The Congressional Budget Office has released its analysis of the Senate GOP’s Better Care Reconciliation Act, and it’s a bloodbath. The bill is expected to lead to 15 million fewer people with health insurance by 2018 — and 22 million fewer by 2026.
But the most devastating of the CBO’s conclusions can be found on page eight. There, the Congressional Budget Office says the BCRA would make decent insurance so expensive that “few low-income people would purchase any plan” at all. Here’s the section:
Under this legislation, starting in 2020, the premium for a silver plan would typically be a relatively high percentage of income for low-income people. The deductible for a plan with an actuarial value of 58 percent would be a significantly higher percentage of income — also making such a plan unattractive, but for a different reason. As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan, CBO and JCT estimate.
A bit of background is helpful. A “silver plan” is an insurance plan that covers 70 percent of a person’s expected health care costs. Obamacare’s subsidies were designed to make silver plans affordable and to limit out-of-pocket costs. The BCRA cuts Obamacare’s subsidies and designs its own subsidies around plans that cover 58 percent of expected health care costs. Those plans, the CBO estimates, will come with deductibles of around $6,000 — which means they would bankrupt many poor people before they ever got through the deductible.
On page 27 of the report, CBO offers an illustrative example. Imagine, they say, a person who makes 75 percent of the poverty line and is currently on Medicaid. The deductible would be more than half their annual income. They would be paying for health insurance that they would destroy them financially if they tried to use it.
So here is what the CBO is saying: The BCRA’s subsidies are too small to make the silver plans affordable for low-income people, and the plans it is trying to make affordable — the ones that cover 58 percent of expected costs — carry such high deductibles that low-income Americans won’t buy them because they won’t be able to afford to use them.
This, then, is what the BRCA actually does: It makes health insurance unaffordable for poor people in order to finance a massive tax cut for rich people.
But there’s much more in the CBO report worth noting. A few points:
- Remember when Donald Trump bragged that “I was the first & only potential GOP candidate to state there will be no cuts to Social Security, Medicare & Medicaid”? This BCRA’s savings come almost entirely from cuts to Medicaid. “Spending on the program would decline in 2026 by 26 percent” as compared to current law, CBO projects.
- CBO directly rebuts Republicans who say this bill needs to pass because insurance markets are collapsing under Obamacare. Like under the Affordable Care Act, the agency projects individual insurance markets will mostly be stable, but in some areas of the country, “no insurers would participate in the nongroup market or insurance would be offered only with very high premiums.” Exactly what’s happening now, in other words.
- While CBO doesn’t think the bill will lead to death spirals in most markets, it explains very clearly how the death spirals it does create will work. “Because the total subsidy per person under the legislation would be substantially smaller than under current law, the fraction of purchasers who are subsidized would fall. Among the unsubsidized population, less healthy people are more likely to purchase insurance—and the higher costs for them would put upward pressure on premiums. As unsubsidized people became a greater fraction of the purchasers, that pressure would be greater and could result in very high premiums in some markets.”
- The increase in uninsurance under the BCRA “would be disproportionately larger among older people with lower income—particularly people between 50 and 64 years old with income of less than 200 percent of the federal poverty level.” A lot of the people in that demographic are Republican voters.
- Congressional Republicans are leaning hard on the idea that their plan brings down premiums, but it actually doesn’t. “Under this legislation, the net premium for a plan with an actuarial value of 58 percent would be smaller for younger people and larger for older people, but the net premium for a plan with an actuarial value of 70 percent would be larger for people of any age,” CBO says. In other words, premiums on decent insurance are higher for everyone, and premiums on high-deductible plans are a bit lower for the young at the cost of making them higher for the old.