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Bipartisan Health Care Stabilization Act of 2017

CBO report on the Bipartisan Health Care Stabilization Act of 2017

The Bipartisan Health Care Stabilization Act of 2017 is a proposed compromise reached by Senator Lamar Alexander and Senator Patty Murray to amend the Affordable Care Act to fund cost-sharing reductions subsidies.[1] President Trump had stopped paying the cost sharing subsidies and the Congressional Budget Office estimated his action would cost $200 billion, cause insurance sold on the exchange to cost 20% more and cause one million people to lose insurance.[2] The plan will also provide more flexibility for state waivers, allow a new "Copper Plan" or catastrophic coverage for all, allow interstate insurance compacts, and redirect consumer fees to states for outreach.

Contents

BackgroundEdit

The CSR subsidies are paid to insurance companies to reduce copayments and deductibles for a smaller group of ACA enrollees, those earning less than 250% of the federal poverty line (FPL). The second and larger type of subsidy, the premium tax credits designed to reduce the post-subsidy cost of monthly premiums, apply to all enrollees earning less than 400% of the FPL. For scale, during 2017, approximately $7 billion in CSR subsidies will be paid, versus $34 billion for the premium tax credits.[3]

CBO estimate of ending CSR paymentsEdit

The CBO reported in August 2017 (prior to President Trump's decision) that ending the CSR payments would increase ACA premiums by 20 percentage points or more, with a resulting increase of nearly $200 billion in the budget deficit over a decade, as the premium tax credit subsidies would rise along with premium prices. CBO also estimated that initially up to one million fewer would have health insurance coverage, although more might have it in the long-run as the subsidies expand. CBO expected the exchanges to remain stable (e.g., no "death spiral") as the premiums would increase and prices would stabilize at the higher (non-CSR) level.[4]

CBO estimated that of the 12 million with private insurance via the ACA exchanges in 2017, about 10 million receive premium tax credit subsidies and will be shielded from premium increases, as their after-subsidy premiums are limited as a percentage of income under the ACA. However, those 2 million who do not receive subsidies face the brunt of the 20%+ premium increases, without subsidy assistance. This may adversely impact enrollment in 2018 and beyond. Another 13 million who are now covered under the ACA's Medicaid expansion (in the 31 states that chose to expand coverage) should not be directly affected by the President's action.[4][3]

CBO estimate on billEdit

The CBO reported on 25 October 2017 that the bill would end up cutting the deficit by $3.8 billion. The expanded state waiver flexibility would result in increased costs, but this would be brought down by the restoration of CSR payments as well as the addition of "copper" tier plans.[5][6]

ReferencesEdit