CBO: #HR1425 would cover 4 million more people & reduce premiums while SAVING $15B over a decade

OK, this surprised me a bit: #HR1425, the Patient Protection & Affordable Care Enhancement Act, has already received a 10-year budgetary impact score from the Congressional Budget Office. I don't think this is a formal score--the whole thing is only five pages and includes minimal text accompanying it, so it might be just a "draft" score or something. I presume that if Mitch McConnell were to shock everyone and actually give it a vote in the Senate (which won't happen), there would likely have to be a second, more elaborate scoring process done by the CBO first. Then again, perhaps not.

Anyway, in a nutshell, the CBO report on the House version of H.R. 1425 comes to the following conclusions regarding the budget impact and other, related results of the bill being implemented nationally. Keep in mind that this assumes that the bill became law and was implemented starting in 2021; the score includes the 10 year period from 2021 - 2030:

TITLE I: Lowering Healthcare Costs & Protecting People w/Pre-Existing Conditions:

  • Section 101 (killing the subsidy cliff & beefing up the subsidy formula): $212.4 billion
  • Section 102 (resetting the premium adjustment percentage back to the original formula): $6.2 billion
  • Section 103 (fixing the Family Glitch): $45 billion
  • Section 104 (fixing the Social Security lump-sum payment problem): $391 million
  • Section 105 (reinstating grants to help states establish their own ACA exchanges): $200 million
  • Section 106 (health insurance affordability fund): $15.8 billion
  • Section 107 (reestablishing Obama-era regulation of short-term plans): $3.1 billion
  • Section 108 (revoking Trump's Section 1332 Waiver changes): n/a (less than $500K)
  • Section 109 (restoring HC.gov marketplace advertising, outreach, education budget): $11.3 billion
  • Section 110 (investigation to make sure HC.gov maintenance isn't being done to mess w/enrollment): n/a
  • Section 111 (restoring HC.gov navigator grant program funding): (unknown; see below)
  • Section 112 (auditing HC.gov's budget): n/a
  • Section 113 (increased awareness of healthcare options): n/a
  • Section 114 (pormoting state innovations): $600 million
  • SUBTOTAL: $295 billion over 10 years

TITLE II: Encouraging Medicaid Expansion & Strengthening the Medicaid Program:

  • Section 201 (3-year 100% FMAP match for Medicaid expansion): $17.0 billion
  • Section 202 (12 months continuous eligibility for Medicaid): $205 billion
  • Section 203 (12-month eligibility expansion for postpartum mothers): $6 billion
  • Section 204 (reducing FMAP for non-expansion states): n/a
  • Section 205 (reporting requirements for non-expansion states): saves $21 million
  • Section 206 (primary care pay increase): $65.3 billion
  • Section 207 (permanent funding for CHIP): n/a
  • Section 208 (permanent extension of CHIP quality measures): $40 million
  • Section 209 (state option to increase children's eligibility): n/a
  • Section 210 (Medicaid coverage for Freely Associated States): $600 million
  • Section 211 (full Medicaid payments to Indian healthcare providers): $760 million
  • SUBTOTAL: $295 billion over 10 years

I'm guessing it's pure coincidence that the projected cost of both Title I and II happen to be nearly identical.

TITLE III: Lowering Prices through Fair Drug Price Negotiations:

  • Would SAVE $581.6 billion, plus another $23 billion in savings via interactions w/the rest of the bill.

In other words, in the end, H.R. 1425 would actually save taxpayers about $15 billion!

Some of these seem a bit surprising until you think about them longer. For instance, they project that the 3-year 100% FMAP match for Medicaid expansion provision is only $17 billion...but remember that the federal government would already pay the other 90% if a state expands Medicaid with this bill or without it, so we're only talking about 10% of the cost for the first three years and between 5-10% after that. For that matter, the CBO is likely assuming that some of the 14 expansion holdouts still wouldn't jump on it even with this incentive.

On the flip side, $205 billion for requiring that people who are deemed eligible for Medicaid once are still eligible for a full 12 month period seems awfully steep to me, but that can be read two different ways: It assumes that either a lot of Medicaid enrollees are unethical mooches who would stay enrolled in Medicaid for months longer than they really should be eligible to do...or it assumes that lots of Medicaid enrollees who sould remain eligible are being kicked off hte program due to not being able to comply with draconian 12-times-a-year paperwork. I tend to err on the latter side.

Section 106 confuses me--that's the Health Insurance Affordability Fund, which is supposed to amount to $10 billion per year or $100 billion over 10 years. I'm not sure I understand why the CBO thinks that would only increase the deficit by $15.8 billion...unless they're going further with the math and figuring that the reduced premiums from the reinsurance funding would in turn also lower APTC subsidy payments proportionately, thus reducing the cost of the reinsurance program overall. This is exactly how the state-based reinsurance programs work under Section 1332 waivers today, after all. So this might make sense...I just figured that would be separated out on the report or something.

There's some footnotes in the report as well which are worth paying attention to...especially the highlighted ones below:

Section 108 would affect direct spending by less than $500,000 over the 2020-2030 period.

Sections 104 and 108 would affect revenues by less than $500,000 over the 2020-2030 period.

Section 111 would affect direct spending and revenues. However, CBO and JCT cannot estimate the magnitude or direction of those effects.

Estimates for titles I and II are relative to CBO’s March 2020 baseline, adjusted for the agency’s current estimates of sources of health insurance coverage and for the estimated effects of subsequent legislation, primarily in response to the coronavirus pandemic and public health emergency. Estimates for title III are relative to CBO’s March 2020 baseline, reflecting the effects of subsequent legislation.

CBO and JCT estimate that enacting Rules Committee Print 116-56 would reduce the number of people who are uninsured by an average of 4 million people between 2022 and 2030, compared with CBO’s current-law projections. CBO and JCT consider people to be uninsured if they would not be enrolled in a policy that provides financial protection from major medical risks.

At first glance, "reducing the number of uninsured by 4 million people" may sound pretty underwhelming. After all, the Medicaid Gap alone includes some 2.3 million people, and estimates of the number of Americans who would become eligible for ACA subsidies by fixing the Family Glitch are as high as six million.

However, the last part is critical to keep in mind: The definition of what "counts" as being "uninsured": "A policy that provides financial protection from major medical risks".

Technically speaking, even a bare-bones #ShortAssPlan could provide "financial protection from major medical risks"...depending on your exact situation. WIthout knowing the CBO's definition of "major medical risk", it gets tricky. Way back in 2016, right after Trump won the Electoral College, the CBO issued a report which basically warned him that they weren't going to "count" junk plans as being "insured":

..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.

However, less than a year later, when addressing the Senate's "BCRAp" ACA replacement, the CBO said this:

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.

...which basically means that if the ACA is struck down, all bets are off and junk plans would "count" as "being insured". So...I'm not sure what to conclude here.

Anyway, 4 million more people insured is still 4 million more insured...and this measure doesn't count the ten to twenty million of those currently insured who would see their costs for that coverage drop dramatically (alternately, many of them would now be able to afford to improve their coverage, moving from Silver to Gold plans or whatever).

Speaking of which:

CBO and JCT estimate that gross premiums—that is, the premium amounts without subsidies—for nongroup coverage would be about 10 percent lower in 2022 and later years, on average, under Rules Committee Print 116-56 than under current law. That reduction primarily stems from section 106, which establishes an affordability fund that CBO estimates would be used primarily to provide reinsurance payments to insurers. Reinsurance payments reduce premiums by shielding insurers from some of the cost of enrolling people with high medical expenses.

In other words, even if your income is high enough that you still wouldn't qualify for the 8.5% of income cap subsidy income threshold, you'd still save 10% when paying full price for your health insurance policy vs. what you'd be paying otherwise (and by 2030, who knows how much that would otherwise be?).

So in short:

  • At least 4 million more people with health insurance,
  • Substantial cost savings/coverage improvement for 10-20 million more,
  • 10% lower premiums for those paying full price, and
  • ...a net $15 billion savings for the American taxpayers.

Pretty damned good, I'd say.