health-reform-20

Senate Republicans and CBO Explore Both Options

July 21, 2017

McDermott+Consulting

This week, Senate Republican leadership released two potential plans for moving forward with its effort to repeal and/or replace the portions of the Affordable Care Act (ACA) that are appropriate to address in the reconciliation process.

Repeal and Replace Pathway

The first document released is an updated version of the Better Care Reconciliation Act (BCRA) that included several amendments intended to bridge the divide between key members of the caucus that expressed concerns about the original draft.  While language allowing insurers to offer limited coverage plans outside of the exchange market, a concept forwarded by Sen. Ted Cruz, was at one point considered, it was not included in the most recent version of the discussion draft released on July 20.

CBO also released its estimate of the revised draft of the bill today, concluding that the BCRA would result in 22 million more uninsured individuals and reduce federal spending by $420 billion over the next decade.  While the number of uninsured individuals is relatively similar to the estimate of the original BCRA draft, the increase in budget savings from $321 billion in the first estimate to the current number is mostly due to the decision to leave certain taxes on higher income individuals in place in the July 20 version.  Additionally, CBO’s conclusion that the bill would result in $756 billion in reduced Medicaid spending is consistent with its estimate of a reduction of $772 billion in the original draft.

Repeal Only Pathway

The second document released this week is a draft of legislation that would repeal many portions of the ACA but does not include a replacement plan or proposals on broader issues like Medicaid payment reform.  This draft is largely similar to H.R. 3762, the repeal bill passed by Congress that was ultimately vetoed by President Obama in 2016. The new version would repeal most of the same provisions effective 2020 but included two noteworthy changes from the previously passed legislation.  First, it delays application of the “Cadillac tax” on high-value, employer-sponsored health plans until 2026 rather than repealing it altogether, and second, it provides funding for cost sharing reduction payments for eligible exchange plan beneficiaries in 2018 and 2019 before repealing them in 2020.

CBO also released a score estimate of this draft repeal bill, projecting that the legislation would result in 32 million more uninsured by 2026 compared to current law and generate $473 billion in reduced federal spending over the next decade. Specifically, CBO estimated that 17 million individuals would lose coverage next year, with the number rising to 27 million in 2020 when repeal takes effect and eventually reaching 32 million in 2026.

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