Actuaries weigh in on Senate healthcare bill

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Republican leaders in the Senate have already had to delay a vote on the Better Care Reconciliation Act once when it became clear they didn’t have enough support from GOP senators to pass it.

The American Academy of Actuaries has evaluated the Senate’s healthcare bill, and its experts have a slew of suggestions for what lawmakers must consider as they try to overhaul both the individual market and Medicaid.

The group outlined these suggestions in a 12-page letter (PDF) to Senate Majority Leader Mitch McConnell, R-Ky., and Minority Leader Chuck Schumer, D-N.Y., the former of which is facing an uphill battle to win 50 votes for the Better Care Reconciliation Act (BCRA) when Congress returns from its July 4 holiday recess.

“With legislation of this scope affecting millions of people and highly complex markets, assuring stable and sustainable markets is no simple feat,” Cori Uccello, the academy’s senior health fellow, said in a statement. “We provided a nonpartisan, actuarial examination of the BCRA component-by-component, and drew lawmakers’ attention to critical issues.”

Here’s a look at some of the highlights from its individual market assessment:

  • In the short term, the BCRA’s continuation of funding for the cost-sharing reduction program for two years and its state stability fund would “reduce uncertainty and put downward pressure on premiums,” the letter stated.
  • Eliminating the individual mandate, meanwhile, would drive up premiums and reduce enrollment. Yet the bill’s six-month waiting period provision for those who don’t maintain continuous coverage could slightly offset this enrollment reduction.
  • In the long term, the BCRA’s widening of allowable age rating could encourage more young enrollees to join the individual market. Yet the elimination of the individual mandate and the lower overall amount of premium subsidies could cause the risk pool to deteriorate.
  • Offering a less-rigorous 1332 waiver process could reduce premiums by allowing insurers to offer less-comprehensive plans, yet such waivers could also erode pre-existing condition protections and increase consumers’ out-of-pocket costs.
  • Lastly, the long-term stability funds in the BCRA could help stabilize the individual market, but “only if they are used for activities that would lower net premiums,” the letter said.

The letter also outlines key areas that policymakers must pay attention to when considering the effect of the BCRA’s Medicaid funding changes.

Here’s a sampling of the academy’s suggestions:

  • Because moving to per capita caps would shift more funding risk to states than under current law, states would need the flexibility to modify components of their Medicaid programs—such as such as eligibility, benefits and provider payments—to ensure they stay within their budgets.
  • Changing per capita caps to be based on state-specific historical costs could have the effect of rewarding states with richer Medicaid programs while limiting the options of states with leaner programs. The BCRA does have a mechanism to push caps toward a national average, but policymakers might also want to consider making adjustments where there are significant demographic and health risk changes over time.
  • Under the Medicaid funding growth rate methodology outlined in the BCRA, states’ efforts to reduce total costs—such as premium increases—could deter enrollment among healthy, lower-cost consumers, thus driving up per capita costs. However, a risk-scoring tool could help adjust Medicaid payments to more accurately reflect such changes in underlying morbidity.

Republican leaders in the Senate have already had to delay a vote on the BCRA once when it became clear they didn’t have enough support from GOP senators to pass it. If the party fails to pass the bill after its July recess, President Donald Trump and a few other lawmakers have suggested that it should aim for a quick repeal of the Affordable Care Act and then craft its replacement.