Skinny Repeal Bill Would Raise Average Premiums by $1,238 and Increase Uninsured

By Emily Gee and Thomas Huelskoetter

Later today, the Senate is scheduled to hold its initial vote on repeal of the Affordable Care Act, although nobody, including the senators themselves, know which bill will be up for a final vote. Reportedly the options for consideration include a previously-unseen “skinny” version of ACA repeal that would only include a repeal of the coverage mandates and the medical device tax. But this skinny repeal bill, if passed, would still have negative effects on health insurance coverage. It would also discourage issuer participation in the individual market and increase the average marketplace premium by $1,238 next year.

The Congressional Budget Office (CBO) has estimated that repeal of the individual mandate would result in 15 million fewer Americans having health insurance a decade from now. By 2026, about 15 percent of the nonelderly population, or 43 million Americans, would be uninsured.

Mandate repeal would affect the individual market enrollment in two ways. First, in the absence of a mandate, some younger and healthier individuals may decide to forgo individual market coverage. This phenomenon, known as adverse selection, would cause the average cost among enrollees remaining in the individual market to rise. In turn, issuers would need to raise rates. The CBO projects that premiums in the individual market would increase by “roughly 20 percent relative to premiums under current law.” Second, because these higher premium levels would not be affordable to some enrollees, more people would be forced to drop their coverage and become uninsured.

The Center for American Progress estimates that a 20 percent increase in individual market premiums next year would mean that the average premium in insurance marketplace would be about $1,238 higher than it would otherwise be under current law. Consumers who were not subsidized, including those who buy their coverage outside the marketplaces, would pay the full premium increase from mandate repeal. For consumers eligible for subsidies, any 2018 premium increase would largely be mitigated by increased premium tax credits, and therefore borne by taxpayers.

Furthermore, the passage of skinny repeal would immediately destabilize the individual market, driving up premiums and leading insurers to exit the market. Even if the House and Senate bills went to a conference committee and a final bill was not passed for some time, the legislation would still immediately destabilize the individual market because the deadlines for insurers to set final 2018 rates are a few weeks away. Issuers would not know the final form of the bill until after the filing deadline; they would have to either increase 2018 premiums now in anticipation of the repeal the mandate or simply withdraw from the individual market altogether. Either action would have catastrophic effects on the individual market and its consumers.

Finally, although a skinny repeal bill would not include the devastating cuts to Medicaid, gutting of protections for people with pre-existing conditions, and reductions in financial assistance found in the House’s repeal bill and previous Senate versions, there is nothing to stop House Speaker Paul Ryan (R-WI) and Senate Majority Leader Mitch McConnell (R-KY) from adding back these harmful provisions if the bill goes to a conference committee. Notably, a final conference bill would be subject only to an up-or-down vote and could not be amended.

Methodology

To estimate what premiums would be next year, we used information on the 2017 average premium and inflated it to 2018 rates. Among states that reported average 2017 premiums to CMS, the average was $471 per month, or $5,652 annually. Under implementation of the ACA, including continued payment of cost-sharing reductions and enforcement of the individual mandate, premium increases next year would reflect mostly increases in medical trend. The consultancy Oliver Wyman predicts that premiums should rise about 8 to 11 percent in 2018. We used the midpoint of this prediction, 9.5 percent, to estimate the 2018 premium.

To apply the CBO’s estimate that premiums would increase by 20 percent relative to current law, we applied that increase to expected 2018 premiums under the ACA implementation. We estimate the average marketplace premium without the mandate would be $7,427 next year, $1,238 higher than it would otherwise be.

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Reposted from CAP

Posted In: Allied Approaches

Union Matters

The Big Drip

From the USW

From tumbledown bridges to decrepit roads and failing water systems, crumbling infrastructure undermines America’s safety and prosperity. In coming weeks, Union Matters will delve into this neglect and the urgent need for a rebuilding campaign that creates jobs, fuels economic growth and revitalizes communities. 

A rash of water main breaks in West Berkeley, Calif., and neighboring cities last month flooded streets and left at least 300 residents without water. Routine pressure adjustments in response to water demand likely caused more than a dozen pipes, some made of clay and more than 100 years old, to rupture.

West Berkeley’s brittle mains are not unique. Decades of neglect left aging pipes susceptible to breaks in communities across the U.S., wasting two trillion gallons of treated water each year as these systems near collapse.

Comprehensive upgrades to the nation’s crumbling water systems would stanch the flow and ensure all Americans have reliable access to clean water.

Nationwide, water main breaks increased 27 percent between 2012 and 2018, according to a Utah State University study.  

These breaks not only lead to service disruptions  but also flood out roads, topple trees and cause illness when drinking water becomes contaminated with bacteria.

The American Water Works Association estimated it will cost at least $1 trillion over the next 25 years to upgrade and expand water infrastructure.

Some local water utilities raised their rates to pay for system improvements, but that just hurts poor consumers who can’t pay the higher bills.

And while Congress allocates money for loans that utilities can use to fix portions of their deteriorating systems, that’s merely a drop in the bucket—a fraction of what agencies need for lasting improvements.

America can no longer afford a piecemeal approach to a systemic nationwide crisis. A major, sustained federal commitment to fixing aging pipes and treatment plants would create millions of construction-related jobs while ensuring all Americans have safe, affordable drinking water.

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