CBO: ACA Replacement Would Force Enrollees to Pay More, Get Less

A new analysis of the GOP’s replacement for the Affordable Care Act (ACA) finds that enrollees would pay much higher premiums for skimpier coverage the covers fewer services, increasing individual deductibles and other out-of-pocket costs.

Consistent with prior estimates, the House Republican health bill – the American Health Care Act (HR 1628) — would cause 23 million people to lose coverage by 2026 and drive $834 billion in federal Medicaid cuts over the next 10 years, the Congressional Budget Office (CBO) found. This means the bill would result in nearly the same number of people losing their health insurance coverage as under earlier versions of the bill.  It also means that the bill would still reverse all of the historic coverage gains achieved since the ACA was enacted in 2010.

CBO finds that breaking the ACA’s fundamental structure would result in people paying much higher premiums for skimpier coverage. CBO finds that breaking the ACA’s fundamental structure would result in people paying much higher premiums for skimpier coverage that requires them to pay much more in deductibles and other out-of-pocket costs. And, in states that waive critical ACA market reforms barring insurers from charging higher premiums based on health status and requiring them to cover “essential health benefits,” people with pre-existing conditions would face even sharply higher premiums. Some would be unable to obtain coverage at all.

“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,” the report said, “if they could purchase it at all—despite the additional funding that would be available under H.R. 1628 to help reduce premiums.

“As a result, the nongroup markets in those states would become unstable for people with higher-than-average expected health care costs,” it said.  

The CBO report shows that in all states, millions of people would pay more under the AHCA due to its less generous tax credits and elimination of cost-sharing subsidies. The premium decrease that Republicans are touting is the average change in the sticker price of health insurance, without accounting for the AHCA’s large cuts to tax credits that reduce premiums for most people. The AHCA would cut tax credits by an average of $2,200 for current marketplace consumers in HealthCare.gov states, with consumers in 12 high-cost states losing more than $3,000 on average.

Premiums would rise 20 percent in 2018 and 5 percent in 2019, as the funding provided by the act to reduce premiums had a larger effect on pricing.

After 2019, premiums would level off and decline because a younger and healthier population would be purchasing the insurance and because the policies would cover fewer services. In addition, premiums would vary significantly according to health status and the types of benefits provided, and less healthy people would face extremely high premiums, despite the additional funding that would be available under H.R. 1628 to help reduce premiums.

Over time, it would become more difficult for less healthy people (including people with preexisting medical conditions) in those states to purchase insurance because their premiums would continue to increase rapidly. 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.

Moreover, the ACA’s ban on annual and lifetime limits on covered benefits would no longer apply to health benefits not defined as essential in a state. As a result, 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. Out-of-pocket payments for people who have relatively high health care spending would increase most in the states that obtained waivers.

Finally,

Although the AHCA purports to protect people with pre-existing conditions who maintain continuous coverage, CBO concludes that the bill would potentially allow the spread of medical underwriting to the entire nongroup market in a state rather than limiting it to those who did not have continuous coverage.

Moreover, as states eliminate “essential health benefits” requirements for what plans have to cover, people would see very large gaps in benefits and the return of annual and lifetime limits, sharply increasing their out-of-pocket costs. Some plans wouldn’t even cover major medical risks and “would not provide enough financial protection in the event of a serious and costly illness to be considered insurance,” CBO said.

Info: https://goo.gl/PFvEOe (report).

About Frank Klimko

Frank Klimko is a nationally known journalist, grants expert and speech writer/speaker. He has years of experience helping nonprofits devise lists of the right funding opportunities and secure funding from these foundations and corporate entities. Clients have focused on an array of areas including child care, homeless, hunger and K-12 education. Additionally, he is a Freedom of Information Act expert, who has helped numerous clients with securing proprietary information from the federal government. Currently, Frank Klimko writes the Children & Youth Funding Report and Private Grants Alert, which are Washington DC-based publications. CYF is a daily publication covering Congress, the Education Dept. and the various federal regulatory agencies. PGA, another daily publication, covers the world of private philanthropy.
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