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CMS joins CBO in trashing GOP's AHCA

The Centers for Medicare & Medicaid Services is administered by Trump/Price pick Seema Verma, who is openly doing everything possible to trash the ACA and push the AHCA, to the point of allegedly committing borderline extortion in order to help push it through.

Therefore, this came as a bit of as surprise a few days ago (yeah, I'm late to the party on this one...busy week). The lead actuary for CMS, Paul Spitalnic, issued his own scoring of the impact of the AHCA on healthcare coverage, premiums and the federal budget.

It's important to note--as Mr. Spitalnic himself does right at the top of the analysis--that:

The Office of the Actuary has prepared this memorandum in our longstanding capacity as an independent technical advisor to both the Administration and the Congress. The costs, savings, and coverage impacts shown herein represent our best estimates for the American Health Care Act. The statements, estimates, and other information provided in this memorandum are those of the Office of the Actuary and do not represent an official position of the Department of Health & Human Services or the Administration.

it's not nearly as ugly a projection as the Congressional Budget Office's was (the Office of the Actuary projects "only" 12.6 million would lose coverage by 2026 vs. the 23 million the CBO projected), it's still not pretty...and even with that disclaimer at the top, this is still an eye-opener to include the CMS logo at the top:

This memorandum summarizes the Office of the Actuary’s estimates of the financial and coverage effects through 2026 of selected provisions of the “American Health Care Act of 2017” (H.R. 1628), which was passed by the House on May 4, 2017 and which is referred to in this memorandum as the AHCA. Included are the estimated impacts on net Federal expenditures, health insurance coverage, Medicaid enrollment and spending by eligibility group, gross and net premiums and out-of-pocket costs in the individual market, total National Health Expenditures, and the financial status of the Medicare Hospital Insurance (HI) trust fund. Not included in these estimates are the impacts of provisions that would affect other parts of the Federal Budget—such as those associated with repealing taxes or fees that do not have a direct effect on the Medicare or Medicaid program—and Federal administrative costs. A summary of the data, assumptions, and methodology underlying our estimates is available in Appendix A.

The key findings in this memorandum are as follows

  • Over fiscal years 2017-2026, selected provisions of the AHCA are anticipated to reduce Federal expenditures by over $328 billion primarily because of lower Medicaid spending.
  • In 2018, the number of uninsured is estimated to be about 4 million higher under the AHCA than under current law, mainly due to the impact of repealing the individual mandate. By 2026, the number of uninsured is estimated to be roughly 13 million higher under the AHCA, mostly as a result of declines in eligibility for Medicaid, the impact of the repeal of the individual mandate, and the net reduction to the subsidies available for the purchase of individual insurance.
  • In calendar year 2026, Medicaid enrollment is estimated to be 8 million lower under the AHCA than under current law due to the combination of two factors: (i) a decline of 6 million in enrollment for newly eligible adults under current law and (ii) a decline of 2 million in enrollment for all other Medicaid enrollees attributable to more frequent — 2 — eligibility redeterminations, the repeal of retroactive eligibility, and optional State work requirements for adults. When this effect is combined with the implementation of per capita allotments as specified under the AHCA, overall Medicaid spending is estimated to be $105 billion, or nearly 11 percent, lower under the AHCA than under current law in 2026.

The CBO analysis projected that by 2026, around 14 million would lose coverage via Medicaid, 3 million via the Group market and 6 million via the Individual market, plus another 900,000 or so seniors losing Medicaid (though they'd still have Medicare).

The CMS Actuary projection is smaller: 8 million off of Medicaid, 3.3 million via Group coverage and, interestingly, a drop of only 1.3 million off the individual market. That's a difference of 6 million via Medicaid and 4.7 million on the individual market. A big part of the difference on the Medicaid side seems to be that the CBO assumes that if the AHCA doesn't become law, most of the remaining 19 states would eventually expand Medicaid, whereas the CMS Actuary states that "Under the current-law baseline, under which eligibility is based on 138 percent of the FPL, we had assumed that the proportion of the eligible population living in States that expanded eligibility would remain at the current level"...in other words, they aren't expecting any more states to jump onboard the expansion train anyway, thus there would be several million fewer who would otherwise lose Medicaid coverage if the AHCA does become law. That's up to 4.5 million people (2.6 million in the Medicaid Gap, antoher 1.9 million in the 100-138% FPL range) who CMS figures wouldn't be enrolled in Medicaid no matter what.

On the individual market side, one thing which seems to account for the discrepancy is that the CBO seems to be assuming the total indy market would be around 18 million on the exchanges plus a nominal number off-exchange which would then drop by 6 million under the AHCA...while the CMS Actuary thinks the total indy market would only be around 16.5 million in the first place under the ACA, and would only drop to 15.2 million under the AHCA.

Here's the big takeaway for the individual market, however:

  • For the individual insurance market, average gross premiums are estimated to be roughly 13 percent lower in 2026 under the AHCA than under current law. However, average net premiums (that is, premium amounts after Federal and State subsidies are accounted for) are roughly 5 percent higher than under current law, and estimated average cost-sharing amounts are projected to be roughly 61 percent higher in 2026 under the AHCA than under current law. The impacts vary widely by age and income of the enrollee and depending on whether the enrollee resides in a State that applies for waivers for Essential Health Benefits (EHBs) or community rating.

Conservatives jumped on that first part (13% lower unsubsidized premiums than under the ACA! Hooray!)...but it's the next sentence which should give them pause: 5% HIGHER premiums then under the ACA after tax credits are applied (which is obviously within the margin of error and might be nominal)...and 61% higher deductibles/co-pays than under the ACA.

I haven't read the whole thing, but I'm guessing this is where the "no minimum actuarial value" allowance and pre-existing condition waiver factor comes into play: Yes, it's easier to cut down on premiums when you just scratch off what's actually covered and/or make people pay more out of pocket instead.

Oh, and as for Medicare, the Part A trust fund would be wiped out 2 years earlier than under the ACA:

  • The assets of the HI trust fund are estimated to be depleted in 2026, 2 years earlier than under current law, and the HI actuarial deficit is estimated to increase from 0.73 percent to 1.18 percent.1 This result is primarily due to the loss of revenue from the repeal of the additional Medicare tax on high-income earners and additional Medicare disproportionate share hospital (DSH) spending.

There's a whole mess of other stuff; I'm so swamped I can't do a full analysis, but the bottom line is that saying this is a "better" projection is like saying eating a spoonful of vomit is better than eating a whole plateful. The closing lines are also somewhat ominous:

The actual future impacts of the AHCA on health expenditures, insured status, individual and employer decisions, State behavior, and market dynamics are very uncertain. The legislation would result in substantial changes in the way that health care insurance is provided and paid for in the U.S. Accordingly, the estimates presented here are subject to greater uncertainty than is typical when estimating the impact of health care legislation. Moreover, the estimates provided in this memorandum assume that effects of various provisions would occur as early as 2018 even though the timing for actual implementation by that date would be quite challenging. Finally, while we have assumed that the individual market will be viable and stable under both current law and the AHCA, it is possible that certain waivers granted under the AHCA could result in a deteriorating or possibly failing individual market depending on how a State chose to implement the waiver.