The Congressional Budget Office has spoken: The Obamacare repeal bill passed by the House GOP earlier this month could destroy the individual insurance markets in states where one-sixth of the population resides. It would cost 23 million people their insurance coverage within 10 years. And in many states it would be terrible for any but the most healthy Americans.
That's the CBO's score of the latest version of the House bill, which only passed after it was amended to allow individual states to eviscerate consumer protections written into the Affordable Care Act. The CBO's bottom line is that the bill is still a train wreck that will cost millions of Americans their coverage and sharply raise costs for millions more.
The CBO found that the amendment, proposed by Rep. Tom MacArthur (R-N.J.), will make the individual insurance markets more unstable in states that take full advantage of its provisions. The analysts estimated that those states would encompass about one-sixth of the U.S. population, although the changes in the law would directly affect only residents in the individual insurance market.
In those states, average health plan premiums would be lower, because their benefits would be skimpier. That's not much of an issue for buyers who remain healthy. But for others, it could be a disaster. They'd be subject to such sharp premium increases to cover their medical conditions that, for many, coverage would be priced out of reach.
"Over time, it would become more difficult for less healthy people (including people with preexisting medical conditions) in those states to purchase insurance," the CBO projected. In those states, the individual market "would start to become unstable beginning in 2020."
The CBO analysis sharpens the conundrum over healthcare for the Senate's Republican majority, which is working on its own repeal bill. Provisions the House added ostensibly to make the bill more palatable to moderates don't offer a significant improvement in terms of the number of Americans whose coverage is jeopardized, the CBO found. Opinion polls have shown that the vast majority of respondents dislike the bill.
The CBO didn't specify which states it thought would take full advantage of the waivers. It forecast that states encompassing about half the U.S. population would not seek waivers at all, and those with one-third of the population would seek limited waivers that would reduce average premiums but raise costs for people with medical needs.
The CBO gave short shrift to a provision, touted by the House GOP leadership, that added $8 billion to a pool to help provide coverage to those with preexisting conditions. That sum "would not be sufficient to substantially reduce the large increases in premiums for high-cost enrollees," it said.
The most egregious provisions of the original House repeal bill remain. The bill strips $834 billion from Medicaid funding over 10 years, which would drive 14 million people out of that program. An additional $665 billion would be cut from the ACA's premium and cost-sharing subsidies, making insurance more expensive for lower-income Americans and potentially driving them out of the insurance market.
The CBO analysis has been anxiously awaited since the House passed the amended repeal bill on May 4, before the bipartisan research body had a chance to gauge its impacts. Attention was particularly focused on the CBO's judgment of the effects of the MacArthur amendment.
The amendment would give states the option of waiving two categories of ACA rules. The first category involves essential health benefits, a roster of 10 services that all plans in the individual market must provide. These include maternity coverage, hospitalization, prescription drugs, and mental health and addiction treatment. Under the law, those benefits can't be subject to annual or lifetime benefit limits.
The second category pertains to "community rating": The ACA allows premium variations only for smokers and geographic location, or within stiff limits for age. The MacArthur amendment allows states to opt to allow insurers to base their premiums for some buyers on their medical conditions — a return to the pre-ACA market in which buyers were routinely rejected for coverage or charged high prices because of their medical histories or conditions.
Both ACA restrictions tend to raise average premiums, but they also ensure that all applicants can obtain coverage at a reasonable price without regard to their medical conditions.
The CBO found that even in states requesting "moderate" waivers — say one of the two waivers and limited changes in the law — the impact on people with medical conditions could be significant.
"Although relatively young and healthy people might prefer plans with fewer benefits and lower premiums," it observed, "many older people and people who use the services that were no longer covered could face substantial out-of-pocket costs and would not find such plans attractive."
Or as David Anderson, a health insurance expert at Duke University, observed in a tweet, "Partial MacArthur is decent for young bad for old; Full MacArthur … good for healthy horrendous for unhealthy."