The new Congressional Budget Office on the American Health Care Act looks remarkably similar to the old score, and still creates major conundrums for the U.S. healthcare industry.
The CBO estimated 23 million fewer insured Americans by 2026, down slightly from the 24 million project under the original AHCA. Elimination of the Affordable Care Act taxes. Although the House-approved bill added $117 billion over 10 years to fund high-risk pool, the numbers didn’t move.
The more onerous is the impact on enrollees who are older, less wealthy and less healthy.
Most damaging could be the CBO’s assessment that the major changes to the AHCA would not protect coverage for people with pre-existing conditions. Obamacare prevents insurers from charging older members no more than three times the premiums charged to younger, healthier enrollees. The AHCA would allow rates up to five times what younger enrollees are charged, increasing costs on the older enrollees.
In some states, the CBO predicts that the waivers would price many people with pre-existing conditions out of the market. As good as the high-risk pool funding sounds, past experiments have found those pools awfully shallow, with high premiums and not enough funding to cover more than a fraction of the eligible population.
The talk of lower premiums comes with tradeoffs.
To get to lower premiums, the House bill allows states to receive waivers to allow insurers to sell plans without the 10 essential benefits required by the Affordable Care Act. Those essential benefits include emergency services, maternity coverage, inpatient hospital benefits and pharmacy coverage. When you hear anger about essential benefits, it frequently comes from men or older adults in regard to the maternity coverage requirement.
It’s important to note than most of those essential benefits are items people would rank as essential to healthcare. A consumer could buy a plan with a really low premium, but if they became sick, they might discover they have no drug coverage or could go to the hospital only to find themselves on the hook for the full cost of an ER bill, which would mean thousands of dollars in out-of-pocket expenses.
Like the previous iteration of the high-risk pools, the healthcare system had policies like this before – mini-medical plans. For a low, low monthly premium, an enrollee received a few physician visits, a barebones drug cover and a “Sorry about your luck” if they had a major health issue.
The bigger impact of states seeking waivers from Obamacare benefits is potential destabilization of individual insurance markets. An argument can be made that a handful of states are nearing this point under the ACA, but that owes more to insurers pulling out.
With Senate Republicans drafting their own bill behind closed doors, the score ultimately might not matter. But a cut in enrollment of that size cannot be ignored, especially when the return of less comprehensive policies would mean to all segments of the healthcare market.
Uncompensated care costs would likely soar as previously covered people lost Medicaid coverage or bought skinnier health insurance policies. Prescription volumes would plummet and patients would let health conditions go untreated until they become acute. It would mark an unwelcome return to issues that plagued the industry prior to the Affordable Care Act.
To hear more on the evolving healthcare environment, attend our upcoming Webinar on June 27, titled “The Politics of U.S. Healthcare – Exchanges in the Trump Era.” Registration is available here (https://decisionresourcesgroup.com/events/webinar-series-politics-u-s-healthcare-exchanges-trump-era/).
This blog is part of a series of posts from DRG regarding the impact of the 2016 election on US healthcare. See our other blogs as they are added here (https://decisionresourcesgroup.com/tag/election2016/).
For more on the exchanges and healthcare, follow Bill Melville @BillMelvilleDRG
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DRG’s Health Plan Analysis explores pharmacy benefit, provider contracting, and product trends through actionable industry insight and key enrollment data across the United States, including Commercial, Exchanges, Medicare, and Medicaid markets. Find out more: Health Plan Analysis.
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