AHCA CBO Report Recap
The link is here. Their executive summary is here, along with a pretty graph that says something very mundane: the bill cuts spending enough for it to be passed with a simple majority in the Senate, immune to filibusters. $664 billion of the $1.1 trillion in fewer spending over 10 years go to cutting taxes under the American Care Act.
Bottom line: this bill still guts Medicaid like the old version and still screws over non-young rich in buying insurance.
Now, to the CBO’s hypothetical person, the fact that some states will gut all of Obamacare’s regulations means they can expect a slight discount on insurance whose prices are already forecasted as unaffordable. However, this now comes with the risk of your exchange blowing up in the next year or two. Is this a risk our society wants to take?
Detailed explanation of changes.
(Need to catch up? Consider reading what I said when the first CBO report came out.)
The report estimates 23 million more uninsured over 10 years by this bill, 1 million fewer than before. Most of this still comes from the complete restructuring of Medicaid in the bill (14 million)
According to CBO and JCT’s estimate, fewer people would be uninsured under the House-passed version of H.R. 1628 than under the previous version — about 2 million fewer people in 2020 and about 1 million fewer in 2026.
That difference in 2026 reflects the net result of two effects: 4 million more people with employment-based coverage, as employers in states making changes to market regulations would probably view the insurance products in the nongroup market as less desirable alternatives and decide to offer insurance to their employees…
3 million fewer people with nongroup coverage, as some would enroll in employment-based coverage, and others would become uninsured.
So the net gain is assuming employers pick up the slack with insurance and just pay more for them. The CBO model, I don’t think, actually lets employers reduce their second-best costs by just hiring fewer workers or working fewer hours (as the ACA’s regulation for healthcare coverage for people working 30+ hours was claimed to do by the right).
More directly, the level of insurance now offered by these employers is unspecified, especially as they can now get away with less generous plans. It could be that employers offer lower quality healthcare but sell it as if they were good.
The biggest novelty of the newest estimate is considering that states representing a sixth of the population will maximize waivers given in the new bill. This includes rolling back all regulations mandating coverage for “Essential Health Benefits” like prescriptions, ambulances, pregnancy care and mental health care. It also ends restrictions on charging people for preexisting conditions under the Community Rating system. Both these additions were given to appease the Freedom Caucus “full repealers” in the Republican Party.
While premiums may be lower according to the CBO, they are projecting something else: the collapse of the exchanges in those states.
However, the agencies estimate that about one-sixth of the population resides in areas in which the nongroup market would start to become unstable beginning in 2020. That instability would result from market responses to decisions by some states to waive two provisions of federal law, as would be permitted under H.R. 1628.
One type of waiver would allow states to modify the requirements governing essential health benefits (EHBs), which set minimum standards for the benefits that insurance in the nongroup and small-group markets must cover.
A second type of waiver would allow insurers to set premiums on the basis of an individual’s health status if the person had not demonstrated continuous coverage; that is, the waiver would eliminate the requirement for what is termed community rating for premiums charged to such people…
By choosing the former, people who are healthier than average would be able to purchase nongroup insurance with relatively low premiums.
Community-rated premiums would rise over time, and people who are less healthy (including those with preexisting or newly acquired medical conditions) would ultimately be unable to purchase comprehensive nongroup health insurance at premiums comparable to those under current law, if they could purchase it at all…
In a footnote, the CBO notes they have “broken out” the premium increases more by states that will not seek any waiver versus states that seek “moderate” waivers, read as states that will roll back mandatory coverage of essential benefits.
In their previous cost estimates, CBO and JCT projected that premiums for single policyholders in the nongroup market would be roughly 10 percent lower under H.R. 1628 than under current law. That figure encompassed a range of possible effects on premiums. For the half of the population in states that would not request waivers, the effects that CBO and JCT estimate for the House-passed version are similar to those in the prior estimates.
This changes the headline for several results. Because on average premiums will decrease, assuming a poor old person is not denied due to preexisting conditions, the premium went from $19500 in the old bill to… $18500 in the new one. Now these guys only lose around $12,000 in premium costs instead of $13,000.
Relative to their original aggregated premium decrease (a mix of states with no waiver versus states that will seek the smaller set of waivers), states that will seek the “moderate amount” of waivers show a smaller decrease in their premiums than the rise in states will not seek waivers.
For example, seeking waivers as before mean $200 premium decrease for a poor 21 year old and $1000 decrease for a poor 65 year old, as stated above. A state which do not seek waivers will see a $300 rise in premiums for the 21-year old and a $1500 increase for the 65-year old.
It must be said that these changes aren’t from changes between the failed and the passed bills; it’s just that the CBO decided to show more variation at the expense of people spinning the new data presentation as the new changes lowering costs.
The states which seek waivers on everything, including preexisting conditions, did not have premium rises displayed in the report. This is because the CBO fears a death spiral in the insurance market, and the uncertainty can’t be modelled:
As a result of the narrower scope of covered benefits and the difficulty less healthy people would face purchasing insurance, average premiums for people who did purchase insurance would generally be lower than in other states — but the variation around that average would be very large.
CBO and JCT do not have an estimate of how much lower those premiums would be.
In these “Death spiral” states with no regulation on preexisting conditions, the CBO also says what we’ve all believed regarding higher out-of-pocket costs and copays:
Services or benefits likely to be excluded from the EHBs in some states
include maternity care, mental health and substance abuse benefits, rehabilitative and habilitative services, and pediatric dental benefits. In particular, out-of-pocket spending on maternity care and mental health and substance abuse services could increase by thousands of dollars in a given year for the nongroup enrollees who would use those services.Moreover … 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. That could happen, for example, to some people who use expensive prescription drugs.
Right-wing think tankers have reasonably mentioned that the CBO model may exaggerate people’s responsiveness to buying health care insurance given subsidies. As far as I can tell, they have not said enough on the real possibility of a health care regime unravelling before our eyes, especially after years of neglect.
