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The Billion Dollar Question: Will CBO count BCRAP plans as "health insurance"??

The CBO score of the GOP Senate's #BCRAP bill is expected to be released early next week, just days (or, who knows, hours?) ahead of Mitch McConnell's rushed-through vote.

The biggest question from a process POV (that is, whether Senaterules will allow the bill to be crammed thorugh the reconciliation process) is financial; as David Anderson summarized the other day:

a) The Parliamentarian is most likely going to be stripping out significant non-germane to the budget items
b) $1 billion in savings must come from each of two committees (HELP and Finance)
c) Anything the Senate passes must meet or beat the $119 billion in budget window deficit reduction that the House AHCA was scored at.

However, from a political POV, the bigger question is how many people the CBO projects will lose coverage by 2026 if BCRAP becomes law.

Back in December, the CBO posted the following:

Some policymakers have expressed interest in developing proposals to replace the current tax-based subsidies for the purchase of private health insurance in the nongroup (or individual) market under the Affordable Care Act (ACA) with refundable tax credits that would be structured differently from those under current law. Many such proposals would also eliminate or reduce the extent of current federal laws regulating the nongroup market, particularly the rules governing health insurance benefits. Two key questions for policymakers in developing such proposals are what type of insurance products would qualify for tax credits and what role states would have in making that determination.

...In response to a future policy that had minimal federal or state regulations, CBO and JCT expect that some new insurance products would be offered that limited coverage to the amount of the tax credit. Some of those insurance products purchased by people using a tax credit would probably not offer much financial protection against high out-of-pocket costs. Depending on the size of the tax credit, however, the depth and extent of coverage and the premiums of plans could vary. As discussed in another blog post about how CBO defines and estimates coverage, CBO does not count plans that have very limited benefits in measuring the extent of private insurance coverage; in such an assessment, it counts only people with a comprehensive major medical policy as having private insurance.

Under such proposals, CBO and JCT would separately estimate the number of people who would receive the tax credits and, if policymakers expressed interest in such estimates, the number of people who would purchase private insurance in the nongroup market that met a broad definition of coverage. In that case, the latter estimate of the number of people with coverage would probably be smaller than the estimate of the number of people who would receive the tax credit.

SHORTER CBO: When Donald Trump and Paul Ryan start lying about having "insured" eleventybillion more people for 1/10th of the cost of the ACA, don't expect us to back up your nonsense.

I was relieved to hear this. The question on many people's minds today is exactly what criteria the CBO uses to define "comprehensive major medical policy".

For example, as I noted last night, the BCRAP plan would supposedly gradually move up to 20 million people over from high-AV coverage (ranging from 87% - 99% AV, via either Medicaid expansion or high-CSR Silver policies) to a low-AV "sub-Bronze" policy (58% AV)...while also supposedly adding the 2.6 million people currently caught in the GOP-created "Medicaid Gap" into those 58% AV plans as well. Will those people be considered by the CBO to have a "comprehensive major medical policy" even if they're looking at a $6,000/yr deductible on a $12,000/year income?

The CBO explained their methodology in an earlier blog post, as follows:

How Does CBO Define Private Insurance Coverage?

Health insurance policies vary widely, ranging from some that offer substantial coverage for a variety of health care services to some with a limited scope or amount of coverage. Therefore, in preparing any estimate of the number of people covered by health insurance, it is useful and important to identify where to draw the line to distinguish policies that provide some type of comprehensive coverage from those that do not.

An important function of insurance is to provide financial protection against high-cost, low-probability events. Consistent with that notion, CBO broadly defines private health insurance coverage as a comprehensive major medical policy that, at a minimum, covers high-cost medical events and various services, including those provided by physicians and hospitals. The agency grounds its coverage estimates on that widely accepted definition, which encompasses most private health insurance plans offered in the group and nongroup markets. The definition excludes policies with limited insurance benefits (known as “mini-med” plans); “dread disease” policies that cover only specific diseases; supplemental plans that pay for medical expenses that another policy does not cover; fixed-dollar indemnity plans that pay a certain amount per day for illness or hospitalization; and single-service plans, such as dental-only or vision-only policies.

When specific requirements are established in law, CBO relies on those definitions to further determine what policies count as private insurance coverage. To define coverage under the ACA, CBO relies on provisions in that law that established detailed requirements governing the benefits of private insurance coverage in the large-group market, which is generally defined as employers with more than 50 employees. (For more about the minimum value standard used to govern benefits in the large-group market and other aspects of the private health insurance market, see CBO’s report about private health insurance premiums.)

CBO also relies on separate provisions of the ACA that define the requirements governing plans offered in the small-group (generally defined as employers with up to 50 employees) and nongroup markets. Since 2014, new plans sold in those markets must cover 10 categories of health benefits that the ACA defines as essential. Other provisions require that the actuarial value (a summary measure of the depth of coverage) of those plans fall into specified categories (60 percent, 70 percent, 80 percent, and 90 percent actuarial value). Only in limited circumstances may plans with an actuarial value of less than 60 percent—known as catastrophic plans—be sold to certain individuals. (A plan with an actuarial value of 60 percent means that for a standard population, the plan will pay for 60 percent of covered health care expenses, while enrollees are responsible for 40 percent of health care expenses through some combination of deductibles, copayments, and coinsurance.) Some plans that existed before 2014 and have continued are exempt from those requirements or some of the ACA’s regulations. CBO counts those noncompliant plans and catastrophic plans as private insurance coverage because they typically provide major medical coverage and are permitted under the ACA in limited circumstances.

If the provisions of the ACA governing the definition of private insurance coverage were repealed, CBO would revert to the broader definition of private insurance coverage—a comprehensive major medical policy, as described above. Such a broad definition of private insurance coverage is in keeping with what the agency has used to estimate coverage in the past. For a discussion of how CBO would estimate coverage under alternative proposals, see CBO’s blog post about challenges in estimating health insurance coverage under proposals for refundable tax credits.

If I'm reading this correctly, it sounds like the BCRAP's 58% AV default minimum wouldn't be counted by the CBO as being a "comprehensive major medical policy", even if not a single state implements any waivers. If a state does implement a waiver (whether of EHBs, minimum AV or whatever), that would almost certainly mean it doesn't count.

However, the final paragraph seems to contradict this: The CBO seems to be saying that once BCRAP was actually signed into law, the definition of "comprehensive major medical policy" would also change...and therefore the 58% BCRAP plans would be counted after all.

Of course, the CBO score is being released before BCRAP becomes law or is even voted on, so it seems to me the CBO shouldn't be counting the 58% plans as "coverage"...but I don't know enough about the legal or procedural basis for this sort of thing to be sure one way or the other.

This is a vitally important question. The CBO projected 23 million people would lose coverage by 2026 under the House GOP AHCA bill. If the BCRAP plans aren't counted as "coverage", their projection will likely be similar for BCRAP. If they do count 58% BCRAP plans, as "coverage", however, it's possible that the CBO's projected number losing coverage could be considerably lower...even if the plans themselves are effectively useless in the real world.