It would be a victory for entitlement reform, but otherwise a mixed bag.
The Congressional Budget Office has released its cost estimate of the Senate’s Better Care Reconciliation Act of 2017. The CBO found that the BCRA would slash the net federal deficit by $321 billion, relative to the existing version of the Affordable Care Act — more than $200 billion more than the House’s American Health Care Act would. The CBO score also shows that the BCRA would largely shrink or inflate the current effects of Obamacare, rather than radically changing the direction of most costs or revenues — thus cementing the bill’s reputation as a modification rather than a full-scale repeal of the Affordable Care Act.
Next year, a projected 15 million fewer Americans would be insured under the BCRA, the CBO notes, “primarily” as a result of the repeal of the individual mandate. Premiums for individuals buying from the non-group market would increase by 20 percent over what they would have been under the ACA. However, by 2020, the year President Trump would be running for reelection, they would be 30 percent lower under the BCRA than they would otherwise have been. The total number of uninsured Americans would rise to 49 million in the next decade, a 22 million increase from projections under the ACA.
Under the BCRA, federal Medicaid spending would plummet by $772 billion over the next ten years, with enrollment of Americans under age 65 falling by 16 percent. This would halt the growth of a program that spends over a fifth of our current federal budget — a major victory for proponents of entitlement reform, but a pointed deviation from Trump’s campaign promise to not cut Medicare, Medicaid, or Social Security. The Senate bill is $72 billion more generous than the House’s in Medicaid funding, a measure enabled by the Senate’s greater reduction of tax credits.
The BCRA would also throw failing Obamacare exchanges a lifeline via its stabilizing mechanisms. The CBO reports that federal funding and subsidies, $50 billion doled out to the states over the next four years, would maintain sufficient demand to keep an adequate number of insurers in the non-group market, especially among healthier Americans. In addition, the easing of Section 1332 waiver requirements would help stabilize markets after the initial shock of the bill’s passage, increasing the odds that states would decrease premiums using “pass-through” funding granted by the federal government to states that perform more efficiently than projected.
Though the CBO does not explain this at length, it does suggest that the BCRA will likely halt — though not necessarily reverse — the impending death spiral in which young, healthy people are leaving the insurance market (a situation that, if permitted to continue, would result in an extremely expensive risk pool). With the BCRA’s change in age-rating rules — which would permit insurers to charge older clients premiums up to five times more than younger ones, as opposed to the threefold limit under the ACA — a premium reduction for younger people would lead to a “slight increase in insurance coverage, on net” for younger Americans.
Nevertheless, given the reforms to Essential Health Benefits requirements, a likely decrease in scope of coverage would result in higher out-of-pocket costs and higher deductibles across the board. This might encourage more young people to choose to be insured, as healthier people benefit from lower rates and higher deductibles, but the CBO estimates that few low-income Americans would purchase any plan at all, as a deductible reflects a constant dollar value rather than a percentage of income, making that burden shift economically regressive.
It would succeed in pausing the wildly unchecked growth of a massive entitlement.
The Senate bill’s replacement for the individual mandate — a new mandatory six-month waiting period for an American wishing to re-enroll in an insurance plan following an aggregate 63-day lapse of coverage in the past year — would only slightly increase the number of people insured over the next decade, in comparison with removing any penalty.
Overall, the CBO suggests that the BCRA would succeed in pausing the wildly unchecked growth of a massive portion of entitlement spending, but would not fully bail out Obamacare or encourage a significant number of providers to enter the market. It would visibly slow the worsening of many problems, and one can hope that the salvaging of young people in the market will eventually stabilize risk pools. But as at least three Republican senators — Dean Heller (Nev.), Rand Paul (Ky.), and Mike Lee (Utah) — refuse to vote on the motion to proceed on the bill, its future remains in limbo.
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The Good, the Bad, and the Senate Health-Care Bill