CBO forecasts Alexander-Murray health-care plan would slightly lower deficit

WASHINGTON – A bipartisan Senate plan to try to stabilize Affordable Care Act marketplaces would lower the federal deficit by nearly $3.8 billion during the next decade and would not affect the number of people with health insurance, Congress’s official budget scorekeepers said Wednesday.

The Congressional Budget Office assessment of the plan, written by the chairman and top Democrat on the Senate Health, Education, Labor and Pensions Committee, forecasts no fiscal effect from one of its main features: resuming for two years the payments President Donald Trump recently ended to ACA insurers to reimburse them for discounts they must provide lower-income customers in insurance marketplaces created by the law.

That central aspect of the bill would not itself affect the deficit, the nonpartisan budget analysts conclude, because the CBO had been assuming those cost-sharing reduction payments would continue.

But the analysts still predict the relatively small savings because health insurers that raised their prices for the coming year to compensate for the loss of the ACA cost-sharing payments would then need to give the government some kind of rebate for charging too much.

Another aspect of the bill by Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., would make inexpensive, so-called catastrophic health plans more available for people who buy insurance on their own. Under the ACA, only individuals under 30 may buy such skimpy insurance. But the CBO predicts that the greater availability of catastrophic plans, through the ACA marketplaces or other individual insurance policies, “would not substantially change” the overall number of people with coverage purchased on their own.

Even so, making such plans more available would slightly reduce how much the federal government pays for insurance subsidies under the law. The catastrophic plans would not qualify for such ACA tax credits, but the plans would be factored into the overall typical prices for ACA coverage, lowering the average and thus reducing subsidy amounts for other customers buying plans on the law’s insurance marketplaces.

Alexander and Murray immediately issued a joint statement, using the CBO score to tout their legislation: “This nonpartisan analysis shows that our bill provides savings and ensures that funding two years of cost-sharing payments will benefit taxpayers and low-income Americans, not insurance companies.”

They pointed out that the budget analysts previously estimated, before Trump ended the cost-sharing payments, that insurance rates for 2018 would spike by about 20 percent without those reimbursements.