Senate GOP health proposal would leave 22 million uninsured

(Bloomberg) -- Senate Republicans’ plan to replace Obamacare will increase the number of uninsured Americans by 22 million, raise costs for many people currently enrolled in private insurance and slash Medicaid by billions of dollars, according to an estimate by the Congressional Budget Office.

The Senate bill, called the Better Care Reconciliation Act, would reduce the deficit by $321 billion over a decade, according to the CBO, which provides nonpartisan analysis of legislation. That compares with a bill that passed the House of Representatives in May, which CBO at the time projected would result in 23 million fewer people with insurance and cut the deficit by $119 billion.

The findings set the stage for a short yet intense debate among Republicans, with Majority Leader Mitch McConnell having to win over 50 of his 52 Republican senators to pass the bill this week. Their efforts may be complicated not only by the CBO’s projection that millions of people will lose insurance, but also by estimates that many Americans will face out-of-pocket costs and insurance premiums far higher than they are now.

There were already signs of GOP discontent in the hours after the score was released, from both the conservative and moderate side of the party.

“At this point, we need to do significantly more to lower premiums,” said Senator Ted Cruz of Texas, a conservative. Senator Rand Paul of Kentucky said he would vote against allowing debate to start on the legislation. “It’s a terrible bill,” he said in Washington Monday.

“It’s obviously not positive,” said Senator Susan Collins of Maine, a moderate who has expressed concerns about the legislation’s cuts.

Medicaid Cuts

The biggest increase in the uninsured would come from the bill’s rollback of Medicaid, the state-federal program that covers the poor. The GOP bill cuts spending on Medicaid by $772 billion over a decade, which would result in 15 million fewer people enrolled in the program in 2026 than under current law. Another 7 million wouldn’t have coverage in the individual insurance market.

The bill, should it become law, would be a negative for hospitals and doctors. There would be fewer insured patients to pay for services, and those with less-generous insurance would face higher out-of-pocket costs that some might not be able to pay. The American Medical Association, the largest trade group for U.S. doctors, said earlier on Monday that the proposal would make it harder for people to afford care, joining the American Hospital Association in opposing the bill.

Insurers have been mixed -- America’s Health Insurance Plans, the industry’s Washington lobbying group, last week called the Medicaid cuts “too much, too fast.” One of its biggest members, Anthem Inc., said Monday that the bill would improve parts of the individual market for coverage.

The CBO estimated that the law would lower premiums in the long term, but raise out-of-pocket costs. Premiums would rise over the next several years and then fall, relative to current law. In 2026, average premiums would be about 20 percent lower than they would be under Obamacare. That’s in part because coverage would be skimpier, and people would face higher deductibles and other cost-sharing.

Premium Example

For example, a 64-year-old making $56,800 in 2026 would have a $6,800 annual premium after an $8,500 subsidy for a silver-level plan covering 70 percent of their expected health costs under existing law. That person would face a $20,500 premium for the same coverage under the Senate bill and get no subsidy.

CBO estimated that the individual health insurance markets would be stable in most parts of the country under both the Senate GOP plan and under Obamacare. Under the Republican plan, though, insurers might withdraw from some rural parts of the country, because they’d have too few customers to operate profitably.

“The reductions in subsidies would lead fewer people to decide to purchase insurance—and markets with few purchasers are less profitable for insurers,” CBO said.

Higher Costs

CBO also estimated that about half the population would be affected by the GOP plan’s extensive waivers, which let states change what coverage insurers are required to offer. While people in those states would still be able to buy insurance, coverage for certain conditions could become “extremely expensive” in some cases.

Many of the insurance offerings under the GOP bill would come with higher deductibles. A “bronze” plan that would be used as a benchmark in the law comes with an average $6,000 deductible. Under the bill, payments that help low-income people lower their premiums and other costs would also vanish. The result would be deductibles so high that “few low-income people would purchase any plan,” the CBO said.

“Because nongroup insurance would pay for a smaller average share of benefits under this legislation, most people purchasing it would have higher out-of-pocket spending on health care than under current law,” CBO said.

Medicaid Cuts

The scale of the Medicaid cuts and the increase in the number of people without insurance may give pause to moderate senators. Nevada’s Dean Heller has already said he won’t vote for the current version of the bill.

“It certainly makes me more concerned,” Senator Bill Cassidy, a Louisiana Republican, said on CNN after the score was released. “It makes me want to explore this more.”

A bloc of four conservatives has also opposed the proposal, but for different reasons: They said the bill doesn’t go far enough in undoing Obamacare.

Under the Senate’s budget rules, the legislation must save at least as much as the“on-budget” savings of $133 billion in the House-passed bill. Not including changes to Social Security, which is technically off-budget, the Senate amendment would save $331 billion. That would give McConnell $198 billion to fund special provisions to Senators reluctant to support the bill, while keeping the bill withing budget guidelines.

The Senate bill would reduce taxes on the wealthy, as well as on insurers, drug companies, device makers and tanning salons, paying for it with sharp cuts to the Medicaid program for the poor and with reductions to the subsidies that help middle-class people buy insurance on their own. The tax cuts are nearly identical to those proposed in the House’s Obamacare repeal bill.

While there’s reluctance among some Republicans, Senator Lindsey Graham said that it was important to try and move forward.

“I don’t think if you took another year it would change much; Democrats aren’t going to help us,” said Graham, a South Caroline Republican. “The bottom line is you’re not going to get 49 votes. You’re probably going to get 50, or 35.”

For reprint and licensing requests for this article, click here.