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Some With Pre-Existing Conditions Could Lose Coverage Under The GOP Health Bill

The Congressional Budget Office’s long-awaited report on the American Health Care Act, released Wednesday, is on one level kind of irrelevant. The GOP-controlled Senate has already said it will write its own bill, dismissing the plan House Republicans passed this month to repeal and replace parts of the Affordable Care Act, aka Obamacare.

On another level, though, the report does not look good for the GOP’s current approach to reforming the health care system. According to the CBO, an estimated 23 million more people would be uninsured under the House bill in 2026 compared with current law, though the federal deficit would be cut by $119 billion during that time. The CBO score suggests that the last-minute changes to the Republican plan would mean less government savings and more insurance coverage than previous versions — but would result in a system that prices out many with pre-existing health conditions and eliminates much-promised “access” for some people with low incomes.

The CBO report provides important insight into some of the key questions the Senate is grappling with as it crafts new legislation. For the last several months, Republicans in both chambers have been debating three core challenges in U.S. health care policy: How can they wind down Medicaid, which was vastly expanded under Obamacare? How can they bring down the cost of premiums in the private insurance marketplace for people who don’t get insurance from their employer? And what kind of protections should they offer to people with pre-existing health conditions?

By giving a sense of how the House bill performs when it comes to these three core challenges, the report provides a rough roadmap of the tradeoffs Senate Republicans are likely to make as they write a new bill.

The Republicans have a big pre-existing condition problem

The biggest news of the report is how it assessed a controversial amendment added late in the process to win the support of the most conservative Republicans, which wasn’t included in two previous reports from the CBO. That amendment would allow states to seek waivers on various insurance regulations, including financial protections for people with pre-existing health conditions. The move caused public outcry, as it could allow insurers to price some people with health issues out of the marketplaces that target people without employer-sponsored insurance. It also made the task of scoring the bill challenging for the CBO. Among other things, the agency had to estimate how many states would take up the waivers and how many people they would affect.

The CBO’s findings align with what many health policy experts expected: Many people with pre-existing conditions would be priced out of the marketplace where the waivers are used. The CBO doesn’t say where exactly it thinks that will happen, but it estimates that the waivers would affect areas where about one-sixth of the U.S. population lives.

Republicans have said that people with pre-existing conditions wouldn’t necessarily be left uninsured, because the bill also called for a return to high-risk pools, subsidized plans that would isolate people who are expensive to treat, as well as other funding to reduce costs for that group. The idea is that insurance premium costs will go down for everyone else if the most expensive patients are separated out. But critics say the key to successful high-risk pools is sufficient funding, which many have argued is not in the GOP bill. The CBO report backs up the argument that the funding isn’t adequate to curb costs for many with health concerns.

How the Senate handles legislation for people with health problems, arguably those most in need of insurance, will likely be one of the most controversial aspects of its bill. Some in the chamber have signaled that they are likely to pursue policy along the lines of what the House did, allowing greater variations in insurance costs based on health status and age, while allowing insurers to sell plans that offer less coverage. The CBO report’s findings will give more fuel to pushback to this approach from Democrats and patients, as well as Republicans.

The bill is still projected to put a big hole in Medicaid

And while the handling of people with pre-existing conditions is among the most controversial aspects of the law, the biggest change to the uninsured rate would come from cuts to Medicaid enrollments, according to the CBO. The report estimates that about 14 million fewer people would be enrolled in the public insurance program in 2026 under the House plan. The CBO’s estimate of the previous version of the AHCA estimated similar declines in Medicaid enrollment.

That’s why one of the most complicated negotiations for senators will be over what to do with Medicaid. The program has long covered pregnant women, children and people with disabilities, but it was expanded under Obamacare to also cover everyone earning less than 138 percent of the federal poverty line.1 The AHCA would slowly deflate the expanded part of the program, by freezing its enrollment and simultaneously reducing federal funding for enrollees.

Even before Wednesday, there was substantial division among senators over Medicaid, between those from states that expanded the program (such as Ohio’s Rob Portman) and senators who don’t want more Americans on government-funded health care, such as Utah conservative Mike Lee. Portman is reportedly looking either to delay the unwinding of the Medicaid expansion or limit the cuts.

Will the individual markets be more affordable?

The House bill seeks to lower the cost of insurance by reducing regulations and removing expensive patients from the general insurance pools, two approaches that are popular among Republican legislators. The changes from current policy would reduce premiums in most places but would also make coverage less comprehensive. Costs would also vary much more widely between groups than they currently do — and still be so high that they would price out some of the poorest and sickest people in the country.

The CBO estimates that for about half the population, marketplace regulations would stay the same, and premiums would go down by an average of 4 percent in 2026 compared with what they would be under current law. Another third of the population lives in states that would invoke some regulatory changes and see a more dramatic reduction of 10 percent to 30 percent. The CBO estimates that the remaining areas would adopt the full set of waivers, which would make their insurance among the cheapest in the nation for young, healthy people — but unaffordable for many of those with health conditions. And, as the CBO notes, those averages obscure dramatic differences in premiums between age groups, since the GOP bill would allow older enrollees to be charged five times more than younger enrollees.

Like today, those costs would be offset by subsidies, though they would leave more of the poor without insurance, even if premiums decreased in most states. That’s because the subsidies would be based solely on age, not income or geographic cost variations, as is the case under Obamacare. Overall, there is likely to be an increase in coverage among healthy middle-class enrollees who currently receive fewer subsidies and have been priced out by rising costs. And even if what people pay for coverage drops, health care costs would go up for some people in states that chose to let insurers sell skimpier policies.

All this adds up to 10 million fewer people using the individual markets in 2020, and 6 million fewer in 2026, than would be expected under the current law, according to the CBO.

The Senate has signaled that it may seek to offer greater financial support to people with lower incomes, which would likely increase coverage compared with the House bill. Current subsidies are generous for the lowest earners, which has substantially increased coverage for this group. It’s unclear how much those subsidies can be reduced before people will start forgoing coverage.

How much will it all cost?

The CBO estimates that the House bill would reduce government revenue by nearly $1 trillion over 10 years, mostly by eliminating the taxes that the ACA imposed on high-income households. But the bill would also cut government spending on health care by $1.1 trillion, mostly by cutting spending on Medicaid. On net, the AHCA would save the government money, reducing the deficit by $119 billion over 10 years.

The bill’s savings are chump change compared to the $8.6 trillion deficit that the federal government is expected to run during that time and are a third the size of the savings that the earlier version of the bill would have provided (per CBO’s estimates). But Republicans avoided the worst-case scenario: a bill that would have cut the deficit by less than $2 billion, which for procedural reasons would have been virtually impossible for the Senate to pass.2

Politically, though, the deficit cuts may be a harder sell. In effect, the bill would cut government spending for the poor (Medicaid) in order to pay for tax cuts for the rich. Democrats hammered that point after the CBO released its earlier report, and the new estimates won’t do much to snuff out that talking point.

What’s next?

These are some of the key questions a 13-man group of GOP senators (none of the five Republican women senators were included, though the GOP meetings have since been opened to all GOP senators) has been debating behind closed doors for weeks, trying to hash out differences between conservatives who want a major rollback of Obamacare, such as Lee, versus Portman and others who want a more measured approach.

The political divides on the Senate bill are already emerging, even before it is fully written. Republicans must earn the votes of 50 of the 52 members. And Louisiana’s Bill Cassidy and Maine’s Susan Collins have already expressed doubts about the legislation.

“I don’t know how we get to 50 (votes) at the moment. But that’s the goal. And exactly what the composition of that (bill) is I’m not going to speculate about because it serves no purpose,” Senate Majority Leader Mitch McConnell told Reuters on Wednesday morning, before the CBO report was released.

Ben Casselman contributed to this article.

Footnotes

  1. The law was written to cover all people, but a Supreme Court case allowed states to decide whether to expand the program. Nineteen have chosen not to do so.

  2. Republicans plan to pass their bill in the Senate through a process known as “reconciliation” that allows them to avoid the possibility of a Democratic filibuster. But Republicans can’t use that process for the bill unless it reduces the deficit by at least $2 billion.

Anna Maria Barry-Jester reports on public health, food and culture for FiveThirtyEight.

Perry Bacon Jr. is a senior writer for FiveThirtyEight.

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