On Wednesday, the Congressional Budget Office released its score of the new version of the American Health Care Act that passed the House of Representatives earlier this month. As Francie Diep reports, the CBO projects that the bill, as passed, would result in deficit savings of $119 billion and 23 million Americans going without health insurance by 2026 (as compared to the Affordable Care Act). In other words, the new-and-improved AHCA, which now allows states to obtain abstaining waivers from some of the ACA's regulations, results in marginally fewer coverage losses and slightly lower deficit savings over the bill's previous version.
The particularly interesting thing about this bill, which is highlighted by the new CBO report, is just how much uncertainty and variation these waivers introduce with respect to market stability, premiums, and out-of-pocket costs for people in the non-group markets. In the immediate future, average premiums would increase by 20 percent in 2018, and 5 percent in 2019. States also wouldn't be able to request waivers until 2020; but from there, things get complicated.
In order to model the effects of the waivers, the CBO broke states into three groups: states that would not request waivers regarding essential health benefits (EHBs) or the community rating (amounting to about half the population of the country); states that would make moderate changes to ACA regulations (amounting to one-third of the population of the country ); and states that would seek waivers making more significant changes to both the EHB and community rating regulations (amounting to about one-sixth of the population of the country).
For states not seeking waivers, the CBO projects that premiums in the individual markets would be approximately 4 percent lower by 2026 due to improvements in the risk pool (more young and healthy people would buy insurance). Older people, however, would face higher premiums than under current law.
In the second group of states—those making some changes to market regulations—premiums would be approximately 20 percent lower by 2026, in large part because insurance plans would cover fewer benefits and services. The range of premium reductions, however, could vary widely, running anywhere from 10 percent to 30 percent, depending on the types of waivers states requested.
It's unclear how closely the Senate’s health-care bill will hew to the AHCA.
For states waiving both EHBs and the community rating, the CBO predicts that average premiums would, again, be lower because of improvements in the risk pool and less generous insurance plans. Less-healthy people, however, could face dramatically higher premiums. Because of the wide variations in premiums, the CBO doesn't provide a numerical estimate of how average premiums would change for folks in these states.
Out-of-pocket costs in the second and third groups of states could also vary wildly from state to state, and between individuals with different health-care needs. Here's how the CBO addressed that variance:
In particular, out-of-pocket spending on maternity care and mental health and substance abuse services could increase by thousands of dollars in a given year for the nongroup enrollees who would use those services. Moreover, the ACA's ban on annual and lifetime limits on covered benefits would no longer apply to health benefits not defined as essential in a state. As a result, for some benefits that might be removed from a state's definition of EHBs but that might not be excluded from insurance coverage altogether, some enrollees could see large increases in out-of-pocket spending because annual or lifetime limits would be allowed. That could happen, for example, to some people who use expensive prescription drugs. Out-of-pocket payments for people who have relatively high health care spending would increase most in the states that obtained waivers from the requirements for both the EHBs and community rating.
The final source of state-level variation in the AHCA concerns market stability in the non-group markets, and the CBO report raises a concern here that hasn't received enough attention, in my opinion (see Matthew Fiedler's full explanation here). In its defense of community rating waivers, the GOP has pointed out that insurers (even those in waiver states) would be forbidden from charging higher premiums to people who maintain continuous coverage—only people who have gaps in coverage could be charged higher premiums. That provision is one of the GOP's much-hyped "layers of protection" for those with pre-existing conditions.
The CBO report points out that, in states that opt out of the community rating provision, healthy people would likely be able to choose whether they want their premiums determined by community rating or medical underwriting. Many of them would likely choose medical underwriting since it would result in lower premiums for them. As more and more healthy people chose that option, however, premiums in the community-rated pool would likely increase as the risk pool skewed sicker and sicker (since only healthy people would opt for underwriting). At some point, the CBO predicts, less-healthy people "would ultimately be unable to purchase comprehensive non-group health insurance at premiums comparable to those under current law, if they could purchase it at all—despite the additional funding that would be available under H.R. 1628 to help reduce premiums."
At this point, it's unclear how closely the Senate’s health-care bill will hew to the AHCA, or whether the waivers in the AHCA will even make it through a Senate "Byrd bath." The CBO report, however, isn't likely to provide much comfort to anyone concerned about how people with pre-existing conditions would fare under the AHCA.