Millions to Lose Coverage Under Trumpcare, Says CBO
Earlier this week, the Congressional Budget Office announced that an estimated 24 million Americans would lose their healthcare coverage under Trumpcare. The coverage estimates in the CBO score are driving changes to the proposed American Health Care Act (ACHA) to appease both Senate Republicans and Freedom Caucus members. It’s difficult to see the legislation as written with, an additional 24 million uninsured in 10 years, passing the Senate. Several critical Republican Senators have voiced their opposition.
Meanwhile, the White House released this one-pager on President Trump’s plans to stabilize health insurance markets and start bringing down costs for the millions of people affected by Obamacare.
… So What Now?
By Joel Wood, SVP, Government Affairs
First, though, let’s look at the more relevant numbers for The Council membership—specifically, the most overlooked numbers in the media reports having to do with the impact of the proposed AHCA on employer-sponsored plans. The CBO estimates that two million fewer Americans will have employer-sponsored coverage in 2020, growing to seven million by 2027. Here’s CBO’s rationale:
- The mandate penalties are eliminated and thus many will drop.
- The tax credits are available to people with a broader range of incomes than the Obamacare credits/subsidies.
- Some employers will drop coverage and increase compensation in the belief that non-group insurance is a close substitute.
These are valid points and the CBO experts are basing their estimates on sound economics and inside the constraints of their authority, and so of course we worry about any proposal that devolves employer-sponsored care. And CBO notwithstanding, we, too, feared something of a death spiral after the ACA was enacted.
The employer penalties were very small in comparison to premiums, and it made sense that many would dump their plans, give their employees cash, and send them to the subsidized exchanges. Also, the subsidies were pretty rich—graduating out at 400 percent of the poverty line—that’s more than $90,000 for a family of four. What we didn’t take into account were a number of things:
- A core assumption of the ACA was that states would all be forced to expand Medicaid to 138 percent of the poverty line, and the exchange subsidies would kick in above that amount. The courts struck that down and 19 (all-red) states never adopted the expansion, creating a massive donut hole.
- We underestimated how incompetent and chaotic would be the rollout of healthcare.gov.
- We knew the exchanges would be a model of adverse selection, but a “bailout” of insurance carriers through the “risk corridor” program was supposed to keep them in the game. Republicans balked, sued, and the reinsurance payments have been so lacking that most of the exchanges are currently in a death spiral (as described by Mark Bertolini of Aetna).
So employer-sponsored health insurance has, well, thrived since the enactment of the ACA—perhaps in spite of it, not because of it. If the CBO’s correct and seven million people lose ESI over the next decade, that’s problematic but ignores other opportunities that are being created through the proposed GOP bill and Trump Administration executive actions.
Republicans propose significant expansion of HSAs that will compliment higher-deductible ESI plans. They want work-arounds for state mandates on essential health benefits (EHB), even though their goal of “buying across state lines” can’t be realized through the tricky budget reconciliation process. And, ultimately, Republicans want to realize the potential for the ACA wellness provisions that have been eviscerated through years of EEOC/ADA/GINA conflicts. That would be a big win for employers.
The most important tradeoff between the “discussion draft” of three weeks ago (doesn’t that seem years ago now?) and the AHCA is that GOP House leaders junked their plan to tax 10 percent of employee contributions for ESI plans, in favor of pushing the Cadillac Tax out five more years, to 2025. Personally, I figure I’ve got another decade left in me to lobby for this industry, and that would get me eight years along the way. That’s a terrific tradeoff in my book, especially as Ways & Means Chairman Kevin Brady emphasized he never intends for that tax to go into effect—it’s purely a budgetary gimmick. (And, it’s a ridiculous “score” from CBO anyway—everybody knows that no employer is going to pay that tax; they’ll work their plan design to get under the numbers.)
My conclusions at this moment in time, thus, are:
- Have we won the battle among GOP leaders with respect to “hands off” of ESI while trying to solve the death-spiral problems in the individual/exchange marketplace? Not yet. We won a battle, not a war. Sadly and frustratingly, too many Republican leaders have bought into the elite conservative/libertarian economic intelligentsia that pure consumerism should drive healthcare, and that ESI is a “historic accident.” As our friend Ed Fensholt at Lockton always says, “penicillin was a historic accident, too, but look how that turned out.”
- Was former Speaker John Boehner right a week ago when he said that there’s no way you can get to the requisite 51 votes in the Senate right now with this current AHCA construct? You bet he was right. If you do the House plan and defund Planned Parenthood, you lose votes of pro-choice Republicans in the Senate. If Ryan and Trump relent to the Freedom Caucus on hacking the Medicaid expansion in 2018 instead of 2020, they’ll lose votes of Republicans in Medicaid-expanded states. In any event, they probably lose the votes of Ted Cruz and Ben Sasse and a number of other Republicans who view the AHCA as “Obamacare Lite” and demand a more straightforward repeal.
- Was Paul Ryan right when he said this on Face the Nation last Sunday? “The most important thing for a person like myself who runs for office and tells the people we’re asking to hire us, ‘This is what I’ll do if I get elected.’ And then if you don’t do that, you’re breaking your word.” You bet, he’s right. Republicans ran on this. They voted 60 times in the House to repeal the ACA. If they can’t do this, they can’t do tax reform, they can’t do 12 appropriations bills. Their margins for error (21 votes in the House; two in the Senate) are almost impossibly narrow, and the press hates this bill. But I wouldn’t pronounce this effort dead, by a long stretch.
Sometimes, when lobbying blank-faced Republican leaders on the importance of ESI, I feel like the old BB King lyric: “Nobody loves me but my mother, and she could be jivin’, too.” But because of, or in spite of, current legislative efforts that are dominating the headlines, I feel relatively well-poised for ESI to continue to be the means through which a majority of Americans receive the health insurance they like and they want to keep. Our job is for them to keep it. Notwithstanding lots of obstacles, we will.
Joel Kopperud, Vice President, Government Affairs:
Cheryl Matochik, Senior Vice President, Strategic Resources & Initiatives:
- The House Health-Care Proposal (National Review)
Michael Kanick, Digital Strategist: