House Bill and Healthcare

One of the programs in play is reductions in Medicaid and Market Place provisions to pay for the tax breaks to a few. Cutting these programs will result in higher deficits also. Reductions in Medicaid and Marketplace provisions will reduce the roughly $1 trillion in ten-year federal savings these provisions generate thereby magnifying the beautiful bill’s already large increase in federal deficits. The cuts to federal programs supporting healthcare and other programs are ridiculous. There is no logic to this. A bit of a rewrite on how this may play out. As taken from:

“Taking Stock of The Health Coverage Impacts of The House Reconciliation Bill,” Health Affairs

The warning by this Health Affairs article is the CBO’s released estimates of the effects of the reconciliation bill passed by the House of Representatives at the end of May. The CBO finds the bill’s provisions impacting Medicaid and the Affordable Care Act (ACA) Marketplaces will increase the number of people without health insurance by 10.9 million by 2034.

The House bill is not the only looming policy change affecting insurance coverage. Others include:

• enhancements to the premium tax credit first enacted in 2021 are scheduled to expire at the end of 2025, which CBO projects will increase the number of uninsured by 4.2 million in 2034. And earlier this year,

• the Trump administration issued a proposed rule making changes to the ACA Marketplaces that CBO estimates would increase the number of uninsured by 1.8 million.

Following its scoring rules, the CBO has included half of that effect, 0.9 million, in its estimate for the House bill because the bill would write the proposed rule’s provisions into law. In total, therefore, looming coverage policy changes would increase the number of uninsured by 16.0 million in 2034, or 4.4 percent of CBO’s projection of the US population in that year. The 16 million should not be a surprise to anyone as of late as similar numbers have been tossed around recently.

Exhibit 1 examines the uninsured rate evolution in the years to come (if these policy changes take effect). It also puts the change into historical context. As shown in Exhibit 1, CBO projections issued in June 2024 indicate major changes in policy. Without changes, the uninsured rate would remain steady at around 8 percent over the coming decade. However, with these changes the uninsured rate would instead rise to around 12.4 percent by 2034.

The forecast rise in the uninsured rate (or anything close to it) represents a sharp reversal of recent trends. From 2013 (the year before the ACA’s main coverage provisions took effect) through 2024, the uninsured rate declined by 6.4 percentage points. The 4.7 percentage point increase forecast for 2024 through 2034 under this set of policies would erase ~ three-quarters of the decline. An increase this big and this fast would be unprecedented as far back as we have data. Even the increase in the uninsured rate from its trough after the creation of Medicare and Medicaid to its pre-ACA peak in 2010 only roughly ties the projected 2024-34 increase. Moreover, the earlier increase unfolded over decades. Most of the new increase of uninsured would occur over just a few years.

Consequences Of Rising Uninsurance, And How It Could Be Avoided

A sharp increase in the uninsured rate attributable to this set of policy changes would have major consequences for the people losing coverage and the health care providers who serve them. Research has established having health insurance improves access to care, financial security, and health outcomes. Broader insurance coverage also benefits health care providers, particularly by reducing uncompensated  care.

Some Republican Senators are expressing misgivings about the House bill. Such concerns are about the consequences of a large increase in the uninsured rate or the political consequences.  The CBO estimates, summarized in exhibit 2, reveal Republican lawmakers could soften the House bill’s effects on insurance coverage by making major changes in one or more of following three areas:

As an alternative, a weak alternate as such, the complete elimination of the bill’s restrictions on states’ use of “provider tax” financing arrangements would have little impact. Reportedly such a tactic  elicited concerns from some Republican Senators. It would also barely move the needle by increasing insurance coverage by only around 0.4 million. Something greater needs to occur.

Republican lawmakers could shy away from modifying these provisions out of a belief they target people who are ineligible or otherwise “undeserving.” However, it is worth noting these policies can and will often miss their notionally intended targets. 

Prior research on work requirements in Medicaid implies most people who would lose coverage under a work requirement are working. Or they are engaging in an approved activity. Or they have eligibility for exemption from the policy.

The enrollment process changes are targeting the removal of ineligible enrollees.  Evidence on how administrative burdens affect insurance enrollment suggests many or perhaps most losing coverage would be people who are actually eligible. However they are not or may be unable to navigate the new processes. The bill’s immigration-related policy changes are described as targeting illegal immigrants. The reality is these provisions generally target either legal immigrants or undocumented immigrants being covered with state and not federal dollars.

If the Senate does pare back the bill’s Medicaid and Marketplace provisions? It would reduce the roughly $1 trillion in ten-year federal savings these provisions generate thereby magnifying the beautiful bill’s already large increase in federal deficits. If lawmakers wish to avoid increasing deficits a straightforward option would naturally be:

Paring back the damn bill’s large and regressive tax cuts.

These tax cuts are the reason the CBO estimates the House bill will increase deficits by $2.4 trillion over ten years, despite its large cuts to Medicaid, the Marketplace, and other federal programs.

Policymakers could also look elsewhere in the health care system for savings. There are a range of viable policy options, including changing how Medicare pays hospitals and Medicare Advantage plans which are over paid. Both options could generate substantial federal savings without posing the same risk of reducing access to care or financial security.

Uncertainty is an excellent descriptor on how this debate will play out. It is uncertain what direction the Senate will go. It will likely depend on decisions made by a small number of Republican Senators. However, what is clear is these decisions will have major substantive and political consequences in the years to come.