iStock/Thinkstock(WASHINGTON) — The anticipated report from the Congressional Budget Office has shed new light on how the Republicans’ American Health Care Act could affect premiums for many in the U.S.
The report was released just weeks after Republicans narrowly passed a health bill through the House of Representatives. But Senate Republicans will have to pass their version of the bill and will likely face more questions about its effects after this report.
The CBO analyzed the bill as currently written and found it would drastically change health care in the U.S. They estimate the law would reduce the federal deficit by $119 billion oven ten years, but also leave 23 million more Americans without health insurance compared to current law.
Additionally the bill would have huge effects on premiums for older Americans and those with health conditions. Here’s a break down on how premiums could change:
Under the new law, people with pre-existing conditions cannot be barred from insurance coverage. However, some states could apply for waivers that would allow insurance companies to charge higher premiums for those individuals. States that apply for the waiver would have to implement high-risk insurance pools to accommodate them. But some health care experts are skeptical that high-risk pools would have enough money to fully cover people in need.
The CBO found that people with pre-existing conditions could face insurance premiums so high they would be unable to afford coverage.
“Community-rated premiums would rise over time, and people who are less healthy (including those with preexisting or newly acquired medical conditions) would ultimately be unable to purchase comprehensive non group health insurance at premiums comparable to those under current law, if they could purchase it at all,” reads the report.
The community rating provision is a way of setting premiums designed to ensure risk is spread evenly across a larger pool. This means that people are charged the same rate regardless of factors like health status. Under the Affordable Care Act, insurance companies may charge different rates for identical plans only on the basis of age, geographic location, the number of people covered and tobacco use, according to the Kaiser Family Foundation.
Karen Pollitz, a senior fellow at the Kaiser Family Foundation, told ABC News in an earlier interview that without protection from higher premiums, people with pre-existing conditions would likely be priced out of coverage. In the 1990s, she added, people with pre-existing conditions who recently lost their jobs were supposed to be protected by the Health Insurance Portability and Accountability Act from losing or being prevented from obtaining insurance coverage. However, insurance companies charged far higher premiums for people with pre-existing conditions.
“To actually protect someone with pre-existing condition … they need full protection,” Pollitz said. “Otherwise, it’s like giving someone half a bulletproof vest.”
Older People vs. Younger People
The CBO also estimated that older people could see premiums drastically increase; some could face premiums nine times higher than under the current law. This is due in part to the proposed changes to the age ratio and tax credits.
Under the Affordable Care Act, insurance companies may charge an older person no more than three times its premium for a younger person with an identical plan. The new bill would increase the maximum allowable ratio to five to one, which could significantly increase older people’s premiums for comparable plans.
Additionally, tax credits to help pay for healthcare would change dramatically. While the ACA offers a scale of credits that take into account several factors, including family income, cost of insurance and age, the Trumpcare plan would offer flat tax credits per individual, according to age. The bill outlines tax credits of $2,000 to $14,000 a year for individuals who don’t get insurance coverage from an employer or the government. The credits would be based on age instead of income and would be capped for higher earners.
“Under the act, premiums for older people could be five times larger than those for younger people in many states, but the size of the tax credits for older people would be only twice the size of the credits for younger people,” the report says.
The CBO estimated that in 2026 the net premiums for a 64-year-old earning $28,500 would rise from $1,700 per year to as much as $13,600 to $16,100 under the current bill, depending on whether the person lives in a waiver state. At an income of $68,200, the same person’s out-of-pocket cost for premiums could go down slightly from $15,300 to as low as $13,600, if state had a waiver, or increase slightly to $16,100 without a waiver.
But, younger people under the AHCA may not see their premiums change greatly, or they may decrease due in part to the age ratio change.
The CBO estimated that a 21-year-old making $26,500 would have premiums between $1,750 and $1,250 depending on if their state applied for waivers. The same person’s premiums are estimated at $1,700 under the ACA.
At an income of $68,200, out-of-pocket cost for premiums may decrease from $5,100 to between $1,750 and $1,250.
Officials at the CBO acknowledge that these estimates “are inherently uncertain because the ways in which federal agencies, states, insurers, employers, individuals, doctors, hospitals, and other affected parties would respond to the changes made by the legislation are all difficult to predict.”
Medical and patient groups have pointed to the CBO score as further evidence the bill could harm those who need care the most, older Americans who have low incomes and do not yet qualify for Medicare.
AARP Executive Vice President Nancy LeaMond, said in a statement that the bill would have a “devastating impact” on older Americans.
“The CBO analysis found that premiums would go up to unaffordable levels by inflicting an Age Tax and removing current protections for people with common conditions including diabetes and weight gain. Putting a greater financial burden on older Americans is not the way to solve the problems in our health care system,” LeaMond said.
An American Medical Association statement urged the Senate to take action to keep people from losing affordable health coverage.
“Today’s estimates from the nonpartisan Congressional Budget Office show that last-minute changes to the AHCA made by the House offered no real improvements. Millions of Americans will become uninsured–with low-income families on Medicaid being hit the hardest,” the statement said.
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