The Secret To Lower Premiums In The GOP Health Plan Is The Really Crappy Coverage

Jonathan Cohn and Alissa Scheller
Updated

If there was a bright spot for Republicans in Monday’s dismal Congressional Budget Office analysis of their health care bill, it was one of the findings on insurance premiums for people who buy coverage on their own.

On average, the nonpartisan CBO found, premiums for the typical insurance plan would be 20 percent lower than if the Affordable Care Act were still in place.

Republican leaders were quick to highlight that as proof they would make insurance more affordable.

But analysts at the nonprofit Henry J. Kaiser Family Foundation have crunched the numbers and come to a very different perspective on what the Senate Republican bill would do.

People who now buy insurance on healthcare.gov or a state exchange like Covered California would have to pay 74 percent more on average to get equivalent coverage, Kaiser’s analysts found.

That finding doesn’t mean the Republicans are lying. It does mean that the Republicans aren’t telling the full story about why premiums would come down 20 percent under their plan ― and what it would actually mean for people buying coverage.

Simply put, if Republicans get their way, then insurance policies will tend to cover less care, and fewer people with serious medical problems will be carrying insurance.

The Better Care Reconciliation Act, the bill that Senate GOP leaders released last week, would make several changes affecting people buying coverage on their own. Arguably the most important among these would be a change to the federal financial assistance available to these consumers.

Today, thanks to the Affordable Care Act, people buying insurance through one of the exchanges can get tax credits that reduce their premiums by hundreds or even thousands of dollars a year. The tax credits taper off as income rises, cutting out altogether at 400 percent of the poverty line, or $98,400 for a family of four.

The Senate bill would preserve that same basic structure, but it would reduce the amount of money available ― cutting off assistance at 350 percent of the poverty line, eliminating extra subsidies that reduce out-of-pocket spending for lower-income consumers and tweaking the formula so that young people get relatively more assistance but older people get relatively less. That last change is particularly important because, separately, the proposal allows insurers to vary premiums more by age ― charging more to the old and less to the young.

A large portion of the people buying coverage on their own do so without the help of tax credits, in most cases by purchasing coverage directly from insurers. For them, changes in financial assistance are mostly irrelevant. But for everybody else buying coverage on his or her own, those tax credits matter a lot.

The precise effects would vary widely from person to person and place to place and, as is almost always the case with health policy, some people would end up better off.

But when Kaiser’s analysts broke up the population into 14 groups, representing different incomes and ages, they found that only one group (younger than 18 with an income more than twice the poverty level) could actually get the same level of benefits for less money ― and even then, it was an average savings of just 4 percent, with monthly net premiums for this group dropping from $176 to $170.

Other groups were in line for increases, in some cases very large ones.

By far the worst off were the oldest consumers, particularly those with the lowest incomes. Americans near retirement age and living close to the poverty line could, according to the Kaiser analysis, expect to pay $272 a month rather than $69 under the ACA ― nearly four times as much.

“I think it’s fair to say that most people in the individual market today would be worse off,” Cynthia Cox, a Kaiser policy expert and co-author of the report.

The idea that premiums for similar plans would be higher, not lower, if a Republican health plan becomes law is consistent with the findings of other researchers, including Loren Adler and Matthew Fiedler of the nonprofit Brookings Institution think tank, who analyzed counterpart GOP legislation in the House and found that it, too, raised the price of equivalent coverage.

Of course, consumers facing such steep increases usually wouldn’t ― and in many cases couldn’t ― pay them.

The ones facing the steepest increases would in some cases opt not to get insurance at all, which means that older people would be dropping coverage even as some young people would be picking it up.

Other consumers would keep getting coverage, but in order to afford premiums within their means they’d have to take policies with higher out-of-pocket costs in the form of bigger co-payments and deductibles, or plans without key benefits like mental health coverage, which Obamacare mandates but the Republican plan would make optional, albeit at each state’s discretion.

And so insurance would end up cheaper on average (20 percent cheaper, by the CBO’s reckoning) because it would become weaker ― although, as yet another Kaiser study found, many people would still pay more because they’d be losing so much financial assistance. Older consumers, in particular, would take a difficult hit.

The Senate bill’s push towards less comprehensive coverage is not an accident. Many conservatives believe, rightly or wrongly, that exposing people to higher out-of-pocket costs will ultimately make health care less expensive. As this argument goes, giving people “skin in the game” will make them price-conscious when they seek out care ― and maybe give them reason to think twice about care they might not need.

But that’s not how Republicans have promoted their agenda for the last few years. Instead, they attacked Affordable Care Act plans as too expensive and vowed, as President Donald Trump did on the campaign trail, to create a system that would offer “great health care at a tiny fraction of the cost.”

The new analysis of the Republican bill shows how empty that promise was. For a fraction of the cost, you also get a fraction of the health care.

This article has been updated to include information from the second Kaiser study.

Love HuffPost? Become a founding member of HuffPost Plus today.

Also on HuffPost

1912

Former President Theodore Roosevelt champions national health insurance as he unsuccessfully tries to ride his progressive Bull Moose Party back to the White House.
Former President Theodore Roosevelt champions national health insurance as he unsuccessfully tries to ride his progressive Bull Moose Party back to the White House.

1935

President Franklin D. Roosevelt favors creating national health insurance amid the Great Depression but decides to push for Social Security first.
President Franklin D. Roosevelt favors creating national health insurance amid the Great Depression but decides to push for Social Security first.

1942

Roosevelt establishes wage and price controls during World War II. Businesses can't attract workers with higher pay so they compete through added benefits, including health insurance, which grows into a workplace perk.
Roosevelt establishes wage and price controls during World War II. Businesses can't attract workers with higher pay so they compete through added benefits, including health insurance, which grows into a workplace perk.

1945

President Harry Truman calls on Congress to create a national insurance program for those who pay voluntary fees. The American Medical Association denounces the idea as "socialized medicine" and it goes nowhere.
President Harry Truman calls on Congress to create a national insurance program for those who pay voluntary fees. The American Medical Association denounces the idea as "socialized medicine" and it goes nowhere.

1960

John F. Kennedy makes health care a major campaign issue but as president can't get a plan for the elderly through Congress.
John F. Kennedy makes health care a major campaign issue but as president can't get a plan for the elderly through Congress.

1965

President Lyndon B. Johnson's legendary arm-twisting and a Congress dominated by his fellow Democrats lead to creation of two landmark government health programs: Medicare for the elderly and Medicaid for the poor.
President Lyndon B. Johnson's legendary arm-twisting and a Congress dominated by his fellow Democrats lead to creation of two landmark government health programs: Medicare for the elderly and Medicaid for the poor.

1974

President Richard Nixon wants to require employers to cover their workers and create federal subsidies to help everyone else buy private insurance. The Watergate scandal intervenes.
President Richard Nixon wants to require employers to cover their workers and create federal subsidies to help everyone else buy private insurance. The Watergate scandal intervenes.

1976

President Jimmy Carter pushes a mandatory national health plan, but economic recession helps push it aside.
President Jimmy Carter pushes a mandatory national health plan, but economic recession helps push it aside.

1986

President Ronald Reagan signs COBRA, a requirement that employers let former workers stay on the company health plan for 18 months after leaving a job, with workers bearing the cost.
President Ronald Reagan signs COBRA, a requirement that employers let former workers stay on the company health plan for 18 months after leaving a job, with workers bearing the cost.

1988

Congress expands Medicare by adding a prescription drug benefit and catastrophic care coverage. It doesn't last long. Barraged by protests from older Americans upset about paying a tax to finance the additional coverage, Congress repeals the law the next year.
Congress expands Medicare by adding a prescription drug benefit and catastrophic care coverage. It doesn't last long. Barraged by protests from older Americans upset about paying a tax to finance the additional coverage, Congress repeals the law the next year.

1993

President Bill Clinton puts first lady Hillary Rodham Clinton in charge of developing what becomes a 1,300-page plan for universal coverage. It requires businesses to cover their workers and mandates that everyone have health insurance. The plan meets Republican opposition, divides Democrats and comes under a firestorm of lobbying from businesses and the health care industry. It dies in the Senate.

1997

Clinton signs bipartisan legislation creating a state-federal program to provide coverage for millions of children in families of modest means whose incomes are too high to qualify for Medicaid. 
Clinton signs bipartisan legislation creating a state-federal program to provide coverage for millions of children in families of modest means whose incomes are too high to qualify for Medicaid. 

2003

President George W. Bush persuades Congress to add prescription drug coverage to Medicare in a major expansion of the program for older people.
President George W. Bush persuades Congress to add prescription drug coverage to Medicare in a major expansion of the program for older people.

2008

Hillary Clinton promotes a sweeping health care plan in her bid for the Democratic presidential nomination. She loses to Barack Obama, who has a less comprehensive plan.
Hillary Clinton promotes a sweeping health care plan in her bid for the Democratic presidential nomination. She loses to Barack Obama, who has a less comprehensive plan.

2009

President Barack Obama and the Democratic-controlled Congress spend an intense year ironing out legislation to require most companies to cover their workers; mandate that everyone have coverage or pay a fine; require insurance companies to accept all comers, regardless of any pre-existing conditions; and assist people who can't afford insurance.
President Barack Obama and the Democratic-controlled Congress spend an intense year ironing out legislation to require most companies to cover their workers; mandate that everyone have coverage or pay a fine; require insurance companies to accept all comers, regardless of any pre-existing conditions; and assist people who can't afford insurance.

2010

With no Republican support, Congress passes the measure, designed to extend health care coverage to more than 30 million uninsured people. Republican opponents scorned the law as "Obamacare."
With no Republican support, Congress passes the measure, designed to extend health care coverage to more than 30 million uninsured people. Republican opponents scorned the law as "Obamacare."

2012

On a campaign tour in the Midwest, Obama himself embraces the term "Obamacare" and says the law shows "I do care."
On a campaign tour in the Midwest, Obama himself embraces the term "Obamacare" and says the law shows "I do care."

This article originally appeared on HuffPost.