CBO: Senate’s ACA repeal bill would destabilize some markets, increase deductibles

Some 22 million more people would be uninsured by 2026, deductibles and out-of-pocket costs would sharply rise while premiums would be lower and certain markets could be unstable if the Senate’s version of an Affordable Care Act repeal-and-replace plan becomes law, according to the Congressional Budget Office.

The CBO report comes days ahead of when Senate Republican leaders plan to hold a vote on the legislation, titled the Better Care Reconciliation Act (BCRA). It’s similar to the House-passed American Health Care Act (AHCA), but the Senate bill was scored more favorably than the AHCA on insurance coverage (22 million more uninsured in 2026 vs. 23 million under AHCA) and reducing the federal deficit ($321 billion vs. $119 billion).

The BCRA also fared better than the AHCA on market stability. The CBO said the House bill would cause the individual market to become unstable in areas with one-sixth of the U.S. population. For BCRA, the instability would more limited, with the CBO predicting insurers wouldn’t participate or only offer very expensive plans on the individual market after 2019 in areas which “a small fraction of the population resides” when the legislation would cut off cost-sharing reduction subsidies to insurers

“Some sparsely populated areas might have no nongroup insurance offered because the reductions in subsidies would lead fewer people to decide to purchase insurance—and markets with few purchasers are less profitable for insurers. Insurance covering certain services would become more expensive—in some cases, extremely expensive—in some areas because the scope of the (essential health benefits) would be narrowed through waivers affecting close to half the population,” the report said.

The legislation would eventually lower premiums, according to the CBO, but only as a result of health plans covering fewer costs. The BCRA sets the benchmark premium at an actuarial value of 58 percent, not the ACA’s 70 percent. After an initial spike in premiums compared to the ACA in 2018 and 2019—thanks to the repeal of the individual mandate—the legislation would lower premiums by 30 percent compared to current law in 2020.

Out-of-pocket spending, however, would be higher as plans cover a smaller share of benefits and become unattractive to lower-income customers who may otherwise qualify for a subsidy on their premiums. Spending would also be greater for “close to half the population” living in areas where the ACA’s essential health benefits (EHBs) are waived.

“People who used services or benefits no longer included in the EHBs would experience substantial increases in supplemental premiums or out-of-pocket spending on health care, or would choose to forgo the services,” the report said. “Moreover, the ACA’s ban on annual and lifetime limits on covered benefits would no longer apply to health benefits not defined as essential in a state. As a result, for some benefits that might be removed from a state’s definition of EHBs but that might not be excluded from insurance coverage altogether, some enrollees could see large increases in out-of-pocket spending because annual or lifetime limits would be allowed.”

The report had an immediate impact on the bill’s chances of passing the Senate. With all Democrats pledging to vote against the BCRA, Republicans can afford to lose only two votes from their own caucus. Five Senators had already said they wouldn’t vote for it in its current form, and Sen. Susan Collins, R-Maine, became the sixth after the CBO report was released.

“I will vote no” on a motion to bring the bill to a vote, Collins tweeted. “The Senate bill doesn't fix ACA problems for rural Maine. Our hospitals are already struggling.”