This week the Congressional Budget Office (CBO) released its report on the impact of the revised Better Care Reconciliation Act (BCRA), the Senate bill to repeal and replace the Affordable Care Act. The revised bill made changes aimed at winning over Republicans who oppose the bill.
The CBO score indicates that those changes made no difference in the number of people who would lose insurance under the bill if it were to become law. The CBO projects that 22 million people would lose their coverage by 2026 — and millions more would see increased out-of-pocket costs. But the CBO score does not include an analysis of the most controversial change in the revised bill, an amendment modeled on one offered by Senator Cruz that would allow insurers to charge people more on the basis of their health. The insurance industry has already pointed out that this amendment would create conditions that could lead to a premium death spiral in the individual market and widespread losses of insurance. So it is likely that the CBO report underestimates the coverage losses under the revised BCRA.
The CBO projects that if the BCRA were to become law, the number of people without health insurance would nearly double to 50 million people by 2026, or more than the number of uninsured in the year the Affordable Care Act (ACA) passed.
These losses stem from the fact that the revised bill leaves the original BCRA’s provisions intact, including a phase-out of the ACA Medicaid expansion starting in 2021, severe cuts to the Medicaid program, and smaller premium tax credits compared to the ACA that make coverage less affordable for low-income people. (See our original post on the CBO score for the bill for a more complete overview of provisions.)
Coverage Losses Would Hit Lower-Income and Older People the Hardest
The coverage losses would be borne disproportionately by people with low and moderate incomes and particularly by older people who purchase their own coverage. On the individual market, low-income Americans would pay higher premiums for insurance that covers fewer costs. For example, under the ACA a 64-year-old enrolled in a silver-level marketplace plan who has an income of $26,500 has an average premium of $15,300, but her tax credit covers all but $1,700 of her costs. Under the BCRA, this person’s premium would be $4,450 higher than it is under the ACA, and even after the tax credit she would be left paying $5,500, an increase of 224 percent.
The revised bill would allow people to use health savings accounts (HSAs) to pay their premiums. But HSAs are pre-tax savings accounts whose tax benefits increase with income. Moreover, it is unlikely that the 64-year-old in the example would have the excess income required to finance an HSA in the first place. The tax benefits from this change would flow to higher-income Americans.
The updated bill also provides about $70 billion in new funds for states to reduce premiums through mechanisms like reinsurance. And while the CBO estimates this money would lead to slightly lower premiums than in the previous bill, it’s not enough to make coverage sufficiently affordable for the 22 million people projected to lose health insurance.
More Underinsured People
Most people who maintain individual market coverage under the BCRA would pay more for health insurance that covers less. Under the ACA, the 64-year-old in our example qualifies for cost-sharing subsidies that significantly reduce her deductibles and cost-sharing. Because BCRA repeals those subsidies, this person would see her deductible for the same plan jump from about $800, or 3 percent of her income, to $5,000, or 19 percent of her income. If she were to buy the BCRA’s lower-cost “benchmark” plan, the CBO projects her deductible would more than double to $13,000, or about half of her income. Combined with her premium costs, she could spend 56 percent of her income on health care in a given year.
In fact, the estimated size of deductibles in the individual market would be so high it is unlikely that most people with low and moderate incomes would end up purchasing a plan. Someone with an income of $11,400 in 2026 would face a deductible that would exceed his or her annual income.
Deep Cuts to Medicaid
The revised BCRA leaves intact the original bill’s deep cuts to Medicaid, eliminating $756 billion in federal funding of the Medicaid program over the decade. The CBO estimates that 15 million people would lose coverage by 2026 as a result. And because the spending cuts go well beyond the ACA’s Medicaid expansion, they also threaten the health of an additional 60 million people who depend on the program for care including the elderly, people with disabilities, children, and pregnant women.
Faced with criticism that such spending cuts would make it harder for communities to address the nation’s deepening opioid epidemic, Senate Republicans allocate $45 billion in the revised bill for opioid treatment. But this amount would fall well short of the amount needed to cover the full health care needs of an estimated 220,000 people with opioid use disorder who are at risk of losing their Medicaid or marketplace coverage.
Senate Republicans now have several versions of ACA repeal and replace bills that they may bring to a vote next week: the original BCRA, the revised BCRA with an amendment that allows insurers to charge people more based on their health, the revised BCRA without the amendment, and a bill released this week that simply repeals the ACA with a two-year delay. It is unclear which bill they will choose to vote on. But it’s clear that each bill has the same bottom-line result: coverage losses for millions of Americans and a heavy toll on many low- and middle-income people’s personal budgets.
The author thanks Munira Gunja for research assistance.