BEYOND THE NUMBERS
The Bipartisan Health Care Stabilization Act from Senators Lamar Alexander and Patty Murray — the Chairman and senior Democrat on the Senate Health, Education, Labor, and Pensions Committee — would benefit consumers and save the federal government $3.8 billion over ten years, a new Congressional Budget Office (CBO) analysis finds.
The Alexander-Murray bill would provide an explicit appropriation through 2019 for cost-sharing reduction (CSR) payments that the federal government owes to insurers; restore a significant portion of the Trump Administration’s cuts to marketplace outreach and enrollment assistance; and expand eligibility for “catastrophic” plans — high-deductible plans that are subject to Affordable Care Act (ACA) rules and consumer protections but are generally not available to people over age 30. It would also make changes to the ACA’s Section 1332 waivers, which let states modify certain ACA provisions, subject to requirements that they cover as many people, provide coverage as affordable and comprehensive, and not increase the federal deficit.
Contrary to claims that guaranteeing CSR payments would provide a windfall to insurance companies, CBO reiterates its earlier finding that the main beneficiaries would be consumers and taxpayers. In 2019, these benefits would come in the form of lower premiums. “[P]remiums in 2019 would be lower with funding for CSRs than without it,” CBO concludes, “and federal costs would probably be lower as well,” because premium reductions would translate into lower federal costs for premium tax credits that help low- and moderate-income people buy health insurance. For 2018, individual market premiums are already final, and open enrollment for 2018 plans begins next week. For that reason, the Alexander-Murray bill requires insurers to rebate, to consumers and the federal government, the portion of 2018 premium increases that is attributable to uncertainty about CSR payments. CBO estimates that this provision would generate $3.1 billion in insurer rebates to the federal government (which insurers would pay mostly during 2018 and 2019) and additional insurer rebates to consumers.
The Alexander-Murray bill would also modestly reduce marketplace premiums after 2019. While making catastrophic plans available to people over age 30, it makes these plans part of the ACA’s “single risk pool,” meaning premiums for ACA-compliant individual market plans would be based on the average health of everyone enrolled in such plans, including those buying catastrophic coverage. (Currently, catastrophic plan enrollees are excluded.) As CBO explains, this would reduce premiums for non-catastrophic plans “because the people who enroll in catastrophic plans tend to be healthier, on average, than other nongroup market enrollees.” That, in turn, would reduce federal premium tax credit costs, yielding another $1.1 billion in federal savings.
CBO finds that the Alexander-Murray bill’s changes to 1332 waiver rules would slightly increase federal costs by letting states claim more of the savings associated with certain waivers. It also finds that these changes to 1332 waiver rules “would increase the number of applications submitted by states and the likelihood that future waiver applications would be approved.” As we’ve written, while the changes to 1332 waivers would maintain the most crucial protections for consumers, including low-income people, people with serious health needs, and other vulnerable groups, they would increase the risk that approved waivers in some states could make health coverage less affordable for some people.
Overall, CBO finds that the Alexander-Murray bill achieves modest reductions in marketplace premiums and federal costs, without reducing the number of people with health insurance.
These findings contrast sharply with CBO’s previous analysis of provisions included in the alternative plan to guarantee CSR payments proposed yesterday by Senate Finance Committee Chairman Orrin Hatch and House Ways and Means Committee Chairman Kevin Brady and in the Administration’s proposed list of changes to Alexander-Murray. Both of these proposals include provisions very similar to the so-called “skinny repeal” bill that the Senate rejected in July — a bill that CBO found would cause 15 million people to lose coverage in 2018, raise individual market premiums by 20 percent, and shrink individual market enrollment by about a quarter. Adding such provisions to the Alexander-Murray bill would result in higher premiums, less stable markets, and large coverage losses, just the opposite of what a stabilization bill should aim to achieve.