Summary of the CBO Analysis of the Better Care Reconciliation Act (BCRA) of 2017 at https://www.cbo.gov/publication/52849
The Congressional Budget Office projects that the Senate’s BCRA will reduce federal spending by $321 billion over the next 10 years and increase the numbers of uninsured Americans by 22 million and dramatically increase premiums for middle aged and older Americans. It will reduce taxes by close to 4% for those with the highest unearned incomes.
Federal Medicaid spending would be cut by 26% ($772 billion) over the next 10 years and by 33% over the next 20 years. Enrollment would fall by 16% over the next decade; about 15 million Americans would lose coverage by 2020. These reductions are achieved by capping the program’s spending and reducing the federal match for those made newly eligible under the Affordable Care Act. States will respond by restricting eligibility.
Tax credits to low, moderate and middle-income people through the Exchanges would be cut by $408 billion. The cuts are achieved by reducing the refundable tax credits that help pay people pay premiums across the board, by eliminating the refundable tax credits that help people pay their copays and deductibles, and by eliminating the tax credits for people with incomes over 350% of the federal poverty level. This would cause about 9 million Americans to lose coverage in the Exchanges by 2020 and most of the rest to pay far far more for far less coverage in the individual market.
Taxes would be reduced by $541 billion. Most of these tax reductions are for a few very high income Americans -- $225 billion; there is about a 4% increase in the taxes they pay on unearned incomes under the ACA. The rest are taxes on medical devices ($20 billion), pharmaceutical manufacturers ($30 billion), and health plans ($147 billion) -- i.e. those companies that benefit from the coverage expansions helped pay for the coverage expansions under the ACA.
What does this mean for people in the individual market? The CBO projects the average national premiums in 2026 for individuals without any subsidies are as follows:
· A sixty-four year old making $68,200 a year pays $15,300 for silver coverage (70% actuarial value – i.e. plans pay 70% and individuals pay 30% of covered health costs via copays and deductibles) under the ACA and $20,500 (30% of their incomes) for a silver plan under the BCRA. In other words, their premiums increase by about a third due to BCRA.
· A forty year-old making $68,200 a year pays $6,500 for silver coverage under the ACA and $6,400 under the BCRA. Basically, that's a wash.
· A twenty-one year-old making $68,200 a year pays $5,100 for silver coverage under the ACA and $4,100 (6% of their incomes) under the BCRA -- a premium savings of $1,000 or 20%.
· In other words for people in the individual market who do not qualify for tax credits, older and middle aged people lose (i.e. they pay more) while younger people pay less. This is because age rating of premiums is increased from 3/1 to 5/1 by the BCRA.
BRCA eliminates premium subsidies above 350% of FPL; so middle aged and older subscribers will pay more than they do under the ACA.
· A sixty-four year old making $56,800 a year pays $6,800 for silver coverage under the ACA and $20,500 under the BCRA. In other words under the ACA, they pay 12% of their income and under the BRCA, they pay 36% of their income or three times as much.
· A forty-year-old making $56,800 a year pays $6,500 for silver coverage under the ACA and $6,400 under the BCRA.
· A twenty-one year-old making $56,800 a year pays $5,100 for silver coverage under the ACA and $4,100 under the BCRA.
· In other words for middle income, older and middle aged individuals, they will pay more due to 5/1 age rating, and they will get no refundable tax credits for which they qualified under the ACA to help pay their premiums. Younger people will pay less under the BRCA.
BRCA eliminates tax credits that reduce copays and deductibles for individuals with incomes under 250% of FPL, links the premium assistance to a plan with an actuarial value of 58% (rather than 70% under the ACA), and reduces the levels of premium assistance. All will pay more for less coverage.
· A sixty-four year old making $26,500 a year pays $1,700 for enhanced silver (covers 87% of actuarial value) coverage under the ACA and $6,500 under the BCRA. In other words under the ACA, they pay less than 6.5% % of their income while under the BCRA, they pay 24% of their income or four times as much in premiums. In addition under the ACA they get coverage that pays just under 90% of their expected medical expenses due to the tax credits which reduce copays and deductibles; these will be eliminated by the BCRA.
· A forty-year-old making $26,500 a year pays $1,700 for enhanced silver (covers 87% of actuarial value) coverage under the ACA and $3,000 under the BCRA for silver that covers 70% of actuarial value. In other words they pay nearly twice as much in premiums and get about 1/4th less coverage of their medical expenses.
· A twenty-one year old making $26,500 a year pays $1,700 for enhanced silver (covers 87% of actuarial value) coverage under the ACA and $2,200 under the BCRA for silver that covers 70% of actuarial value. In other words they pay about 30% more in premiums and get about 1/4th less coverage.
Under the ACA, individuals making incomes less than the poverty level (actually 133% of FPL) are Medicaid eligible and pay nothing for their premiums and pay nominal copays and no deductibles for their medical expenses; the federal government pays 90% of the costs by 2020 and the states pay 10%. Under the BCRA, the federal match is quickly phased down to the state’s traditional Medicaid match; in California that is a 50/50 federal state match. Thirty-one states have taken this “optional” expansion with an Medicaid enhanced match already; CBO projects that absent congressional action, more states will opt for the Medicaid expansion; however with the drastically reduced match under BCRA, more states instead will drop their expansion. The BCRA does offer Exchange coverage to the uninsured in non-expansion states as follows, but individuals must pay quite a high share of their incomes to get coverage for services which they cannot afford to then use.
· A sixty-four year old making $11,400 a year pays $4,800 under the BCRA for silver coverage (pays 70% of actuarial value. In other words under the BCRA, they would pay 42% of their income for coverage that pays 70% of their expected medical expenses. Under the ACA they would pay no premiums, no deductibles and nominal if any copays.
· A forty year-old making $11,400 a year pays $1,700 under the BCRA for silver coverage (pays 70% of actuarial value). In other words under the BCRA, they would pay 15% of their income for silver coverage that pays 70% of their expected medical expenses.
· A twenty-one year old making $11,400 a year pays $1,200 under the BCRA for silver coverage (pays 70% of actuarial value). In other words under the BCRA, they would pay 10% of their income for silver coverage that pays 70% of their expected medical expenses.
· The CBO projects that very few low-income individuals will sign up for the coverage choices offered by the BCRA – part of the reason why 15 million low income Americans will lose Medicaid coverage. In California (an expansion state), close to 4 million signed up for Medi-Cal (Medicaid).
Under the ACA, medium and large sized employers are required to offer coverage to their full time employees and dependent children or pay a penalty to help fund the Exchanges for their uninsured workers. The BCRA will repeal this requirement saving employers $171 billion over ten years and causing 4 million Americans to lose their coverage by 2018; that number will decline in subsequent years.
Under the ACA, individuals are required to purchase at least the least expensive bronze plans (cover 60% of expected medical expenses) or pay a small tax penalty to defray the costs of the ACA coverage expansions. The BCRA will repeal this requirement saving individuals $38 billion over 10 years (or $3-4 billion annually).
If you have not already done so, it may be time to write your Senator expressing your views about Senate Republicans proposed and sarcastically named “Better Care Reconciliation Act”. It's a good way to celebrate your independence and honor our founding fathers commitment to a participatory democracy.
Prepared by: Lucien Wulsin
Dated: 7/5/17