CBO releases cost estimate, Senate delays vote on healthcare bill

The Senate’s version of the healthcare repeal-and-replace legislation, the Better Care Reconciliation Act of 2017 (BCRA), would reduce the federal deficit by $321 billion over the period of 2017-2026 compared to the current Affordable Care Act law but would include severe cuts to Medicaid, according to a report released Monday by the nonpartisan Congressional Budget Office (CBO) and the Joint Committee on Taxation.

The biggest effect on spending would come from reducing the federal participation in state Medicaid coffers, where spending would drop by an estimated $160 billion in 2026 compared to projections under the current law. The proposed legislation also could result in 22 million uninsured by 2026, the CBO reports.

The Senate’s bill, meant to replace the House’s HR 1628, was released last week. If the bill passes both congressional houses in its current form, four major coverage provisions would take effect in 2019:

1. Appropriating funding for grants to states through the Long-Term State Stability and Innovation Program.

2. Requiring insurers to impose a six-month waiting period before coverage starts for people who enroll in insurance in the nongroup market if they have been uninsured for more than 63 days within the past year.

3. Setting a limit whereby insurers would charge older people premiums that are up to five times higher than those charged younger people in the nongroup and small-group markets, unless a state sets a different limit.

4. Removing the federal cap on the share of premiums that may go to insurers’ administrative costs and profits (also known as the minimum medical loss ratio requirement) and effectively allowing each state to set its own cap.

Starting in 2020, it’s all about Medicaid. New payment growth rate caps for Medicaid enrollees, including disabled adults and Medicaid enrollees over age 65, would begin in 2020 and would be revised again in 2025. In addition, the tax credits for purchasing health insurance would be reworked, adjusting the income requirements for who is eligible. The insurance payment amounts also would change, the bill notes: “The maximum percentage of income specified by the bill that people would pay at different ages toward the purchase of a benchmark plan would be lower for some younger people and higher for some older people.”

The shift of financial support for Medicaid from the federal level to the states—a key element of the House’s version as well—begins in 2021 in the Senate version, stipulating a five-percentage-point reduction in federal matching funds for Medicaid eligibility in 2021-2023, then set at a state rate from then on. Several sections of the Senate bill also include incentives or additional funding for non-Medicaid-expansion states, especially between now and 2022.

Tuesday afternoon the Senate Republican leader Mitch McConnell pulled the bill from the Senate floor, effectively delaying any possible vote until after the July 4 holiday recess.

Read the entire Senate bill here
Read the full CBO report here

Topics: Articles , Executive Leadership , Medicare/Medicaid