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June 26, 2017

6 key projections in CBO's Senate health bill score

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Editor's note: This story was updated on June 27, 2017.

The Congressional Budget Office (CBO) on Monday released its analysis of the Senate GOP's health care bill, called the Better Care Reconciliation Act (BCRA), projecting that the bill would lead to 22 million more uninsured Americans by 2026 and reduce federal Medicaid spending by $772 billion across the next decade.

The so-called CBO "score" factored in a new bill provision announced Monday morning that would impose a waiting period of at least six months on new individual market enrollees who did not maintain continuous coverage during the previous year.

Here are six key projections from the CBO report on the BCRA:

1. 22 million more uninsured Americans by 2026

CBO projected that in 2018, relative to current law, 15 million more Americans would lack health insurance coverage, primarily because the bill would eliminate the ACA's individual mandate, which requires most Americans to purchase insurance. And CBO estimated that by 2026, 22 million more Americans—consisting of 15 million Medicaid beneficiaries and 7 million non-group market enrollees—would lack coverage relative to current law.

CBO said the increase in uninsured "would be disproportionately larger among older people with lower income—particularly people between 50 and 64 years old with income of less than 200 percent of the federal poverty level."

2. A 26 percent drop in federal Medicaid funding by 2026—and larger reductions after that

CBO projected that, between 2017 and 2026, federal Medicaid funding would drop by $772 billion. That decline would come from a combination of a rollback in Medicaid expansion funds that would start in 2021 and per capita caps on Medicaid funding that would start in 2020.

CBO projected that in the short term states would use a mix of approaches to adjust to reduced funding, including providing more state funding, cutting payments to providers and health plans, eliminating optional services, and implementing work requirements.

CBO also noted that in 2025 and beyond, the Senate bill's Medicaid funding caps would grow by a slower rate, and "the differences between spending growth for Medicaid under current law and the growth rate of per capita caps for all groups would be substantial."

As a result, CBO projected that "after 2026, enrollment in Medicaid would continue to fall relative to what would happen under current law," although CBO did not provide a precise estimate of the decline. Further, CBO wrote, over the long term, "there would be increasing pressure on more states to" make adjustments to their Medicaid programs.

3. $29 billion in additional DSH and safety net funds over a decade

The Senate bill would exempt non-expansion states from the ACA's Medicaid disproportionate share hospital (DSH) allotment reductions starting in 2018. Further, states with per capita FY 2016 DSH allotments below the national average would be eligible for more funding for FY 2020. CBO estimated those changes would increase federal spending on DSH payments by $19 billion over the next decade.

CBO also estimated that a provision providing additional safety net funding through 2022 to non-expansion states would result in $10 billion in additional federal spending through 2026.

4. Higher average premiums through 2019; lower premiums afterwards

CBO estimated that the average premium for the non-group market benchmark plan would be about 20 percent higher in 2018 and 10 percent higher in 2019 than under current law.

But CBO noted that beginning in 2020, the benchmark plan's actuarial value would drop from 70 percent to 58 percent. As a result, "the smaller share of benefits ... and federal funds provided to directly reduce premiums" would lead to a 30 percent reduction in average premiums for benchmark plans, relative to current law.

CBO said that premium increases in different parts of the country would be "substantially higher" and "substantially lower," depending in part on whether states waive any of the ACA's insurance regulations.

5. Higher out-of-pocket costs on average

The decline in benchmark premiums, CBO projected, would largely be "because the insurance pays for a smaller average share of health care costs" than under current law. In particular, CBO projected that benchmark plans under the BCRA "would have high deductibles similar to those for the bronze plans offered under current law."

The BCRA would offer premium tax credits to all individuals with incomes up to 350 percent of the federal poverty level. But CBO said that starting in 2020, the premiums and deductibles would be sufficiently high for such individuals that "despite being eligible for premium tax credits, few low-income people would purchase any plan," CBO projected.

In addition, CBO said, "some people enrolled in non-group insurance would experience substantial increases in what they would spend on health care even though benchmark premiums would decline, on average, in 2020 and later years." In particular, CBO said that some individuals in states that change the ACA's essential health benefit (EHB) provision "would experience substantial increases in supplemental premiums or out-of-pocket-spending on health care, or would choose to forgo the services."

CBO also said that the ACA's "ban on annual and lifetime limits on covered benefits would no longer apply to health benefits no longer defined as essential in a state," which could further increase cost-sharing in states that waive EHBs.

6. A stable individual market in all but a 'small fraction' of states

CBO said that "the non-group market in most areas of the country would continue to be stable in 2020 and later years as well, including in some states that obtain waivers that would not have otherwise done so." It also estimated that "a small fraction of the population resides in areas in which—because of this legislation, at least for some of the years after 2019—no insurers would participate in the non-group market or insurance would be offered only with very high premiums."

Next steps

The Senate must wait 28 hours after the CBO score's release before it can vote on a motion to proceed on the House-approved American Health Care Act (AHCA).

According to Axios' Vitals, the Senate is expected to vote on a motion to proceed to debate on the bill on Wednesday. The vote would actually relate to the House-approved American Health Care Act, which would function as a "shell" for the Senate bill, providing the legislative base from which the Senate could proceed, according to Politico's "Pulse."

If the motion to proceed to debate the bill passes, which would require 50 votes, lawmakers would have 20 hours to debate the bill, with the time equally divided between Republicans and Democrats. Senate Democrats also would be able to raise points of order to argue that certain provisions of the bill violate the chamber's budget reconciliation rules. If the Senate parliamentarian agrees, those provisions would be stricken from the bill.

Finally, the Senate would proceed to the so-called "vote-a-rama," likely on Thursday, in which senators could offer as many amendments as they wish to alter the bill.

The final amendment would be a substitute amendment, striking the language of the House bill and replacing it with the Senate plan ahead of the final floor vote, "Pulse" reports.

(Source: CBO score, 6/26).

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