HEATLH CARE WATCH: Better Care Reconciliation Act (BCRA)

Coverage

  • By 2018 about 15 million people will lose coverage, rising to 19 million in 2020 and by 2026 the coverage loss will total to 22 million.
  • The breakdown is as follows:
    • By 2026, 15 million will lose Medicaid and 7 million will lose non-group/Exchange coverage.
    • By 2026, among people under age 65, enrollment in Medicaid would fall by about 16%.

Medicaid and Savings to the Deficit

  • Under the Senate bill, federal support for Medicaid will drop by $772 billion over 2017-2026. While this is somewhat lower than the House cut of $834 billion, the cut in the final year would actually be deeper than the final two years under the House bill.
  • Overall savings to the deficit: $321 billion over ten years, about $200 billion more than under the House bill. The difference is largely due to the Senate’s targeting tax credit subsidies to lower income people. Senate leadership may use the additional savings amount to make tweaks in order to gain support from moderate Senators.

Premiums and Access (1332 Waivers)

  • Premiums will rise in 2018 (20%) and 2019 (10%), and then drop after the legislation is fully implemented. After 2020 they will generally be lower. The main reason why premiums will drop is that insurance plans will cover fewer services compared to current law.
  • In particular:
    • Starting in 2020, the share of services covered by insurance would be smaller compared to current law. Right now a benchmark plan (known as the ‘silver’ plan) has to cover 70% of the medical costs. This bill will lower the benchmark plan requirement to 58%.
    • Insurers will design plans that have high deductibles. So in essence, people will be paying more for plans that cover less.
    • The CBO finds that this plan will hurt older, low-income people the most (see table at the end). They conclude, “deductibles for a plan with an actuarial value of 58% [as explained above, the new benchmark plans will cover 58% of the medical costs] would be significantly higher percentage of income – making such a plan unattractive. As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan.”
  • CBO estimates that close to half of the population live in states that would seek 1332 waivers to modify Essential Health Benefits (EHBs) requirements such as maternity care, prescription drug coverage, and mental health treatment. These people, “would experience substantial increases in supplemental premiums or out-of-pocket spending on healthcare, or would chose to forgo the services.” In addition, the ACA’s ban on annual and lifetime limits on covered services would no longer apply in states that seek to waive EHB requirements.

Market Stability in Non-Group/Exchange Coverage

  • The CBO finds that a small fraction of the population reside in areas in which, no insurers would participate in the non-group markets or would only offer insurance with very high premiums.
  • Elimination of cost-sharing subsidies for low income people, greater share of income older people now have to pay towards their premiums, and reduction in premium tax credit subsidies are few of the reasons why the demand for insurance will drop and reduce incentives for healthy people to buy insurance. This would result in market instability.

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