In making the case for repealing and replacing the Affordable Care Act (ACA), the president and congressional leadership have cited “rising premiums,” “unaffordable deductibles” and “skyrocketing” out-of-pocket (OOP) costs associated with ACA plans. While the current Senate version of repeal and replace, the Better Care Reconciliation Act of 2017 (BCRA), is intended to address these issues, the BCRA could in fact result in higher out-of-pocket costs and less generous coverage relative to the coverage people receive today.
As currently drafted, the BCRA changes the share of expected healthcare costs covered by insurers (called actuarial value (AV)) that would be subsidized by premium tax credits. The BCRA pegs the value of the available tax credits to the premium of the median-cost benchmark plan with 58% AV in the taxpayer’s rating area, rather than to the premium of the second-lowest silver plan (70% AV) used to benchmark the value of credits today. In 2020, the BCRA also eliminates cost-sharing reductions, which provide co-pay and deductible assistance for the lowest-income consumers purchasing ACA coverage.
Finally, the BCRA phases out the enhanced federal Medicaid funding that allowed 31 states and the District of Columbia to expand Medicaid coverage to 14 million people with incomes below 138% of the Federal Poverty Level (FPL), and eliminates enhanced funding entirely in 2023 (and for most states, likely eliminates Medicaid expansion coverage along with it). Notably, the BCRA provides that individuals with incomes below 100% of the FPL may access subsidies to purchase marketplace coverage (filling a gap in the ACA which provided subsidies only to those with incomes above 100% of the FPL).
To analyze how the proposed changes would impact the overall affordability of healthcare coverage, including for people who are eligible for Medicaid today under the ACA expansion, we analyzed OOP costs and plan value under the BCRA for individuals of various ages and at various income levels:1
- Figure 1 looks at the percentage of household income families with incomes below 150% of the FPL would have to pay for premiums and average deductibles, showing that for most people under 150% of the federal poverty level (FPL), the total OOP costs a family would have to pay for a benchmark plan before their insurance plan starts to pay for most covered services would be unaffordable. For example, the deductible and premiums for a family of two earning $12,933 a year (133% FPL) would be 60% of annual family income suggesting that few low-income families would be inclined to buy coverage under the BCRA. By way of comparison, individuals covered under states’ Medicaid expansion today pay no more than 5% of their family income in premiums and cost-sharing.
- Figure 2 focuses on the change in premiums and value under the BCRA versus the ACA for a variety of incomes. The analysis shows that while premiums would decrease for some under the BCRA, the overall value of the plans purchased would be significantly reduced, and premiums would increase for other people. In particular, those between 50 and 64 would see an increase in premium costs for lower-value coverage.
Please click here to view image