As he attempts to close what has been an elusive deal among Republicans on a Senate bill to repeal and replace Obamacare, President Donald Trump continues to make bold promises about what that bill would do — promises that all available analysis suggests the bill will not keep.
Trump made a final-appeal speech on Monday, which was light on policy and heavy on pressuring Republican senators to vote for the bill when it's expected to come to the floor for a procedural vote on Tuesday. It included one section in which the president gave a small list of how health care would change should the Better Care Reconciliation Act become law.
Trump promised the new health care bill would "significantly lower premiums" and "stabilize the insurance market." He shared horror stories of families who had relied on the Affordable Care Act for coverage but ultimately liquidated a 401(k) retirement account in order to cover their large deductibles.
The truth, however, is that the Senate bill will not lower premiums for many people. For low-income Americans, in particular, premiums could rise by as much as 700 percent. Nonpartisan analysis from the Congressional Budget Office estimates that the Senate bill would destabilizethe individual market. And those plans with large deductibles? They would become more common should the Senate bill become law.
Trump himself offered no proof for his claims: He was surrounded by supposed "victims of Obamacare," who had seen their premiums and deductibles rise under the health care law, but he did not explain how any of these families would be better off under the Republican plan.
What is true for Trump the president was true for Trump the candidate. On the campaign trail, he promised great things on health care — but endorsed policies that did not deliver. Trump repeatedly vowed, during the campaign, to create a health care plan that "covers everyone." His voters, many of whom rely on the Affordable Care Act for coverage, believed him.
The Senate bill is still fluid, but in every form under discussion right now it breaks that promise. If it were to become law, the Obamacare enrollees who believed Trump would be in for a rude surprise.
Premiums would rise for many under Senate plan
Trump claimed during his address that premiums would decline under the Senate health care plan. What he didn't explain was how that would happen: Overall premiums in the individual market would drop because coverage would become too expensive for low-income and older Americans to purchase.
The Senate health care bill eliminates the Medicaid expansion and greatly scales back the tax credits for middle-income Americans who purchase coverage in the individual market. It provides some help for those people to get private plans but not nearly as much as Obamacare currently does.
Decent health insurance, the Congressional Budget Office predicts, would become prohibitively expensive for low-income Americans. This is what the agency estimates (emphasis mine):
Under this legislation, starting in 2020, the premium for a silver plan would typically be a relatively high percentage of income for low-income people. The deductible for a plan with an actuarial value of 58 percent would be a significantly higher percentage of income — also making such a plan unattractive, but for a different reason. As a result,despite being eligible for premium tax credits, few low-income people would purchase any plan, CBO and JCT estimate.
If you want to understand how premiums would change under the Senate bill, it's helpful to flip to page 48 of that same report. It shows how premiums would change for an individual who earns $26,500; I've circled some of the key numbers.
You can see that across the board, premiums would go up for Americans with low to moderate incomes. People who purchased bronze-level plans would see their premiums go up a little. People who purchased silver-level plans would see their premiums go up a lot.
What is harder to see is that the premiums are up while the quality of the health insurance being purchased is going down. Those numbers in the gray boxes represent actuarial value, which measures how much of its members' costs, on average, a health plan covers. You can see that the actuarial value drops as premiums rise.
This, in simple terms, means enrollees will be asked to pay higher premiums and in return get coverage with higher deductibles and copayments.
Who gets lower premiums under the Better Care Reconciliation Act? The CBO estimates those "winners" fall into two categories. The first is low-income Americans who live in states that did not expand Medicaid, and would for the first time qualify for subsidies to purchase insurance (but again, the CBO thinks these subsidies wouldn't be enough for those people to deem coverage affordable). The second is high-income young adults, who benefit from new rules allowing insurers to charge them lower premiums (and raise monthly payments for older enrollees).
Trump says the Senate bill will "stabilize" the insurance market. The CBO says it would cause "market disruption."
Trump argued that the new health bill would bring more stability to the individual market. Right now the Affordable Care Act marketplaces are admittedly struggling to attract robust competition. There are 28 counties with no health plans signed up to sell coverage next year.
But the Senate health bill doesn't fix that problem. At best, it continues the status quo, and at worse it makes the markets less competitive.
"Some sparsely populated areas might have no nongroup insurance offered because the reductions in subsidies would lead fewer people to decide to purchase insurance," the CBO estimates of the Senate health care plan. "In addition, the agencies anticipate that all insurance in the nongroup market would become very expensive for at least a short period of time for a small fraction of the population residing in areas in which states' implementation of waivers with major changes caused market disruption."
The CBO has not yet analyzed a recent amendment to the BCRA offered by Sen. Ted Cruz (R-TX), which would allow insurance plans to once again sell coverage that rejects those with preexisting conditions and covers few benefits as long as it sells one option that hews to Obamacare regulations.
That amendment, outside experts worry, could be the most destabilizing. Having an insurance market with two sets of rules — one that has to cover everybody, and one that doesn't — is a recipe for disruption. One insurance industry source recently predicted that this would trigger a wave of cancellation notices, as insurers would want to ditch their sicker patients and start from scratch with a healthier population.
"The plans that cover individuals could have to pull out of the markets and start over," says Justine Handelman, senior vice president for policy at the Blue Cross Blue Shield Association. "You could see widespread terminations for people enrolled today."
At his speech, Trump was surrounded by families who had experienced the negative effects of Obamacare. He told the story of one family that had to liquidate its 401(k) retirement account to pay the costs that fell within the big deductible of their Obamacare plan.
The Obamacare plans undeniably have big deductibles. Some are in the range of $5,000 or $6,000 — a big amount to have to pay before one's benefits kick in.
But again, this is a case where the Senate plan won't fix this problem. Instead, the Senate plan is specifically designed to raise deductibles in the individual market.
The Senate bill provides tax credits to help people purchase "58 percent actuarial value" health insurance plans. In non-wonk speak, these are plans that, on average, cover 58 percent of enrollees' cost. Actuarial value is a way to compare the relative generosity of health insurance — and 58 percent actuarial value is not especially generous.
The Affordable Care Act tethered its subsidies to 70 percent actuarial value plans. Because these plans cover a greater share of enrollees' cost, they typically have lower deductibles than those envisioned under the Senate health care bill.
The deductibles under the Senate plan could get really big. The Congressional Budget Office estimates that for a family plan, the deductible could be about $13,000 — an amount so high that the Affordable Care Act actually outlaws it.
We have seen this show from Trump before. Earlier this year, he gave an interview to CBS's Jon Dickerson on the latest draft of the House health care bill.
He said that people with preexisting conditions would be protected. That wasn't true. He said deductibles would go down under the Republican plan. Under that plan as well, deductibles would be expected to rise.
Trump has recently estimated that health insurance premiums ought to cost $12 or $15 annually, depending on the interview. To state the obvious, the premiums envisioned under the Senate bill, the House bill, the Affordable Care Act, or any realistic health plan are nowhere in that neighborhood.
Trump either does not understand how the health care bill works or he does understand and is not telling the truth.
I can't pretend to be inside the president's head and know how much he understands. I do know, however, the upshot of either situation is the same: People believe the president's promise. Voters in southeastern Kentucky believed Trump during the election when he promised a great health care plan. They believed he was working in their best interest when I took a trip out there in May.
At some point, if the Senate health bill becomes law, those beliefs will be shattered. But that will only be after a lot of people lose coverage and find that despite the president's promises, their deductibles and premiums aren'tgoing down. They will find that the great health care plan never existed and coverage has suddenly become unaffordable.