(Bloomberg Gadfly) — Most headlines about the Senate Republican effort to repeal and replace Obamacare have focused on the bill’s fundamental reshaping of Medicaid. As I’ve written, that could be bad for hospitals and insurers. But that’s just the start of how this bill could impact these industries.
The near-term prospects for the Senate’s Better Care Reconciliation Act bill took a hit on Monday when the Congressional Budget Office predicted it would leave 22 million more Americans uninsured than current law. But there is still a good chance it could pass.
One of the most important changes in the BCRA relative to both the Affordable Care Act and the House-passed American Health Care Act is in its support of low-income Americans.
Under the ACA, people with incomes ranging from 100% to 400% of the federal poverty level get tax credits to help them buy insurance, based on their income, age, and geography. About 81% of the people who buy insurance on ACA exchanges use these credits. The lowest-income members of this group also get subsidies that reduce out-of-pocket health costs.
The AHCA has less-generous tax credits tied only to age. The BCRA, meanwhile, keeps the basic ACA structure, which makes it seem friendlier to patients and to health care providers. But a closer look reveals warts.
In 2020, the income range for tax credits shifts down to 0 to 350% of the poverty level. That may help low-income people in states that didn’t take the ACA’s Medicaid expansion. That’s arguably a positive for hospitals and insurers.
But other aspects of BCRA erase that benefit. Cost-sharing subsidies will end in 2019. And tax credits will be far less generous.
The ACA gives out credits based on the cost of a fairly comprehensive insurance plan, in which enrollees only pay about 30% of health costs through deductibles and other cost-sharing. Under the ACA, subsidies reduce those costs further.
The BCRA, in contrast, bases its credits on a stingier plan, in which enrollees may pay for as much as 42% of their own costs. Deductibles on the sort of plan the ACA helps people afford are around $3,600. They may be in the range of $6,000 for the plans the BCRA encourages.
This is one reason why the CBO expects that “despite being eligible for premium tax credits, few low-income people would purchase any plan.” Lower premiums don’t mean much to someone who makes less than $20,000 a year and faces a $6,000 deductible.