Republican Health Care Bill: Less Access, Fewer Choices, and Higher Costs for Consumers

The nonpartisan Congressional Budget Office (CBO) report confirmed on Monday what we already knew: the American Health Care Act (AHCA) will be a disaster for consumers and the American health care system. Compared to current law the bill will increase costs to consumers, while providing coverage for significantly fewer people. The AHCA would benefit the healthy and wealthy while inflicting far-reaching harm on children, seniors, low-income consumers, those with disabilities, and more.

All told, the CBO estimates that if Congress passes the House Republican bill, 24 million people will lose health insurance over the next 10 years, 14 million alone in 2018. This would put the uninsured rate at or above the level before the Affordable Care Act was passed – wiping out all of the coverage gains under the ACA and reversing a historic drop in the uninsured rate.

Premiums would rise for older adults under the House Republican bill

People across America who remain in the individual market could face higher premiums and higher out-of-pocket costs – a fate that will be felt most acutely by older adults and lower-income individuals and families. In the short term, premiums under the AHCA would be 15-20% higher than under current law.

Combined with changes in age rating (how much more insurers are allowed to charge older consumers than younger consumers for the same plan) and less generous financial assistance, the CBO found that a 64-year-old making $26,500 a year would see their premiums skyrocket to $14,600 a year (or more than half of their yearly income), up from $1,700 under current law.

The Republican bill leaves states holding the bag for providing health care to America’s most vulnerable

The CBO also quantified the massive cost-shift to states under the AHCA. The effective end of the Medicaid expansion and the capping of the Medicaid program would cut federal Medicaid funds by $880 billion dollars over the next 10 years, or 25% of total expenditures. This would leave states with significantly fewer resources to provide coverage for the vulnerable children, seniors and people with disabilities that rely on the program.

CBO even acknowledges that states will be left making hard decisions:

“[W]ith less federal reimbursement for Medicaid, states would need to decide whether to commit more of their own resources to finance the program…or whether to reduce spending by cutting payments to health care providers and health plans, eliminating optional services, restricting eligibility for enrollment, or (to the extent feasible) arriving at more efficient methods for delivering services.”

In total, the CBO report is a damning assessment of a fatally flawed bill. And yet, in a level of spin unprecedented even for the House GOP, Speaker Paul Ryan has the audacity to claim the CBO report confirms that the bill will improve access to quality, affordable health care. The statement is worth reading in full, but one quote stands out in particular:

“Under Obamacare, we have seen how government-mandated coverage does not equal access to care, and now the law is collapsing. Our plan is not about forcing people to buy expensive, one-size-fits-all coverage. It is about giving people more choices and better access to a plan they want and can afford. When people have more choices, costs go down. That’s what this report shows.”

Nothing in even a cursory read of the CBO report supports Speaker Ryan’s statement. In fact, the report roundly contradicts his claims.

The market is not collapsing under the Affordable Care Act

The CBO report dispels Ryan’s assertion that the law is collapsing upfront on page 2: “In CBO and JCT’s assessment, however, the nongroup market would probably be stable in most areas under either current law or the legislation.”

With this finding, the CBO joins experts across the health care industry in dismissing a favorite GOP talking point that the law is in a death spiral.

Given the fact that Republicans in the House of Representatives will likely use the second half of CBO’s analysis as evidence for the AHCA’s changes, it’s worth examining the difference between the two. The ACA is designed to create a stable market through a combination of financial assistance to help lower- and moderate-income families afford coverage and a requirement (the individual mandate) that people who can afford to have health coverage actually stay insured.

The AHCA would create a stable market only by making it nearly impossible for older adults and the sick to find affordable coverage.

In combination, these policies encourage as many people as possible to enroll in coverage, help to attract both high-cost and healthier individuals, and help lower costs of coverage for everyone, including people who have significant health care needs. The AHCA by contrast, would create a stable market only by making it nearly impossible for older adults and the sick to find affordable coverage, leaving only the healthy or wealthy in the market. In essence, under the AHCA, the people that need health insurance the most would be cut out of the market entirely.

The AHCA has its own coverage mandate–it’s just less effective

The CBO finds that in 2018 alone, 14 million fewer people would be insured and that “[most] of that increase would stem from repealing the penalties associated with the individual mandate.” But if you dig deeper, it’s not just the mandate going away that contributes to the sharp increase in the number of uninsured. The CBO expects that a large number of these people would be forced to go without coverage due to higher costs under the AHCA, many of whom would otherwise purchase insurance if it were affordable.

Despite talk of “eliminating government-mandated health care” the AHCA has its own mandate – a requirement that individuals have continuous coverage for one year or pay a 30% premium penalty the next time they try to enroll. On net, the AHCA mandate will do nothing to counteract the loss of coverage due to repeal of the ACA’s individual mandate, and will further erode coverage in the long run by deterring individuals without coverage from enrolling due to increased costs. The CBO finds that people who don’t enroll will largely be healthier individuals – necessary for a balanced risk pool – who would be unwilling to pay the premium surcharge.

Consumers will have fewer health care choices and less access to health coverage

The CBO estimates that 14 million people will lose health insurance as a result of the AHCA’s changes to the Medicaid expansion, effectively ending the expansion entirely, and its capping and cutting of the Medicaid program. These 14 million will likely be left with no affordable coverage options and will have no choice but to go without coverage altogether. Their only access to health care will be to pay out of pocket – an impossible financial burden that will drive low-income working families into debt.

Individuals and families in the marketplace will likewise see fewer coverage choices that work for their budgets and health care needs. The CBO finds that, with the AHCA’s changes to actuarial value (AV), insurers could choose to sell plans at lower AV levels and that many insurers would be “less likely to offer plans with high actuarial values out of a fear of attracting a greater proportion of less healthy enrollees to those plans.”

This means that plans on the marketplace will likely group at the lower end of the allowable AV – covering fewer services with higher deductibles – reducing the number of plan choices that people will have in the marketplace.

Comprehensive coverage will be unaffordable, especially for those who need it the most

CBO estimates that premiums and out-of-pocket costs of coverage would increase drastically for lower-income people and older adults under the ACHA.  This is in large part due to changes this bill would make to financial assistance that is currently available for private coverage, as well as to premium pricing for older adults. CBO estimates that lower-income adults would see their financial assistance with premiums cut drastically. By 2026:

• A 21-year-old making only $26,500 a year would see their financial assistance for premiums cut $950
• A 64-year-old making the same amount would see their financial assistance cut $8,900, meaning they would pay nearly $13,000 more per year for coverage

Why? Because the ACHA would replace the Affordable Care Act’s income-based tax credits with flat tax credits that are the same size for anyone making up to $75,000 and that only double in size as people get older. This is paired with a provision that would allow insurers to charge older adults 5 times higher premiums than young people.

Lower-income people would also lose all financial assistance to help them with out-of-pocket costs like deductibles and copayments. CBO estimates that this would result in their coverage decreasing from 87% actuarial value to only 65%. In simple terms this means they would be paying more for way less coverage that has drastically higher deductibles and other cost-sharing.

As a result of all of these changes, CBO projects that enrollment in nongroup coverage would decrease significantly among lower-income and older adults simply due to their not being able to afford these higher costs. The CBO estimates that more than 30% of all lower-income nonelderly adults (those under 200% of poverty) would be left uninsured under the AHCA. Older lower-income adults would see the largest jump, with the percent uninsured nearly doubling.

Paired with the elimination of the Medicaid expansion, these policies will leave insurance completely unaffordable for millions of low and middle-income people and older adults.

CBO confirms that the Republican bill would reverse America’s progress on health care

Despite repeated attempts by Speaker Ryan and Republicans in the House to discredit the nonpartisan CBO and spin the results in their favor, the findings in the report couldn’t be clearer: the ACHA would mean less access, fewer choices, and higher costs for consumers – if they’re able to get coverage at all.

The CBO results underscore that the AHCA would be a huge step backward from the coverage and care that people currently have under the ACA. Speaker Ryan is right to that every individual should have “access to quality, affordable health care.” But he’s wrong to believe that the AHCA will achieve that goal.

See our talking points about the CBO analysis of the bill.