CBO: AHCA would destabilize individual market in parts of U.S.

The Congressional Budget Office has released its updated report on the American Health Care Act (AHCA), saying the Affordable Care Act (ACA) replacement passed by House Republicans would still erase the recent gains in insurance coverage and potentially price less healthy enrollees out of the individual market.

There are some positives for supporters of the AHCA in the report. For one, it will cut the federal deficit by $119 billion by 2026, which means a re-vote on the bill in the House isn’t required. It would also lower insurance premiums after 2020, though rates would jump an average of 20 percent in 2018 and then another 5 percent in 2019, with the decrease credited to allowing plans which “pay for a smaller proportions of health care costs.”

Its impact on insurance coverage would be slightly smaller compared to the first CBO report, but it estimated 23 million more people would still become uninsured by 2026. The largest loss in coverage would be immediate, with 14 million becoming uninsured in 2018 compared to the ACA.

The greatest difference between the first report and the updated score related to the stability of the health insurance market. The earlier report said the ACA’s individual market is not in a “death spiral,” as some of its detractors have claimed, and also said the AHCA market would be stable. Under the new legislation, however, that wouldn’t be the case across the U.S., thanks to provisions which allow individual states to waive the ACA’s essential health benefits requirements and open the door for insurers to set premiums based on an individual’s medical history.

“The agencies estimate that about one-sixth of the population resides in areas in which the nongroup market would start to become unstable beginning in 2020,” the report said.

Those unstable areas would be ones which opt to waive both the benefit and community rating provisions. People with pre-existing conditions would likely be unable to purchase comprehensive insurance on the individual market at premiums comparable to current ACA plans, the report said, and some of them who are insured in the current market would go without coverage.

The waivers did complicate the CBO’s assessment of the AHCA, since it couldn’t project what each individual state would do. Instead, it broke its estimates into three categories:

·         About half of the U.S. population would be in states which wouldn’t waive either requirement. The CBO estimated premiums in those states would be reduced by 4 percent in 2026 compared to the ACA, mostly thanks to a younger, healthier population buying insurance and providing greater balance to the risk pool.

·         One-third of the population would be in states which only make “moderate” changes. Their premiums would be far lower on average, about 20 percent by 2026, because insurance plans would cover fewer services.

·         Then there’s the unstable market category, covering one-sixth of the population. Premiums would be lower, though the CBO doesn’t estimate by how much, thanks to skimpier benefits and people with pre-existing conditions leaving the risk pool.

The report also estimated out-of-pocket spending would increase dramatically in states in the latter two categories, as people utilize services which are no longer covered by their insurance.

“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,” the report concluded.

Initial reaction from Republicans focused on the promises of lowered premiums, rather than the estimated losses in insurance coverages or the warnings of unstable markets.

“CBO continues to find that through our patient-focused bill, premiums will go down and that our reforms will help stabilize the market,” House Energy and Commerce Committee Chairman Greg Walden, R-Oregon, and Health Subcommittee Chairman Michael C. Burgess, MD, R-Texas, said in a statement.