As many as 10 million people could lose insurance under the Republicans’ proposed American Health Care Act, according to an analysis from Standard & Poor’s.
The rating agency projected that between 6 million and 10 million people will lose coverage if the bill is passed. The hardest hit would be between 4 million and 6 million Medicaid enrollees, who would lose coverage as result of decreased funding for Medicaid and cutoffs to expansion.
The number might be higher, but S&P’s analysts predicted that some states, especially larger ones or those that expanded Medicaid benefits prior to the passage of the Affordable Care Act, will continue to fund Medicaid out of state coffers.
Another group that may lose coverage in high numbers is the elderly, according to S&P. The AHCA would adjust the rate banding rule to a 5:1 ratio instead of a 3:1 ratio, allowing insurers to charge older, and likely sicker, people five times as much as younger people.
However, the law’s age-based tax credits for older people would only be double those of younger people, likely making insurance unaffordable for a significant portion of that population. Between 2 million and 4 million older people enrolled in plans through the individual market could lose coverage.
This is good for insurers, as they would pay for care for fewer of the most expensive people to insure, according to the report. However, high-cost, high-need patients account for half of U.S. healthcare spending, so leaving more of those people uninsured could instead hurt providers’ finances.
The report also noted that the GOP’s replacement for the ACA’s individual mandate, a continuous coverage incentive, doesn’t kick in until 2019, while the mandate would be repealed immediately, so it could lead to significant enrollment lapses in between. S&P did not project that the AHCA would significantly impact the employer markets or the Medicare Advantage insurance sector.
Fitch Ratings echoed many of the same findings in its own analysis. There may not be a significant impact to large, diversified payers if the bill becomes law, but smaller insurers would certainly feel the effect of change. The rating agency said that it’s hard to determine how much other areas of the bill, like its proposed tax credits and expansion of health savings accounts, could impact credit ratings for payers.
Mark Rouck, senior director at Fitch Ratings, said in a statement emailed to FierceHealthcare that it’s hard to say if payers will take advantage of opportunities to increase competition by selling across state lines.
“It is still a big open question as to how much insurers would take advantage of this flexibility. Significantly increased competition can theoretically drive down pricing if insurers become very aggressive, which could pressure financial health if it goes too far, but that would remain to be seen,” Rouck said. “This is primarily an issue that impacts health insurers selling individual as opposed to group health insurance, and would especially impact Blue Cross/Blue Shield Plans and a number of smaller insurers, as opposed to the largest national insurers who focus heavily on group coverage.”