bill. After McConnell introduced a draft version of his bill, Sean Spicer, the White House spokesman, said that Trump was “very supportive” of the bill but was “committed” to making sure that people currently on Medicaid didn’t lose their coverage.
From Birth To Death, Medicaid Affects The Lives Of Millions
Medicaid pays the costs for about 62 percent of seniors who are living in nursing homes, some of the priciest health care available.
Medicaid is the government health care program for the poor.
That’s the shorthand explanation. But Medicaid is so much more than that — which is why it has become the focal point of the battle in Washington to repeal and replace the Affordable Care Act, also known as Obamacare.
President Barack Obama expanded Medicaid under his signature health care law to cover 11 million more people, bringing the total number of people covered up to 69 million.
Now Republicans want to reverse that expansion, and they want to go much further in cutting back on the number of people covered and federal dollars spent. The legislation they’re contemplating in both the House and Senate shrinks and fundamentally restructures the program.
The report issued by the Congressional Budget Office on Monday estimates that 15 million people would lose coverage through Medicaid by 2026 under the proposed Senate bill.
Here are five key things to know about Medicaid as the debate moves forward.
Medicaid Makes Up Almost 10 Percent Of The Federal Budget
Medicaid is a joint federal/state program under which both costs and regulations are divided. Currently, it’s an open-ended program, where the governments pay for any covered medical costs that beneficiaries need.
Federal spending on Medicaid in 2015 was about $350 billion, almost one-tenth of the $3.7 trillion federal budget. That money is supplemented by the states, so total spending on Medicaid services was $545 billion that year. Those numbers have been increasing as health costs rise and the number of people who are eligible for the program expands.
That’s what makes Medicaid a rich target for Republicans who want to put a lid on its growth. The Senate and House health plans would cap the amount Medicaid will spend per person, and then give states that amount of money to administer the program largely as they please.
Medicaid Pays For Half Of All Births In The United States
Medicaid was established in 1965 as a program to help poor single parents on welfare, along with their children. Two decades after that, the federal government required states to cover poor women who were pregnant for the first time. And in the early 1990s, Congress expanded coverage for pregnant women further to ensure that all pregnant women and mothers of children under age 6 with incomes up to 133 percent of poverty — or $21,599 for a family of two — are covered. According to the Kaiser Family Foundation, about half of all births are now paid for by Medicaid, ranging from 72 percent in New Mexico in 2015 to 27 percent in New Hampshire
Medicaid Pays For Most People In Nursing Homes
Medicaid pays the costs for about 62 percent of seniors who are living in nursing homes. The reason? Many seniors enter retirement with low incomes and few assets. And over time, many middle-income people who saved for retirement spend down their assets on health care.
Inpatient nursing care is some of the priciest health care out there, so even though seniors accounted for only 9 percent of Medicaid beneficiaries in 2014, they used 21 percent of Medicaid dollars, according to the Kaiser Family Foundation.
If You Or Your Loved One Is Disabled, You May Qualify
Medicaid spends almost $200 billion a year caring for people with physical and intellectual disabilities. That’s about one-third of its budget, even though, according to the Center for Budget and Policy Priorities, only about 13 percent of those enrolled in Medicaid are disabled. The services offered to people with disabilities vary by state and can include inpatient care, home-based services including personal care such as bathing and feeding, school-based services for children and job coaching for adults who opt to live independently.
People Who Need Treatment For Opioid Addiction
For people who are addicted to opioids, the expansion of Medicaid has proved to be one of the only paths to treatment. The expansion, in 31 states and the District of Columbia, opened up coverage to adults without children who have incomes up to 138 percent of the federal poverty level. In 2015, the program spent nearly half a billion dollars on Suboxone, a drug used to help those addicted to opioids control their cravings and stop using. Several studies have credited the expansion of Medicaid to better access to medication-assisted treatment, which is the most successful treatment for substance abuse.
Other Adults
About 11 million people got new health coverage through the expansion of Medicaid under the Affordable Care Act. Almost two-thirds of those fall into the category of the working poor, and another 12 percent are looking for work, according to an article published by Health Affairs in March. Many low-wage jobs don’t come with health benefits, and insurance premiums are often too high for people living on the edge of poverty to buy coverage.
Under the House bill and proposed Senate bill, the people who gained coverage under Medicaid expansion would be among the first to lose insurance.
Why the Senate’s health-care plan wouldn’t work in the real world
Drew Altman is president and chief executive of the Henry J. Kaiser Family Foundation.
Monday’s report on the Senate health-care bill from the Congressional Budget Office said that 22 million people would lose coverage under the plan and that coverage in the non-group market would become far stingier than it is today. By Tuesday the bill had been pulled back for revision. The quick sequence was revealing: Senators clearly could use some extra time to figure out how to bridge a giant gap between policy theory and reality.
The CBO report illustrates how policymaking can become divorced from the reality of people’s lives. Here are three big examples of how the Senate health-care bill, as currently configured, may sound one way in theory (and in talking points) but would work out quite another way in practice.
First, the bill phases out the Affordable Care Act’s 90 percent federal match for expanded Medicaid eligibility over four years, reducing it to each state’s regular matching rate. The theory is that this phase-down period would provide time for states to decide whether they want to replace the lost federal funds and continue their Medicaid expansions.
There is no way states can replace funds of this magnitude. If the expansion states try to replace even a significant share of the money, they will be forced to increase taxes or make significant cuts to other parts of their budgets, including for public schools, higher education, environmental protection and corrections. And because the federal match would be phased out incrementally beginning in the first year, states would have every incentive to end or freeze their expansions quickly. The idea that a phaseout would give states time to plan and adjust is driven by a belief that states can operate Medicaid with far less money if they have greater flexibility. In this case, with funding cuts this large, it’s simply wishful thinking.
That leads to reality gap No. 2: the theory that the 14 million people who are covered under the ACA’s Medicaid expansion could buy private coverage with the tax credits offered under the Republican plan, in effect privatizing the Medicaid expansion. This is the biggest reality check in the Senate bill.
Let’s look at a typical adult covered by the Medicaid expansion. He is a 35-year-old man who lives in, say, Minden, Nev., makes $15,000 a year and may even have voted for President Trump. Under the Senate plan, he could buy a policy costing him about $400 per year after using his tax credit, but his plan would come with a deductible of more than $6,000 a year. (The Senate plan’s policies are calibrated to cover just 58 percent of costs.) On a $15,000 income, he cannot afford to get sick with a policy like that. Assuming he has a car to get to work, pays rent, eats food and otherwise has the same basic expenses as any other human being, such a policy would be far from affordable for him. In fact, this is why this hypothetical Trump voter was uninsured before Medicaid was expanded in his state; like millions of his counterparts across the country, he could not afford private coverage.
The Senate plan also trims back the pool of people in the non-group market who will be eligible for tax credits, by reducing the threshold from four to 3½ times the federal poverty line. That leads to reality gap No. 3. Consider a 60-year-old woman in the town of Strong, Maine, making just less than $45,000 a year. She has high blood pressure, takes daily medication and needs regular monitoring because of her previous thyroid cancer. Under the ACA, she is eligible for a premium tax credit of about $7,000 and a comprehensive policy with a premium cost to her of about $4,500 in 2020, when the Senate health-care bill would take effect. Under the Senate plan, she would not be eligible for a tax credit. A similar plan under the Senate bill would cost her more than $15,000, or one-third of her income.
Gaps between the theory and practice of policy are not some Republican creation. Under the ACA, many people have struggled with costs or were forced to change plans and provider networks annually to keep their premiums down. But the current Senate bill takes this divergence to a new level. Private insurance cannot be better than Medicaid if it is unaffordable; states do not have some magic way to cover millions of people with far less money.
The bill may now be altered, and senators will certainly hear from constituents over the holiday recess. They should listen carefully to what they have to say. As it’s written, the Senate health-care plan would substantially widen the gap between policy theory and the real world — making coverage unaffordable for millions more Americans.
Millions of Americans Would Face a Six-Month Waiting Period to Get Health Insurance Under the Senate’s ACA Repeal Bill
Senate Republicans this week added a provision to their bill aimed at repealing and replacing the Affordable Care Act (ACA). The new provision of “The Better Care Reconciliation Act” replaces the ACA’s individual requirement to have health insurance or face a tax penalty with a requirement to maintain continuous coverage. Anyone who applies for insurance in the individual market will be forced to wait six months for their coverage to begin if they had a gap in their insurance of more than 63 days in the prior year. People enrolling either during an open enrollment period or in a special enrollment period are subject to the waiting period. Even newborn or adopted children could face a waiting period if they were not enrolled within 30 days of birth or adoption.
Data from the 2016 Commonwealth Fund Biennial Health Insurance Survey indicate that if such a policy had been in effect in 2016, an estimated 21 million working-age adults would have been locked out of coverage for six months had they tried to buy a health plan in the individual market.
How Many People Would Be Subject to the Waiting Period?
The Biennial Health Insurance Survey shows that in 2016, 21 percent of adults ages 19 to 64, or an estimated 40 million people, experienced a gap in their health insurance. These adults reported that they were either uninsured at the time of the survey, or that they were insured and had a gap in coverage earlier in the year.
Among this group with a gap in insurance, 75 percent, or about 30 million people, had been uninsured for more than three months, which is longer than the 63-day gap period allowed under the Senate bill.
Among the 30 million people with a coverage gap, 2 million had individual market coverage at the time of the survey and 19 million were uninsured. Had the Senate bill been in effect in 2016, 2 million people would have been forced to wait six months before their coverage kicked in. And up to 19 million people would potentially have to wait if they were to try and sign up for individual market coverage.
Those who were able to gain employer coverage or Medicaid would have been spared the six-month waiting period. Unlike the ACA individual requirement to have health insurance, the Senate bill’s requirement to maintain continuous coverage is not a universally shared responsibility. It affects those Americans whose only option for coverage is the individual market.
Policy Implications
The ACA individual mandate is reviled by the law’s opponents. Many believe that the penalties for not having coverage are too small relative to premiums to encourage those who place a low value on insurance to enroll. To encourage greater enrollment, policymakers could increase the ACA penalties and lower what people pay in premiums by increasing subsidies.
But the Senate bill’s continuous coverage requirement is a punitive substitute for the ACA mandate. People who lose their jobs and their insurance during the year and don’t find a new job with health benefits within the 63 day period could find themselves facing a half-year waiting period, even if they wait until the open enrollment period to apply for a plan. During that lengthy time without insurance, people could be diagnosed with cancer or have a serious accident that could leave them with catastrophic medical costs. Or they might avoid care entirely.
The CBO estimate projects that just next year 15 million people will become uninsured, mainly because of the repeal of the individual mandate penalty. Not only will the Senate bill provision potentially inflict suffering on millions of people, the CBO estimates it will do little to stabilize the markets.
H.R. 1628, Better Care Reconciliation Act of 2017
https://www.cbo.gov/publication/52849
Click to access 52849-hr1628senate.pdf
The Congressional Budget Office and the staff of the Joint Committee on Taxation (JCT) have completed an estimate of the direct spending and revenue effects of the Better Care Reconciliation Act of 2017, a Senate amendment in the nature of a substitute to H.R. 1628. CBO and JCT estimate that enacting this legislation would reduce the cumulative federal deficit over the 2017-2026 period by $321 billion. That amount is $202 billion more than the estimated net savings for the version of H.R. 1628 that was passed by the House of Representatives.
The Senate bill would increase the number of people who are uninsured by 22 million in 2026 relative to the number under current law, slightly fewer than the increase in the number of uninsured estimated for the House-passed legislation. By 2026, an estimated 49 million people would be uninsured, compared with 28 million who would lack insurance that year under current law.
Following the overview, this document provides details about the major provisions of this legislation, the estimated costs to the federal government, the basis for the estimate, and other related information, including a comparison with CBO’s estimate for the House-passed act.
Effects on the Federal Budget
CBO and JCT estimate that, over the 2017-2026 period, enacting this legislation would reduce direct spending by $1,022 billion and reduce revenues by $701 billion, for a net reduction of $321 billion in the deficit over that period (see Table 1, at the end of this document):
- 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.
Pay-as-you-go procedures apply because enacting this legislation would affect direct spending and revenues. CBO and JCT estimate that enactment would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2027. The agencies expect that savings, particularly from Medicaid, would continue to grow, while the costs would be smaller because a rescinded tax on employees’ health insurance premiums and health plan benefits would be reinstated in 2026. CBO has not completed an estimate of the potential impact of this legislation on discretionary spending, which would be subject to future appropriation action.
Effects on Health Insurance Coverage
CBO and JCT estimate that, in 2018, 15 million more people would be uninsured under this legislation than under current law—primarily because the penalty for not having insurance would be eliminated. The increase in the number of uninsured people relative to the number projected under current law would reach 19 million in 2020 and 22 million in 2026. In later years, other changes in the legislation—lower spending on Medicaid and substantially smaller average subsidies for coverage in the nongroup market—would also lead to increases in the number of people without health insurance. By 2026, among people under age 65, enrollment in Medicaid would fall by about 16 percent and an estimated 49 million people would be uninsured, compared with 28 million who would lack insurance that year under current law.
Stability of the Health Insurance Market
Decisions about offering and purchasing health insurance depend on the stability of the health insurance market—that is, on the proportion of people living in areas with participating insurers and on the likelihood of premiums’ not rising in an unsustainable spiral. The market for insurance purchased individually with premiums not based on one’s health status would be unstable if, for example, the people who wanted to buy coverage at any offered price would have average health care expenditures so high that offering the insurance would be unprofitable.
Under Current Law. Although premiums have been rising under current law, most subsidized enrollees purchasing health insurance coverage in the nongroup market are largely insulated from increases in premiums because their out-of-pocket payments for premiums are based on a percentage of their income; the government pays the difference between that percentage and the premiums for a reference plan (which is the second-lowest-cost plan in their area providing specified benefits). The subsidies to purchase coverage, combined with the effects of the individual mandate, which requires most individuals to obtain insurance or pay a penalty, are anticipated to cause sufficient demand for insurance by enough people, including people with low health care expenditures, for the market to be stable in most areas.
Nevertheless, a small number of people live in areas of the country that have limited participation by insurers in the nongroup market under current law. Several factors may lead insurers to withdraw from the market—including lack of profitability and substantial uncertainty about enforcement of the individual mandate and about future payments of the cost-sharing subsidies to reduce out-of-pocket payments for people who enroll in nongroup coverage through the marketplaces established by the ACA.
Under This Legislation. CBO and JCT anticipate that, under this legislation, nongroup insurance markets would continue to be stable in most parts of the country. Although substantial uncertainty about the effects of the new law could lead some insurers to withdraw from or not enter the nongroup market in some states, several factors would bring about market stability in most states before 2020. In the agencies’ view, those key factors include the following: subsidies to purchase insurance, which would maintain sufficient demand for insurance by people with low health care expenditures; the appropriation of funds for cost-sharing subsidies, which would provide certainty about the availability of those funds; and additional federal funding provided to states and insurers, which would lower premiums by reducing the costs to insurers of people with high health care expenditures.
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. (Under current law and this legislation, states can apply for Section 1332 waivers to change the structure of subsidies for nongroup coverage; the specifications for essential health benefits [EHBs], which set the minimum standards for the benefits that insurance in the nongroup and small-group markets must cover; and other related provisions of law.) Substantial federal funding to directly reduce premiums would be available through 2021. Premium tax credits would continue to provide insulation from changes in premiums through 2021 and in later years. Those factors would help attract enough relatively healthy people for the market in most areas of the country to be stable, CBO and JCT anticipate. That stability in most areas would occur even though the premium tax credits would be smaller in most cases than under current law and subsidies to reduce cost sharing—the amount that consumers are required to pay out of pocket when they use health care services—would be eliminated starting in 2020.
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.
Effects on Premiums and Out-of-Pocket Payments
The legislation would increase average premiums in the nongroup market prior to 2020 and lower average premiums thereafter, relative to projections under current law, CBO and JCT estimate. To arrive at those estimates, the agencies examined how the legislation would affect the premiums charged if people purchased a benchmark plan in the nongroup market.
In 2018 and 2019, under current law and under the legislation, the benchmark plan has an actuarial value of 70 percent—that is, the insurance pays about 70 percent of the total cost of covered benefits, on average. In the marketplaces, such coverage is known as a silver plan.
Under the Senate bill, average premiums for benchmark plans for single individuals would be about 20 percent higher in 2018 than under current law, mainly because the penalty for not having insurance would be eliminated, inducing fewer comparatively healthy people to sign up. Those premiums would be about 10 percent higher than under current law in 2019—less than in 2018 in part because funding provided by the bill to reduce premiums would affect pricing and because changes in the limits on how premiums can vary by age would result in a larger number of younger people paying lower premiums to purchase policies.
In 2020, average premiums for benchmark plans for single individuals would be about 30 percent lower than under current law. A combination of factors would lead to that decrease—most important, the smaller share of benefits paid for by the benchmark plans and federal funds provided to directly reduce premiums.
That share of services covered by insurance would be smaller because the benchmark plan under this legislation would have an actuarial value of 58 percent beginning in 2020. That value is slightly below the actuarial value of 60 percent for “bronze” plans currently offered in the marketplaces. Because of the ACA’s 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. Under current law for a single policyholder in 2017, the average deductible (for medical and drug expenses combined) is about $6,000 for a bronze plan and $3,600 for a silver plan. CBO and JCT expect that the benchmark plans under this legislation would have high deductibles similar to those for the bronze plans offered under current law. Premiums for a plan with an actuarial value of 58 percent are lower than they are for a plan with an actuarial value of 70 percent (the value for the reference plan under current law) largely because the insurance pays for a smaller average share of health care costs.
Although the average benchmark premium directly affects the amount of premium tax credits and is a key element in CBO’s analysis of the budgetary effects of the bill, it does not represent the effect of this legislation on the average premiums for all plans purchased. The differences in the actuarial value of plans purchased under this legislation and under current law would be greater starting in 2020—when, for example, under this bill, some people would pay more than the benchmark premium to purchase a silver plan, whereas, under current law, others would pay less than the benchmark premium to purchase a bronze 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.
By 2026, average premiums for benchmark plans for single individuals in most of the country under this legislation would be about 20 percent lower than under current law, CBO and JCT estimate—a smaller decrease than in 2020 largely because federal funding to reduce premiums would have lessened. The estimates for both of those years encompass effects in different areas of the country that would be substantially higher and substantially lower than the average effect nationally, in part because of the effects of state waivers. Some small fraction of the population is not included in those estimates. CBO and JCT expect that those people would be in states using waivers in such a way that no benchmark plan would be defined. Hence, a comparison of benchmark premiums is not possible in such areas.
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.
Uncertainty Surrounding the Estimates
CBO and JCT have endeavored to develop budgetary estimates that are in the middle of the distribution of potential outcomes. Such estimates are inherently inexact because the ways in which federal agencies, states, insurers, employers, individuals, doctors, hospitals, and other affected parties would respond to the changes made by this legislation are all difficult to predict. In particular, predicting the overall effects of the myriad ways that states could implement waivers is especially difficult.
CBO and JCT’s projections under current law itself are also uncertain. For example, enrollment in the marketplaces under current law will probably be lower than was projected under the March 2016 baseline used in this analysis, which would tend to decrease the budgetary savings from this legislation. However, the average subsidy per enrollee under current law will probably be higher than was projected in March 2016, which would tend to increase the budgetary savings from this legislation. (For a related discussion, see the section on “Use of the March 2016 Baseline” on page 15.)
Despite the uncertainty, the direction of certain effects of this legislation is clear. For example, the amount of federal revenues collected and the amount of spending on Medicaid would almost surely both be lower than under current law. And the number of uninsured people under this legislation would almost surely be greater than under current law.
Intergovernmental and Private-Sector Mandates
CBO has reviewed the nontax provisions of the legislation and determined that they would impose intergovernmental mandates as defined in the Unfunded Mandates Reform Act (UMRA) by preempting state laws. Although the preemptions would limit the application of state laws, they would impose no duty on states that would result in additional spending or a loss of revenues. JCT has determined that the tax provisions of the legislation contain no intergovernmental mandates.
JCT and CBO have determined that the legislation would impose private-sector mandates as defined in UMRA. On the basis of information from JCT, CBO estimates that the aggregate cost of the mandates would exceed the annual threshold established in UMRA for private-sector mandates ($156 million in 2017, adjusted annually for inflation).
The cruel reality of high-speed health care legislating
https://www.vox.com/policy-and-politics/2017/6/26/15865598/senate-health-bill-fast-speed
Four days ago, Senate Republicans got their first glimpse at their leadership’s plan to repeal and replace Obamacare.
Three days from now, Senate Republicans are expected to vote on that plan.
Let that sink in for a moment: We are already more than halfway through the Senate Republicans’ consideration of their health care bill — and there’s still a lot we don’t know about it, and what it would do.
The Senate is running its health care process at breakneck speed. Republicans are aiming to introduce the bill, have it scored by the Congressional Budget Office, and vote on it in exactly one week. It is a compressed and highly unusual process, which some Republicans are rebelling against.
“We don’t have enough information,” Sen. Ron Johnson (R-WI) told NBC’s Meet the Press on Sunday. “I don’t have the feedback from constituencies who will not have had enough time to review the Senate bill. We should not be voting on this next week.”
Legislating so quickly means that fewer people will have time to offer feedback and shape the bill — especially those who stand to be affected by the bill’s overhaul of the American health care system.
At the same time, the speed of the process appears to have produced some sloppy bill-writing. When it was unveiled Thursday, the Senate bill included glaring omissions in how it constructs an insurance market, which experts said could have caused that market to collapse. New policies were added over the weekend to patch those holes, but the public has not seen them.
Other policy concerns are being discovered by the day — like that this bill might raise small business insurance premiums — as analysts scramble to make sense of the document.
I’ve heard from multiple former Republican aides, who served either for the Bush administration or on Capitol Hill, who were shocked to see such large omissions. Writing good policy takes time and deliberation, especially when it is something as complex as re-regulating the health insurance marketplace.
Considering policy takes time, as well. On Sunday at a Koch donor retreat in Colorado, Sen. Ben Sasse (R-NE) was asked onstage if he would vote for the bill. He refused to take a position — in part, he said, because he had only read about 40 percent of the text.
At the same event, Sen. John Cornyn (R-TX) told reporters the hasty process was necessary in order to ensure stability in the individual health insurance exchanges created under the Affordable Care Act, which he said were in “meltdown.” But while the exchanges are being unsettled by deliberate actions from the Trump administration, they are nowhere near melting down.
The real reason for the speedy process is entirely political: to pass a health bill, in whatever form can get a Senate majority, before opposition can mount further. And there could be big consequences for millions of Americans as a result.
The Republicans are still writing major parts of a bill they want to vote on this week
10 Stray Thoughts on the Senate GOP’s Health Care Bill
Senate Republicans have released a draft version of their bill to repeal and replace portions of the Affordable Care Act (ACA, or “Obamacare”). Here are 10 stray thoughts as we all begin poring over the text.
- The Senate version renames the bill the Better Care Reconciliation Act (BCRA) of 2017. The House version is the American Health Care Act (AHCA) of 2017. The differing abbreviations provide a nice shorthand for distinguishing between the two versions of the bill.
- Those claiming that the BCRA “repeals and replaces” the ACA overstate their case. The BCRA modestly alters the AHCA, which, in turn, modestly alters the ACA. Most changes are highly technical, and many are downright arcane. Neither the BCRA nor the AHCA will dismantle the core structures of the ACA.
- Those bellowing that tens of millions will lose insurance coverage, consigning myriad Americans to sickness and death are also blowing smoke. The dire predictions on coverage compare hazy predictions of hypothetical laws with impossibly optimistic expectations of the current law. And in America, the uninsured have not gone without care, though the financing of that care has been messy. In addition, economic research has established a much weaker connection between coverage and health than intuition might suggest.
- Both the House and Senate bills eliminate the individual mandate that requires Americans to buy health insurance or pay a tax in lieu of coverage. The House bill would replace the mandate with a weaker penalty, thereby destabilizing the ACA’s already unstable insurance markets. The Senate bill would eliminate the mandate without replacing it at all, likely destabilizing things even faster.
- The BCRA drops all ACA taxes except for the “Cadillac Tax” on high-cost insurance plans, action on which has been pushed to 2026. Implementation or elimination of this tax has been pushed back repeatedly. We may have flying Cadillacs before this issue is finally resolved.
- The BCRA phases out the ACA’s Medicaid expansion more slowly than the AHCA and alters the eligibility rules significantly.
- In the Senate version, insurance premium subsidies are a bit larger but cease once households reach three-and-a-half times the federal poverty level (FPL), rather than the House version’s four times the FPL. In addition, in states that did not expand Medicaid, households with income under 100 percent of FPL will be eligible for subsidies, thus filling a gap the ACA left.
- State waivers from ACA provisions are broader in some areas. For example, states can eliminate health insurance exchanges altogether. State waivers are narrower in other areas. The Senate version more clearly retains the ACA’s guarantees for individuals with pre-existing conditions.
- Like the ACA, neither the BCRA nor the AHCA tackles the real problems of American health care. The ACA promised lots of care to tens of millions of newly insured people and quite a bit of free stuff to hundreds of millions of previously insured people. But the law did not appreciably increase the supplies of doctors, nurses, hospital beds, and so forth. Nor did it markedly change how we use those resources. The ACA redistributed care and money from some people to other people. For the most part, the BCRA and AHCA do the same.
- Finally, for the sake of future health care reform, the best outcome in 2017 may be one in which Republicans can claim “We repealed and replaced Obamacare” while Democrats can simultaneously claim, “We saved Obamacare.” Then perhaps we can turn our attention away from insurance technicalities and toward changing how we actually produce care for patients. That will allow us to provide better health to more people at lower cost year after year.
HENRY KOTULA 