Almost as soon as the Congressional Budget Office released its hotly awaited analysis of the Senate GOP healthcare bill, the media pounced on the CBO’s projection that 15 million fewer Americans would have health insurance in 2018 and 22 million in 2026 if the measure became law.
The White House immediately denounced the prognosticating skills of the nonpartisan CBO, saying it “has consistently proven it cannot accurately predict how healthcare legislation will impact insurance coverage.” For Republicans, though, some loss in coverage should be expected. After all, one purpose of the bill is to roll Medicaid eligibility back to where it was before the Affordable Care Act included everyone earning less than 138% of the federal poverty line, even able-bodied childless adults. To many in the GOP, that was a mistake crying out for correction, not a step forward as a society.
Their main goal isn’t to preserve the coverage gains achieved by the ACA, it’s to cut the premiums paid by those who aren’t covered by large employer health plans. And on that front, the CBO offers what looks at first blush like good news for the GOP. After an initial spike in premiums in 2018 (projected to be 20% higher than if current law were left in place), rates would head in the other direction, dropping 30% below where they would be under current law in 2020 before ending up about 20% below current law projections in 2026, the CBO report predicts.
The bottom line for consumers is insurance plans that cover less and carry lower premiums but impose far higher out-of-pocket costs.
Now for the reality check. First off, we’re not talking about rates being lower in 2020 than they are today — just that they wouldn’t be as high as they would be under current law. And second, the main reasons premiums would be comparatively lower, the CBO predicts, are that the policies would be worth less, and federal taxpayers would be kicking in more. As the CBO put it, “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.”
This gets a little weedy, but the bottom line for consumers is insurance plans that cover less and carry lower premiums but impose far higher out-of-pocket costs. As in, two-thirds higher.
The “benchmark” plans are the ones that determine how large the premium subsidies for qualifying individuals will be. Under current law, such plans cover 70% of a consumer’s expected medical costs; under the Senate bill, the benchmark will cover only 58% of those costs starting in 2020. The report goes on to note that because of the insurance regulations in current law, which the Senate bill would not change, insurers would have no choice but to impose very high deductibles on their policies.
So, average deductibles for the benchmark plan would rise from about $3,600 today to about $6,000 in 2020 under the Senate bill, the CBO projected. Lower premiums are great, but deductibles that high would make insurance effectively worthless. As the report puts it, “As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan, CBO and [the Joint Committee on Taxation] estimate.”
One thing that California has shown is that signing up lots of low-income people for coverage can be a good thing for everyone buying coverage because it brings in healthy folks, not just the ones who need care. Regardless, if the CBO is right about what will happen to deductibles, Republicans will have a tough time saying this bill hits its target — even if it does lead, eventually, to premiums that aren’t as high as they would be under current law.