A Quick Look at BCRA

So I am a few days late to my analyses of the GOP’s latest health care proposal, the Senate’s awkwardly named Better Care Reconciliation Act (BCRA). 

What does the Senate bill actually do?

  • Medicaid Reform! It is, in some ways, most apt to view this bill first and foremost as the most extensive Medicaid reform package in American history.
  • It repeals the ACA Medicaid expansion, and replaces this with tax credits for people to purchase insurance in the market.
  • Most importantly, it ties long-term per-capita spending to medical inflation through 2025, and conventional inflation (CPI-U) thereafter. This is a long term critical component to insure that Medicaid stays fiscally viable for decades to come, and a change that will have to happen sooner or later, regardless of Democrats’ complaints. On the current trajectory, Medicaid is simply not viable as a healthy insurance program for the long run. 
  • The bill gives states massive leeway in how they approach the numerous problems they will face going forward; it is federalism on steroids.  
  • States will be able experiment with their marketplaces with great flexibility. In the short term, the states will receive $100 billion to stabilize the already shaky exchanges, funding that did not exist in the House plan. 
  • It allows states more ability to sign people up who are eligible for Medicaid and get them enrolled. 
  • Section 102 of the Senate bill provides an age- and means-tested tax credits up to 350 percent of the Federal Poverty Level. This is significantly different than Paul Ryan’s House bill, which gave a flat tax credit across the board to all Americans of all ages and incomes. This in short closes the doughnut hole left not only in the House bill, but the fiscal cliff that was created under the Affordable Care Act. 
  • The bill ends the individual mandate (with a replacement to force people to choose coverage supposedly coming at a later date).  It further removes most of the taxes involved with the Affordable Care Act. 

Some conservatives, most notably Avik Roy, are head over heels for this plan. Others, like Philip Klein and Michael Cannon, are largely not enthused. 

First and foremost, this is nowhere near a repeal of Obamacare. That is simply a fact. It is, in fact, many ways ‘Obamacare-lite’.  It enshrines the concept of federal funding for tax supplied health care to all Americans for all time. Now, you can take this as a good or bad thing as you wish, but that is one of the accomplishments of the BCRA. We are no longer discussing of federal subsidization is right or wrong; we are now discussing what LEVEL of federal subsidization is right or wrong. 

Second, the Medicaid reforms are significant…but the implementation leaves a lot to be desired. The majority of the fiscal reforms come only in the mid-2020s! In short, the GOP is rolling the dice that not only Trump has a successful Presidency and gets a second term, but that the GOP fights headwinds and keeps control of both the  House and Senate for another 7 years or more. Anything short of that guarantees that those fiscal savings and reforms likely will never happen. 

Third, regarding Medicaid reform, in the later years these reforms could have disastrous results for exactly the groups of people that rely on the program. What do Republicans believe is the role of Medicaid in our society? This is an important question, frankly; one that they continue to fail to answer. If it is to protect the most vulnerable in our society, then this bill falls short. If it is simply to provide the most minimal amount of dollars possible, then this bill succeeds. Neither is an incorrect position necessarily (there are ways to adapt to the latter position that would still protect the sick and poor)…but without knowing what their intentions are, it is very hard to answer what they are trying to achieve. 

To compound matters, the CBO predictions of this bill are mixed, to say the least. They predict 22 million people will lose insurance under the plan. Avik Roy states that this number is likely false.  He provides a short explanation here:

If you want to understand the utter absurdity of the CBO’s predictions of health insurance coverage under GOP health care proposals, all you have to do is look at the three major GOP health care bills from the last two years: The Restoring Americans’ Healthcare Freedom Reconciliation Act (H.R. 3762), the American Health Care Act, and the Better Care Reconciliation Act.

Even though these three bills spend vastly different sums on trying to cover the uninsured, the end result—in the CBO’s mind—seems to always be the same.

The principal way to explain these three results from the CBO model—nearly identical coverage numbers despite substantially divergent resources directed to low-income individuals to afford coverage—is to remember that the CBO’s model is heavily tied to the idea that the individual mandate is forcing all sorts of people to buy coverage that otherwise would not.

In the latest report, the CBO estimates that 15 million people would voluntarily drop out of the market in 2018 due to the repeal of the mandate. That’s nearly three-quarters of the total coverage loss, in one year.

Furthermore, this from Josh Archambault:

According to the BCRA score, 18 million Americans will purchase health insurance in the individual market in 2026. This is framed in the report as 7 million fewer enrollees, compared to CBO’s 2016 baseline. But according to CBO’s updated 2017 baseline, only 20 million in 2026 are projected to buy health insurance in the individual market under current law to begin with.  That’s a difference of just 2 million or 71% lower than CBO’s eye-popping headline.

If there has been a flaw in the CBO numbers from day 1, it is their analysis of how the individual mandate effects insurance participation. The likelihood these numbers are accurate is very unlikely

That said, the CBO also predicts that although costs for Silver plans under the BCRA will fall, cheaper Bronze plans will see their premiums increase. Additionally, premiums for the sicker and poorer will skyrocket. CBO does predict an approximately $300 Billion deficit savings under this plan over the next decade…a feather in the cap for Mitch McConnell.

Overall, this bill does some good things: Medicaid reform, more state control, more free market choices. But it also shifts costs to the sicker and poorer, while reducing the safety net for those very people, without a good answer of what the response will be if they fall through that net.  The question for Republicans is, are these trade offs worth the political risk?