CBO: New version of AHCA still reduces deficit

First, the good news for House Republicans: they’re off the hook for ObamaCare repeal. The bad news for Senate Republicans: Today’s CBO score on the most recent version of the American Health Care Act qualifies for reconciliation in its current form, so it’s coming their way ASAP.

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The bad news for everyone is that it’s not going to stay in its current form, but #YOLO:

CBO and the staff of the Joint Committee on Taxation (JCT) have completed an estimate of the direct spending and revenue effects of H.R. 1628, the American Health Care Act of 2017, as passed by the House of Representatives. CBO and JCT estimate that enacting that version of H.R. 1628 would reduce the cumulative federal deficit over the 2017-2026 period by $119 billion. That amount is $32 billion less than the estimated net savings for the version of H.R. 1628 that was posted on the website of the House Committee on Rules on March 22, 2017, incorporating manager’s amendments 4, 5, 24, and 25. (CBO issued a cost estimate for that earlier version of the legislation on March 23, 2017.)

Paul Ryan had held up transmission of the bill to the Senate until after the CBO had a chance to score it. Ryan said he did that out of an “abundance of caution,” but it was really an overabundance of caution. Even in the relatively minor change that took place since the previous CBO score had wiped out all of the $150 billion in red-ink savings, the Senate will completely rewrite the bill anyway.

The politics of the bill haven’t changed much, however. Despite all of the negotiating that took place to minimize the numbers of people who will opt out or lose coverage, those figures look almost identical to the previous version of the AHCA:

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In comparison with the estimates for the previous version of the act, under the House-passed act, the number of people with health insurance would, by CBO and JCT’s estimates, be slightly higher and average premiums for insurance purchased individually—that is, nongroup insurance—would be lower, in part because the insurance, on average, would pay for a smaller proportion of health care costs. In addition, the agencies expect that some people would use the tax credits authorized by the act to purchase policies that would not cover major medical risks and that are not counted as insurance in this cost estimate.

It’s well worth noting, of course, that the CBO vastly overestimated the enrollments Obamacare would receive, so they may be overestimating the decreases, too. Most of the decreases shown here are actually reductions in future enrollments, not people losing their plans in the marketplace, at least in the first three years. After that, Medicaid cutbacks will push some people out of their government coverage, but that’s also where the savings come, too — just as it did in the previous version. There’s not much change on enrollment projections at all between the two scores.

The impact on premiums hasn’t changed significantly either. That issue held up the AHCA for weeks, along with assurances for coverage of pre-existing conditions, forcing a compromise that allows states to get waivers for certain mandates and pursue lower premiums. The CBO tried to analyze how those waivers would get applied, but the picture gets murky depending on exactly how those waivers get applied:

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About half the population resides in states that would not request waivers regarding the EHBs or community rating, CBO and JCT project. In those states, average premiums in the nongroup market would be about 4 percent lower in 2026 than under current law, mostly because a younger and healthier population would be purchasing the insurance. The changes in premiums would vary for people of different ages. A change in the rules governing how much more insurers can charge older people than younger people, effective in 2019, would directly alter the premiums faced by different age groups, substantially reducing premiums for young adults and raising premiums for older people.

About one-third of the population resides in states that would make moderate changes to market regulations. In those states, CBO and JCT expect that, overall, average premiums in the nongroup market would be roughly 20 percent lower in 2026 than under current law, primarily because, on average, insurance policies would provide fewer benefits. Although the changes to regulations affecting community rating would be limited, the extent of the changes in the EHBs would vary widely; the estimated reductions in average premiums range from 10 percent to 30 percent in different areas of the country. The reductions for younger people would be substantially larger and those for older people substantially smaller.

Finally, about one-sixth of the population resides in states that would obtain waivers involving both the EHBs and community rating and that would allow premiums to be set on the basis of an individual’s health status in a substantial portion of the nongroup market, CBO and JCT anticipate. As in other states, average premiums would be lower than under current law because a younger and healthier population would be purchasing the insurance and because large changes to the EHB requirements would cause plans to a cover a smaller percentage of expected health care costs. In addition, premiums would vary significantly according to health status and the types of benefits provided, and less healthy people would face extremely high premiums, despite the additional funding that would be available under H.R. 1628 to help reduce premiums. Over time, it would become more difficult for less healthy people (including people with preexisting medical conditions) in those states to purchase insurance because their premiums would continue to increase rapidly. As a result of the narrower scope of covered benefits and the difficulty less healthy people would face purchasing insurance, average premiums for people who did purchase insurance would generally be lower than in other states—but the variation around that average would be very large. CBO and JCT do not have an estimate of how much lower those premiums would be.

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Overall, premiums will go down, but … out of pocket expenses will go up, too:

Although premiums would decline, on average, in states that chose to narrow the scope of EHBs, some people enrolled in nongroup insurance would experience substantial increases in what they would spend on health care. People living in states modifying the EHBs who used services or benefits no longer included in the EHBs would experience substantial increases in out-of-pocket spending on health care or would choose to forgo the services. Services or benefits likely to be excluded from the EHBs in some states include maternity care, mental health and substance abuse benefits, rehabilitative and habilitative services, and pediatric dental benefits. 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.

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Most of these problems stem from the efforts to transition out of ObamaCare and slowly return to state jurisdiction and more free-market solutions. For a while, consumers will likely get the worst of both worlds, albeit without a mandate to participate in the health insurance markets. And besides, the status quo of ObamaCare is worse, and rapidly accelerating into a full-scale meltdown.

For now, however, none of this matters as much as the CBO finding on deficit reduction. Having fulfilled their mission to qualify HR 1628 for reconciliation, House Republicans can now wash their hands of it and dump the whole mess into Mitch McConnell’s lap. Don’t be surprised if we never see anything close to this version of HR 1628 again, even if we see the bill number used later.

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