3 ways the CBO’s latest AHCA score affects advisers and employers
The Congressional Budget Office on Wednesday released its score of the House of Representatives’ proposed American Health Care Act. While the legislation focuses primarily on the individual market, there are some workplace-relevant highlights for brokers and benefit advisers to share with employers. After all, employer-sponsored healthcare provides coverage for the majority of Americans younger than age 65.
1) Number of uninsured: Relatively unchanged
The CBO estimates that by 2026 the AHCA would leave 23 million more Americans uninsured than the Affordable Care Act. The previous CBO score had calculated this number to be 24 million in the same time frame. These numbers include 7 million fewer people who would have employer-sponsored coverage by 2026. That’s because mandates for coverage — both on an individual and employer level — are excluded from the latest version of the AHCA. Without a requirement, some employers may decline to offer coverage, or employees may choose to forego insurance or purchase bare-bones plans. Individuals who purchase minimal coverage aren’t included as “insured” in the CBO’s report.
In contrast, the CBO also notes that more people could be covered under employer-based insurance. These predictions are based on the belief that companies would choose to offer coverage as a gesture of good will, or as a recruiting and retention tactic, but there are no guarantees without a government mandate.
For now, employers are still required to comply with the standing ACA guidelines.
2) Premiums: Going up, but depend on location
The score estimates premiums would rise 20% in 2018 compared to ACA projections. That would be followed by a 5% rise in 2019. Premium costs for 2020 and beyond would largely depend on a number of factors, including individual states applying for and receiving waivers from essential health benefit requirements, along with health status underwriting and age ratio underwriting requirements.
As a whole, premium costs would decrease for some people, but out-of-pocket costs could skyrocket. That could impact an employee’s healthcare decisions, especially depending on the state in which they conduct business and the decisions made at the state level around healthcare-related polices. If an organization spans multiple states that have differing waiver statuses, that could mean more information to track and consider. It’s a confusing process, so having as much information documented as possible can prove due diligence.
Overall cost: Increasing
While premiums are expected to decrease for healthy, younger individuals, especially in states that receive waivers from EHB and underwriting regulations, the overall cost of healthcare is expected dramatically increase under the AHCA.
The increase stems from plans covering less and the removal rules like the bans on annual and lifetime maximum limits. Employers subsidizing healthcare plans may want to keep a close eye on how their premiums could be affected. As of now, employer reporting remains in effect through the end of 2019, so those costs should be considered, too.
Overall, the CBO’s score of the AHCA is not much different from its predecessors: the number of uninsured Americans rises, premiums rise, and the federal deficit goes down.
Immediate changes from the House are unlikely since this CBO score appears to fit the requirements to pass under budget reconciliation. The Senate will likely revise the bill through ongoing deliberations and many have speculated that the bill will require bipartisan support to pass the Senate. However, if the bill were to make it to the president for signature, there would still be a long road to implementation. And even then, some form of reporting is expected to be required.
Benefit advisers and brokers should remember that whatever the latest projections or proposals, the ACA is still law of the land. Though the uncertainty in the market creates confusion, it’s imperative that employers continue to comply with all documentation, reporting, and filing guidelines in a timely manner.