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The impact of the two waivers that change essential health benefits and coverage for pre-existing conditions hasn’t been studied until now.
WASHINGTON — The version of the American Health Care Act passed by the U.S. House of Representatives in early May would lead to 23 million more Americans being uninsured in the next decade compared with what is expected under the current law, according to a report from the Congressional Budget Office released on Wednesday.
While many of the central provisions of the legislation remain the same since the CBO last studied the bill in March, a few key, last-minute additions, which were introduced to garner support from conservative Republican holdouts in the House have gone unstudied until now.
Of these amendments is a waiver would give states the ability to modify the regulations that govern essential health benefits, which set the standard for what insurance plans must cover. The second amendment is a waiver that states can opt into that allows insurers to set premiums based on a consumer’s health status if that person has experienced a lapse in coverage—it’s this waiver that could affect consumers with pre-existing conditions.
Despite criticism, Republicans in the House voted on the AHCA before the CBO had the chance to analyze the bill’s effect on factors like coverage, and the cost of insurance. With the release of this report, it is now clear what kind of impact we can expect from the bill.
What’s the Verdict on Coverage?
According to the CBO, 14 million more people would be uninsured by 2018, and by 2026, an estimated 51 million people under age 65 would be uninsured under the AHCA—that’s compared with the 28 million who would lack insurance that year under Obamacare.
The coverage gap under the current iteration of the legislation is an improvement over the last version—but only by 1 million people. The CBO score of the previous draft of the AHCA estimated that 24 million people would lack coverage within the decade.
How Will State Waivers Impact Costs for Consumers?
The CBO estimates that under the House-passed version of the AHCA, premiums for single policyholders would increase by an average of about 20 percent before 2018, with that increase slowing to about 5 percent in 2019.
But, starting in 2020 the price of an average premium would be directly impacted by whether or not a given state chooses to take advantage of those two waivers that were built into the House-passed version of the legislation at the 11th hour.
The CBO avoided making any guesses about which states would take advantage of these waivers. Instead, the report estimates this:
- About half of the population lives in states that would not choose to request the two waivers that touch on essential health benefits and community rating—which affects pricing for those with pre-existing conditions. In those states, the average price of a premium in the nongroup market would be about 4 percent lower in 2026 than it would be under the current law.
- About one-third of the U.S. population lives in states that would make some changes to their market regulations. In those places, average premiums would be about 20 percent lower one decade from now than they would be under the ACA—but that is mostly due to the quality of insurance that would be affordable in those places. In general those insurance policies would likely provide fewer benefits due to changing regulations in EHB coverage.
- And, about one-sixth of the population lives in states that would take advantage of both of those waivers—essential health benefits and community rating. Average premiums in those states would likely be lower than under the ACA because younger healthier people would be the ones purchasing health insurance.
But, the CBO cautions, in those states that take advantage of both waivers, less healthy people would face “extremely high premiums” and that “over time, it would become more difficult for less healthy people (including people with preexisting medical conditions) ... to purchase insurance because their premiums would continue to increase rapidly.”
In states that request both waivers, premiums for low-income elderly consumers could increase by as much as 800 percent.
It should also be noted that the CBO estimates that those who live in states that choose modify the scope of the EHBs would experience “substantial increases in out-of-pocket spending on health care.” Those costs could go even higher as bans on lifetime limits no longer apply to benefits states deem “unessential.” The services that may end up being excluded from insurance plan requirements could include maternal health care, mental health and substance abuse benefits, as well as pediatric dental coverage.
What Does This Mean for Insurance Markets?
The CBO finds that the AHCA has the potential to impact the stability of insurance markets in a number of different ways.
While nongroup markets in many parts of the country would remain stable, the CBO finds that “substantial uncertainty about how the new law would be implemented could lead insurers to withdraw from or not enter the nongroup market … “
The CBO also finds that the two waivers that touch on EHBs and community ratings have the potential to destabilize markets. Remember, the CBO already said that one-sixth of the population lives in states where those conditions might be true. The analysis finds that markets in those states would begin to destabilize in 2020, when those waiver options go into effect, partly as a result of higher premiums for sicker consumers. According to the report, “that instability would cause some people who would have been insured in the nongroup market under current law to be uninsured.”
Factors That Haven’t Changed Since the Last CBO Score
It’s important to remember that many central portions of the first iteration of the AHCA remain in place.
Massive Medicaid reforms that were built into the bill are untouched, meaning spending on the federal program that provides health insurance to millions of low-income Americans would still be cut by more than $800 million over the next decade—a fact that was reiterated in the Trump budget released on Tuesday. Much of the insurance coverage loss—as many as 14 million people—is a direct result of the rolling back of the Medicaid expansion that took place under Obamacare.
In addition, the AHCA still relaxes the provisions in the ACA that prevent insurers from charging older people premiums that are more than three times higher than the premiums they charge younger consumers in the nongroup and small-group markets. As a result, the House-passed legislation would allow insurers to charge older people more than five times as much as younger people starting in 2018 unless states intervene to mandate otherwise.
How Are Lawmakers Reacting?
Democrats on Capitol Hill are interpreting the results of this report as a victory of sorts. House Minority Leader Nancy Pelosi released a statement on the report calling the CBO score “devastating,” while Senate Minority Leader Chuck Schumer tweeted out “The #CBOScore makes it perfectly clear: unless you’re a healthy millionaire, #Trumpcare is a nightmare.”
Republican lawmakers, and members of the Trump administration, on the other hand, have been quick to criticize and attempt to discredit the CBO’s findings. In a tweet following the report’s release, House Speaker Paul Ryan, focused on what he saw as the positive takeaways—the AHCA’s ability to lower premiums as well as the deficit.
And Health and Human Services Secretary Tom Price released a statement saying, “the CBO was wrong when they analyzed Obamacare’s effect on cost and coverage, and they are wrong again.”
The last-minute waivers included in the legislation were part of what enabled the bill to garner needed support from conservative members of the House Republican Conference.
But given the CBO’s analysis of the impact those waivers might produce—on coverage, cost and insurance markets—there may be some tough arguments ahead in the Senate about whether or not those amendments should remain. Overall, it’s extremely unlikely this bill will pass the Senate as is.
Quinn Libson is a Staff Correspondent for Government Executive’s Route Fifty and is based in Washington, D.C.
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