The Congressional Budget Office (CBO) projected that under the Senate’s healthcare reform bill millions of Americans would lose their health insurance coverage, individual market premiums would decline over the long-term, and the federal deficit would be reduced by $202 billion more than under the House’s version of the bill. This score did not do anything to bridge the current divide between GOP conservatives and moderates over the scope of insurance protections, higher cost for the poor and elderly, rolling back Medicaid expansion, reducing Federal spending on Medicaid, or anti-abortion provisions.
Republican leaders currently don’t have the necessary 50 votes to pass the bill, so we expect to see modifications to the bill designed to gain support. There is plenty of room for negotiation – at least in terms of spending – since the Senate bill only needed to produce savings of $119 billion to match the savings generated by the House bill. Leaders are pushing for a vote following the July 4 recess.
What was the score?
Effect on premiums
The report estimates the average premium for a silver plan in the individual market would be 20% higher in 2018 and 10% higher in 2019 under the Senate bill than under the ACA. In 2020, average premiums would be about 30% lower, but this is measured against a less-comprehensive bronze plan, with higher-out-of-pocket costs. Out-of-pocket costs would also increase significantly for people in states that choose to narrow the scope of essential health benefits by opting out of ACA standards. By 2026, premiums would be 20% lower—a smaller decrease than in 2020 – because federal funding to reduce premiums would have lessened.
Older, poorer people would see big increases in premiums. This is of interest to employers since most pre-Medicare retirees obtain their coverage in the individual market. Under the Senate bill, a 64-year-old making $26,500 per year would pay $6,500 in premiums for a 70% actuarial value plan. Under the ACA, the same individual would pay $1,700 and the plan would have a much higher actuarial value (87%) because of cost-sharing subsidies that are available under the ACA but eliminated in the Senate bill.
“Lock-out” replaces the individual mandate
One change that has been made to the bill already was adding a six-month “lock out” period: People who can’t demonstrate they have been continuously covered have to wait 6 months for an individual policy to take effect (they don’t pay premiums during this period). This rule would apply to anyone with a break in coverage of more than 63 days in the prior 12 months. The House bill would have allowed insurance companies to charge people with a break in coverage up to 30% more for one year.
What does this all mean?
The CBO report made the road to 50 votes rougher, mainly because the number of uninsured is basically the same as under the House bill that the Senate Republicans sharply criticized. For employers, this means it may take longer to get anything done to address important issues like the future of the individual insurance market.
Either way, the increase in uninsured is material as it relates to potential increases in the cost of employer-provided care. In states that expanded Medicaid under the ACA and reduced the number of uninsured, hospitals benefited from lower levels of uncompensated care. Much of the savings in the Senate bill come from cuts to Medicaid, which would reverse these gains and likely result in more cost-shifting to employer plans.