The Congressional Budget Office (CBO) released its so-called score on the Better Care Reconciliation Act (BCRA) that was unveiled in the Senate last week. As we suspected, there were some better numbers than under the House’s American Health Care Act (AHCA). But as we also stated last week, far more work needs to be done before a truly credible alternative to the Affordable Care Act (ACA or Obamacare) emerges and should be passed.
The CBO indicated that coverage actually worsens slightly in 2018 under BCRA vs. AHCA. Fourteen million would lose coverage next year under AHCA compared with 15 million under BCRA. But 10 years down the road, BCRA would mean 22 million lose coverage versus 23 million under the AHCA. One caveat is that all of these predict scenarios against what the CBO thinks will happen under the ACA. By no means can anyone adequately predict what the ACA status quo will be down the road. So many different forces are in play, including whether true access can be maintained in the Marketplace in at least half of all states. We just don’t know if the CBO projection that only 28 million will be uninsured in 2026 is truly accurate.
What we do know is that whatever happens under the ACA, under both AHCA or BCRA, the country returns to having roughly 50 million uninsured over time. The bottom line is that this is bad for the nation as we struggle to deal with a healthcare cost that is fast approaching 20 percent of the gross domestic product (GDP) and an aging baby boom population that threatens to accelerate acute care and long-term care costs even more. Making affordable insurance accessible for all is important to deal with over-utilization, poor quality, and a lack of prevention in our healthcare system.
In 2020, premiums in the Marketplace would be about 30 percent lower under the BCRA than under ObamaCare and 20 percent lower by 2026. At the same time, plans would be significantly less generous and there would be greater out-of-pocket costs. As we have stated, though, we doubt the country can sustain overly generous benefits and that some realignment in the Marketplace benefit is needed. It also appears that state waivers would help in this area. Generally, we think these aspects of the bill are on the right track with some tweaking – perhaps some enhancement of the amount ultimately borne by taxpayer resources for the low income and elderly without making it too rich. We would expect a further sculpting of the depth and breadth of benefits by the Centers for Medicare and Medicaid (CMS) by using its regulatory authority in the future.
Where we have said the Senate bill goes horribly wrong, and the CBO score emphasizes this, is on Medicaid. About 15 million of the 22 million projected to lose coverage are now in Medicaid. As we have stated, some Medicaid reform is warranted, but the Senate bill goes too far. The Medicaid expansion should be preserved and as much of the expansion money as possible promised states (perhaps that 90 percent number is not fully achievable but the social compact with the states should be kept here) should be factored in any baseline before annual per capita caps are imposed. As well, the tighter inflation rate must protect states’ ability to fund Medicaid in the future and not be fashioned as an ongoing federal deficit mitigator. Reasonable belt tightening should occur on both the federal and state sides. But, as the Senate bill is drafted now, a massive cost shift to the states occurs. A much more generous funding mechanism should be enacted. At a minimum, the long-term “CPI-Urban” formula in the Senate bill should be permanently funded at a “CPI-Medical plus X%” factor (a healthy dialogue should ensue on what “X” should be based on the competing priorities of the federal budget). This would still reap major federal budget savings over time. At the same time, it gives states the ability to fashion reasonable changes to the program in the area of benefits, individual contributions and other reforms.
While so-called “rich Medicaid benefit” states oppose the provision that effectively limits their overall reimbursement, we are not terribly sympathetic here. The program should be funded uniformly across all states at reasonably generous federal rates. States that choose to create benefits, coverage and a program that exceeds reasonable federal norms should ask state taxpayers to fund it. It is a matter of equity in the future. And since these states are among the group of 31 Medicaid expansion states, our proposal already favors them by grandfathering expansion monies (as much as can be afforded) in their baseline allotment.
Senate Republicans changed one thing from the draft last week that is a good policy change. The change creates a 6-month coverage waiting period in the Marketplace when a 63-day or greater lapse in coverage exists. Advocacy groups immediately attacked the change, but the provision is rooted in common sense. There has to be an incentive (or an implied penalty) to maintain coverage. The House provision that would have put a 30 percent surcharge on coverage for gaps was meant to do the same, but might have had the unintended consequence of dissuading healthier people from coming into coverage much more than the 6-month waiting period. Whether either of these are an adequate substitute for an individual or employer mandate remains to be seen.