Saturday, July 08, 2017

Those uninsured by the BCRA "not losing, but choosing"? Get ready to hear it more.

Bloomberg reporter Steve Dennis flags a Republican talking point in favor of their latest travesty of a 'healthcare" bill that we're likely to hear more of in the next two weeks:
That's in response to:
This argument was first voiced byPaul Ryan, defending the first iteration of the House bill, and later by Tom MacArthur*, whose amendment undermining protections for people with pre-existing conditions secured that bill's House passage. As Cornyn, the Senate majority whip, has emerged as gaslighter-in-chief defending the Senate bill (the so-called Better Care Reconciliation Act, or BCRA), we should regard it as a kind of front-line defense. If the cabal now redrafting the BCRA in secret manages to improve the CBO score by throwing a couple hundred billion dollars back in the coverage pot -- reducing the forecast increase in the uninsured to, say, 15 or 12 million --expect to hear a lot more of it.

There is a ghost of truth in the allegation, which can be made to look more substantial by gaslight. so let's shine some stronger light,. A few points:

1. The claim that most coverage losses under the BCRA will be a matter of individual choice depends on conflating CBO's short-term and long term forecasts. For the Senate bill, CBO forecasts that 15 million fewer people will have insurance than under current law in 2018, and 22 fewer million in 2026.  In 2015, CBO forecasts, enrollment in the private individual market will be reduced by 7 million, with the remainder of losses coming from employer-sponsored insurance and Medicaid, in unspecified proportions. By 2026, however, Medicaid will account for 15 million of the 22 million fewer people forecast to be insured than under current law.

2. In 2018, CBO does foresee that the increase of 15 million in the ranks of the uninsured compared to current law will be "primarily because the penalty for not having insurance would be eliminated." The mandate repeal would probably at least partly motivate most of the losses in the private individual market in that year, because subsidy structure does not change dramatically until 2020. The absence of a mandate would also cause some people to drop -- or not take up -- employer-sponsored insurance, and Medicaid takeup among the eligible would probably drop to pre-ACA levels, CBO says. By 2026, the Medicaid losses would be almost entirely due to the phase-out of enhanced federal funding for those meeting the ACA's expanded eligibility criteria, which few states will maintain on their own dime.

3. In all markets the mandate interacts with other factors (if it did not, no one would consider it as a policy option). In 2018, CBO forecasts:
Under the Senate bill, average premiums for benchmark plans for single individuals would be about 20 percent higher in 2018 than under current law, mainly because the penalty for not having insurance would be eliminated, inducing fewer comparatively healthy people to sign up.
So those initial individual market coverage losses, attributed "primarily" to the mandate, are also a function of higher prices.

4. In 2020 a new subsidy structure is forecast to drive lower-income and older enrollees out of the market while eventually pulling in a roughly equal proportion of higher income and younger enrollees. Several changes will work together to produce this effect, chief among them cessation of Cost Sharing Reduction subsidies for low income enrollees and the reduction of the actuarial value of the benchmark plan against which subsidies are calculated from 70% to 58%.   The bottom line is that average deductibles for the 5 million current ACA marketplace enrollees with incomes under 200% FPL will go from about $500 to at least $6000. Conversely, unsubsidized premiums will drop some 30%, mainly because the value of the insurance will drop but also because stability funding provided to states and directly to insurers will kick in. The net result, CBO forecasts, is that low income enrollees (or prospective enrollees) will exit the market or decline to enter it, their places more or less taken by wealthier, younger enrollees (as the subsidy and price structure is also altered to favor the young).** For someone with an income of 175% FPL, CBO writes:
the average share of the cost of medical services paid by the insurance purchased by that person would fall—from 87 percent to 58 percent—and his or her payments in the form of deductibles and other cost sharing would rise.3 Those changes, CBO and JCT estimate, would contribute significantly to a reduction in the number of lower-income people who would obtain coverage through the nongroup market under this legislation, compared with the number under current law. 
After all these changes, it's probably impossible to separate out to what extent the net reduction in individual market enrollment of 7 million by 2026 is attributable to repeal of the individual mandate.

5. CBO does forecast that repeal of the individual mandate will reduce Medicaid enrollment:
The agencies do not expect that, with the penalty eliminated under this legislation, people enrolled in Medicaid would disenroll. However, among people who would become eligible for Medicaid under the legislation or who would need to recertify their eligibility, the proportion of people who enroll in the program would, by CBO and JCT’s expectations, be lower—closer to the proportions observed for those groups prior to the institution of the penalty.
Here too, the mandate interacts with other factors. Medicaid enrollees generally "churn" in and out of the program. As enhanced federal payments for the expansion population begin phasing out in 2020, enrollees will churn out, but not in, and those who would have become eligible will no longer have the opportunity to enroll. Repeal of the mandate also interacts with new administrative barriers to Medicaid enrollment in the BCRA: shorter periods between recertifications, state work requirements and increased cost-sharing encouraged by the law, and "per capita caps" on federal spending that will drive states to further narrow eligibility or erect further barriers to enrollment. Poor people face many logistical challenges, and the ACA's drafters and implementers worked hard to smooth the enrollment process. The BCRA swings the other way.  

6. The BCRA alters the ACA subsidy structure to enable those with incomes from 0-100% FPL, eligible for Medicaid under the ACA in states that accepted the Medicaid expansion, to buy private market insurance with a subsidy that will leave them paying 2% of income for a benchmark plan. But since that plan will have an AV of just 58%, CBO basically laughs off the possibility that any of those in this income bracket will enroll, unless they have assets to protect. A mandate might induce more private plan enrollment in this group, but the coverage would be close to worthless for most.

Stepping back, several facts should be kept in mind when considering the claim that the reductions in coverage forecast by CBO are a matter of choice. First, if a mandate to maintain coverage could not be expected to increase the number of insured, no one would implement the unpopular measure. Second, were the mandate maintained in the BCRA with no other changes, coverage losses might be reduced but would still be well into eight figures -- and the ranks of the underinsured would also swell by millions.  Third, the effects of the mandate or its loss play out mainly in the individual market, while the BCRA concentrates its spending cuts, and does its primary damage, to Medicaid. The bill is a colossal bait-and-switch, eviscerating Medicaid in the name of fixing a moderately dysfunctional individual market that it will also make worse.

* On May 9: Ryan told George Stephanopoulos:
the 24 million statistic -- what the CBO is basically saying, and I agree with this, if the government's not going to force somebody to buy something they don't want to buy, then they're not going to buy it. So they're basically saying people, through their own free choice, if they're not mandated to buy something that's unaffordable, they're not going to do it.
MacArthur, defending the bill he resurrected on April 19, was particularly disingenuous in overtly conflating CBO's 10-year coverage loss estimate for the AHCA (24 million, due mainly to Medicaid expansion repeal) with its 1-year estimate (14 million, mostly stemming from mandate repeal:
I have read repeatedly that the AHCA would leave 24 million fewer Americans insured in the next decade. What I haven’t seen widely reported is that the Congressional Budget Office concluded that a majority of those who would be uninsured stems from “repealing the penalties associated with the individual mandate.
** The following subsidy and pricing changes would work together as of 2020: 1) reduction in the base actuarial value of the benchmark plan against which subsidies are calculated from 70% to 58%; 2) termination of Cost Sharing Reduction subsidies, which currently raise the AV of the benchmark plan to 94% or 87% for about 5 million low income enrollees (and to 73% for about a million more); 3) increase in the degree to which the oldest enrollees can be charged more than the youngest adults from the current 3:1 to 5:1 (this change is effective in 2019);  4) shifting the range of subsidy eligibility from 100-400% FPL to 0-350% FPL and 5) adjusting subsidies so that younger enrollees pay a smaller percentage of income.and older enrollees pay a higher percentage for a benchmark plan.

A hat tip to Ezra Klein, who flagged the Coryn tweets and called out this monstrous bill in simpler and frankly mor effective terms:
In Cornyn’s telling, if a family making $16,000 a year decides there’s no point to buying a plan with a $6,000 deductible because insurance doesn’t help you if you can’t afford to use it, they’re just showing they didn’t really value health insurance in the first place:

1 comment:

  1. Thanks for an insightful article.

    Here is a piece on the Republican obtuseness.......

    (within this article, check out the link to an item by Michael Strain. It is worth reading.)

    As a side note, I do have to add my bafflement at why the CBO says that the lack of a mandate will reduce ACA enrollment by 8 million in just one year. I take 200 phone calls a year from ACA enrollees, and about 3 of them mention 'avoiding the penalty tax' as their primary motivation.