Obamacare replacement could make costs soar for many sick and older people

Key Points
  • The Congressional Budget Office estimates average premiums will generally fall, depending on the state, under the House-passed health care plan.
  • Sick people in states that take waivers under the plan could see soaring out-of-pocket costs, according to the CBO.
  • Those over 64 years old could also see higher costs under the GOP plan, the CBO says.
CBO: 23M fewer insured under revised GOP health care bill
CBO: 23M fewer insured under revised GOP health care bill

Sick Americans in many states and older people could see costs spike under the House-passed Obamacare replacement plan, the nonpartisan Congressional Budget Office said Wednesday.

The CBO estimates that the American Health Care Act will lead to 23 million more uninsured people in 2026 than under current law. It also finds that average premiums will generally fall, though whether states decide to take waivers allowed under the plan will affect how much the costs change.

The new plan allows states to waive current Obamacare rules that mandate what's covered and bar insurers from charging less-healthy people higher prices. Less-healthy people in some of the states that obtain those waivers could face higher premiums and find it tougher to afford coverage after 2020, according to the CBO.

The CBO wrote:

"In addition, premiums would vary significantly according to health status and the types of benefits provided, and less healthy people would face extremely high premiums, despite the additional funding that would be available under [the House plan] to help reduce premiums. Over time, it would become more difficult for less healthy people (including people with preexisting medical conditions) in those states to purchase insurance because their premiums would continue to increase rapidly."

The report estimates that premiums "would decline, on average" for people in the individual health-care market in states that choose to "narrow the scope" of so-called essential health benefits. But the people in those states who use those services could see "substantial increases" in health-care costs.

That could affect people on the individual market who use services such as "maternity care, mental health and substance abuse benefits, rehabilitative and habilitative services and pediatric dental benefits," according to the CBO:

In particular, out-of-pocket spending on maternity care and mental health and substance abuse services could increase by thousands of dollars in a given year for the nongroup enrollees who would use those services.

Effect on older people

The report also estimates that, effective in 2019, the GOP plan would "directly alter the premiums faced by different age groups, substantially reducing premiums for young adults and raising premiums for older people." One chart illustrates that net premiums in 2026 could spike by 800 percent or more for low-income 64-year-olds compared with net premiums under current law.

The chart does not indicate the effect on people 65 and older, who are eligible for Medicare. However, AARP pointed out on Wednesday that those Americans could also take a hit.

"Additionally, after facing a massive premium increase as we age, the bill weakens Medicare funding, opening the door to turning Medicare into a voucher program that shifts costs for prescriptions and insurance to seniors, at the same time it gives big drug and insurance companies and other special interests a sweetheart deal," the interest group that advocates for older Americans said in a statement.

The House narrowly passed the plan early this month without seeing a CBO report assessing a series of last-minute amendments. The House waited for the CBO score before sending the bill to the Senate, making sure that it passed a procedural bar that would allow it to get through the Senate with a majority vote.

The CBO's assessment may increase political pressure on Republicans. Those waivers were part of the series of amendments added to win votes from both conservative and moderate House Republicans.

The bill has already proven unpopular in public opinion polling. Much of the criticism of the bill when it passed involves possible higher costs for less healthy and older Americans.

Senators have signaled that they could change major parts of the bill, or even start from scratch, before it goes back to the House for approval.

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Clarification: The CBO report does not quantify explicitly the effect of premiums for Americans 65 and older. A previous version of this report did not clearly differentiate between Americans who are 64 versus Americans who are 65 and older.