The Senate yesterday delayed its plan to vote on its health care repeal bill, also known as the Better Care Reconciliation Act of 2017 (BCRA). On Monday, the Congressional Budget Office (CBO) released its score of the bill and projected it would cause 22 million individuals to be uninsured by 2026, including 15 million individuals enrolled in Medicaid. The bill effectively ends the Medicaid expansion program and cuts $772 billion in Medicaid funding. Senate Republicans offer two options to current expansion enrollees: 1) prohibitively expensive coverage, or 2) no coverage at all.
Spending half their annual income on health care is not a viable option for low-income families
Republican Senators were quick to tout that current Medicaid expansion enrollees still had coverage options under the bill because it expands the eligibility for tax credits to the expansion population (i.e., from 100-400 percent of the Federal Poverty Level (FPL) under the Affordable Care Act (ACA) to 0-350 percent FPL). Senator Richard Burr of North Carolina touted that the bill “better targets tax credits to low-income individuals.”
But the bill’s replacement of Medicaid with private coverage is not a viable alternative for this population. First, the bill cuts tax credit funding by $408 billion, and therefore while it attempts to provide credits to more low-income individuals, there will be substantially less funding to go around. Second, the bill changes the tax credit eligibility rules to prohibit anyone with an offer of employer-sponsored insurance (ESI) to be ineligible for tax credits, regardless of how much that ESI would cost. But Medicaid expansion enrollees’ incomes are so low, that almost any offer of ESI would be prohibitively expensive for them. Yet, under the Senate bill, that coverage would be their only option.
In addition, the Senate bill ties tax credits to plans with far higher out-of-pocket costs, which will make coverage prohibitively expensive for many, particularly those between 0-100 percent FPL. Specifically, the bill changes the “benchmark plan” on which premium tax credit calculations are based from the ACA’s “silver-level” plan – a plan that covers 70 percent of the costs of the standard population – to a plan that only covers 58 percent of such costs, leaving enrollees with significantly higher out-of-pocket costs. The CBO estimates that moving the benchmark plan to a 58 percent Actuarial Value plan would lead to deductibles that would represent a “significantly higher percentage of income” than under the ACA, and individuals at 75 percent FPL would be required to spend more than half of their income on their deductible. As a result,” the CBO concludes, “few low-income people would purchase any plan.”
Unaffordable coverage options will lead to spikes in uncompensated care
If the current Medicaid expansion population chooses not take up either of these highly problematic options, there will likely be a spike in uncompensated care costs that providers and states will have to absorb. Research has shown that states that expanded their Medicaid programs saw significant reductions in their uncompensated care costs, but these reductions will likely reverse under the bill. Instead, left only with the options of employer-sponsored coverage or marketplace coverage, many Medicaid expansion enrollees may simply choose not to enroll in coverage, as the CBO expects, and instead seek care at safety-net providers. And many who do enroll will be burdened with medical debt when they seek care, since they will not be able to afford their deductibles.
Overall, to provide affordable coverage options to low-income individuals, the Senate needs to reverse course entirely. Right now, the basic structure of bill is tax cuts for the rich financed by benefit cuts for low- and moderate-income families. Unless that underlying structure is changed, it’s clear that Medicaid expansion enrollees will be left behind.