GOP Health Bill's $13,000 Deductibles Would Be Illegal, CBO Says

A copy of the CBO report is available here.

Cuts to Medicaid account for much of reductions in coverage, and may pose McConnell’s biggest challenge among moderate members of his party. The bill reduces federal spending on the health-insurance program for the poor by $756 billion over a decade, which would result in 15 million fewer people enrolled in the program in 2026, compared with current law. Much of the rest of the coverage losses come from the individual insurance market, where the Senate bill would reduce subsidies that help people buy plans.

The high deductibles are another key reason for the coverage declines foreseen by CBO. Under the current Affordable Care Act rules, a person who makes $26,500 a year could buy a health plan with a deductible of about $800, thanks to special subsidies for low-income people. Those subsidies, known as cost-sharing reductions, are eliminated in the Senate bill. Under the BCRA, that person would face a $13,000 deductible, roughly half their income. CBO figures, therefore, that they probably wouldn’t buy an insurance plan.

Money to Spend

The Senate bill reduces the deficit by $420 billion, the CBO said. The increase from a $321 billion in deficit reduction projected in an earlier version may give Republican leaders additional money they can use to court holdout votes. Much of the increased funding comes from the elimination of tax cuts for the wealthy.

One use of the funds may be to provide extra money to states to help move poor people from Medicaid coverage and on to private insurance plans. Seema Verma, the head of the Centers for Medicare and Medicaid Services, proposed that idea to some GOP senators on Wednesday night, Alaska Sen. Dan Sullivan said. Sullivan said Verma called it a “wraparound” plan, to provide extra help in the individual market for lower-income people.

Such a plan would be similar to the cost-sharing reduction subsidies that are currently available through the Affordable Care Act exchange plan coverage. The subsidies lower out-of-pocket costs for people making between 100% and 250% of the poverty level. The GOP plan would end that help. Legislative text or policy details of Verma’s plan haven’t been made public, and it isn’t clear that there’d be enough funding in the bill to help all the low-income people who’d be moved off Medicaid maintain similar coverage to what the current Affordable Care Act system provides.

— Read What’s Next for the DOL Fiduciary Rule? on ThinkAdvisor.