CBO Report Shows Senate Bill’s True Colors: Cost-Shifting, not Saving

JUNE 26, 2017 BY NATIONAL COALITION ON HEALTH CARE

Tweet

Share

“With CBO’s estimate in hand, we can be certain the Senate bill is an exercise in cost-shifting, not cost saving – with devastating impacts for families, state taxpayers, employers, providers, payers, and the Medicare program.

“The Senate must reject this bill and turn instead to serious, bipartisan efforts with input from stakeholders across the board that would improve, not worsen, health care affordability.” 

-NCHC President & CEO John Rother

A Brief Analysis of the Better Care Reconciliation Act of 2017

With the release of the Congressional Budget Office score dated June 26, 2017, we offer the following analysis of the Senate bill. We conclude that the legislation, rather than decreasing health care costs from our increasingly unaffordable health care system, serves to shift costs from the federal balance sheet onto state taxpayers, employers and families, and providers.

CORE COVERAGE PROVISIONS OF THE SENATE BILL

The Better Care Reconciliation Act of 2017 would repeal most of the ACA’s tax provisions, offset largely by a 26% reduction in federal support for Medicaid programs operated by the states and territories.[1]  It also replaces the Affordable Care Act’s system of tax credits and insurance rules with reduced federal tax credits and new, more relaxed rules for what services and level of coverage insurers must provide. Finally, it broadens state authority to waive most federal coverage and benefit standards. Specifically, this provision of BCRA removes the requirement that states cover as many people and provide coverage that is at least as comprehensive and affordable.

COST SHIFTING TO STATE TAXPAYERS AND LOCAL COMMUNITIES

Over the next ten years, the Senate bill reduces federal support for state Medicaid programs by $772 billion, primarily by capping federal contributions to state Medicaid programs and eliminating funding for state option to cover low-income adults through Medicaid. Cuts of this scale cannot be addressed by new efficiencies and reforms alone.  Instead, their implementation would force state policymakers to choose between slashing Medicaid benefits, provider rates, or eligibility, cutting other services like education and law enforcement, or raising state taxes.  CBO states:

“With less federal reimbursement for Medicaid, states would need to decide whether to commit more of their own resources to finance the program at current-law levels or to reduce spending by cutting payments to health care providers and health plans, eliminating optional services, restricting eligibility for enrollment through work requirements and other changes, or (to the extent feasible) arriving at more efficient methods for delivering services.”[2]

COST SHIFTING TO MEDICARE AND ITS BENEFICIARIES

Under the Senate Bill, the Medicare Hospital Insurance Trust Fund that helps fund Part A benefits will become insolvent two years earlier than previously estimated. This is largely due to the repeal of a dedicated 0.9% increase in Medicare payroll taxes on individuals earning over $200,000 a year and the increase in Medicaid DSH payments to hospitals.[3]

Faced with a $772 billion in reductions to federal reimbursement, states are likely to scale back those benefits and services that are optional under federal law—most significantly the availability of home-based services—and restrict who can qualify for Medicaid-covered nursing home care. The result will be greater utilization of Medicare’s hospital, post-acute, and medical benefits—costs which must be borne by the Medicare beneficiaries, providers, and taxpayers.

COST SHIFTING TO INDIVIDUALS AND FAMILIES

For Individual Market Consumers: The Americans who get coverage through the state Marketplaces and receive cost-sharing subsidies will encounter dramatically higher deductibles. Families earning incomes equal to 100-150% of the Federal Poverty Level (FPL) would be subject to deductibles of about $6000 on Marketplace plans, compared to the approximately $300 deductible available today with cost-sharing reductions.[4] Consumers over 59 years of age will face substantially higher premiums than under current law- reaching as high as 16.2% of their income for those earning 350% of FPL.[5]

For People with Employer-Sponsored Insurance: The 178 million Americans who rely on employer coverage could face higher out-of-pocket costs and a return to lifetime or yearly caps on benefits if their state opts to waive essential health benefit requirements.

COST-SHIFTING TO PROVIDERS AND PRACTICES

The Senate legislation will dramatically increase uncompensated care.The legislation does provide for $42 billion in additional Medicare payments to hospitals serving low income patients. However, these changes would be a fraction of the likely uncompensated care costs resulting from 22 million additional Americans without insurance and unpaid medical bills associated with higher deductibles and other cost sharing on the individual market.

 [1] https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/52849-hr1628senate.pdf, page 4.

[2] https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/52849-hr1628senate.pdf, page 30.

[3] https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/Downloads/AHCA20170613.pdf.

[4] https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/52849-hr1628senate.pdf, page 27, footnote 3.

[5] https://www.budget.senate.gov/imo/media/doc/BetterCareReconcilistionAct.6.26.17.pdf, page 6.

FILED UNDER: FEATURED, PRESS RELEASES