The Congressional Budget Office scored the financial impact of the Senate's Better Care Reconciliation Act, finding minor improvements in health insurance coverage and significant improvements in federal savings compared to the House's ACA replacement, the American Health Care Act.
Here are six key takeaways from the CBO score of the BCRA.
1. The CBO estimates 22 million more people would be uninsured by 2026 under the BCRA, compared to current law. This means roughly 49 million Americans would be without insurance in 10 years under the BCRA, compared to 28 million if the ACA is not repealed. This is a small improvement over the House ACA repeal and replacement plan, which would have increased the number of uninsured by 23 million over the next decade.
2. Average premiums on the individual market would initially increase and begin decreasing in 2020, the CBO projects. The estimates suggest premiums will grow until 2020, so that the average premium for a benchmark plan — a plan where insurers cover 70 percent of total costs, also known as a silver plan on the ACA exchanges — would increase by 20 percent in 2018 and 10 percent in 2019 over current projections. By 2020, however, the average premium for a benchmark plan would be 30 percent lower than projections under current law. The CBO believes premiums will fall under the BCRA over time because the greater age rating ratio will allow young people to buy insurance with lower premiums; and because increased federal funding meant to reduce premiums will affect pricing.
3. Despite declining premiums, out-of-pocket costs are expected to increase under the BCRA. The legislation sets the actuarial value for benchmark plans at 58 percent rather than 70 percent — meaning payers must cover 58 percent of the total cost of benefits. This means benchmark plans will have higher deductibles, the CBO notes, and out-of-pocket costs will go up. "As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan, CBO and JCT estimate," the report reads.
The bill also allows states to file for Section 1332 waivers and reduce the required essential health benefits every health plan must cover. Once services are no longer considered EHBs, they are also no longer protected by the ACA's ban on lifetime and annual coverage limits. The CBO estimates about half of Americans would be affected by Section 1332 waivers. This means about half of Americans are at risk for paying more out of pocket if they frequently use services no longer considered EHBs in their states. Depending on what states decide to cut, this could include emergency services, hospitalization, maternity care, prescription drugs, laboratory services and wellness services, among others.
4. The BCRA would reduce the federal deficit by $321 billion — a 170 percent improvement over the House's AHCA, according to the CBO. If implemented, the bill would reduce federal direct spending by more than $1 trillion, due largely to Medicaid cuts. The CBO estimates federal spending on Medicaid would decline by more than a quarter by 2026 under the BCRA, compared to current law. Overall federal spending on the entitlement program will continue to increase, but the cuts will slow the growth in spending over the next decade. The savings from Medicaid cuts would be partially offset by a $701 billion reduction in revenues, stemming from the repeal of ACA taxes and increased spending to offset growth in premium costs.
5. The individual markets would be largely stable. The CBO believes several aspects of the bill would ensure stability in the individual marketplaces: subsidies to buy insurance, cost-sharing reduction payments and additional federal funding to lower premiums for high-cost enrollees until 2021. The CBO expects premium tax credits will help insulate the market after 2021. However, some rural areas will likely have no insurance options on the exchanges or EHBs could be so narrow that services are unaffordable, the CBO notes.
6. The CBO score includes the newly added continuous-coverage provision, according to Politico. This provision, which would go into effect in 2019, requires people to maintain continuous coverage or be locked out of purchasing health insurance for six months. The addition is intended to stabilize markets by deterring people from waiting to buy coverage until they are sick, according to Business Insider's coverage of the last-minute addition. The CBO estimates this provision would only slightly increase the number of people with insurance.
Editor's note: This article was updated June 30 to clarify Medicaid spending will continue to increase despite cuts to the program.
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