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Would consumers really pay higher premiums under the Senate health bill?

What states would face highest premium hikes if Senate bill passes?

When the Congressional Budget Office released its report on the Senate's proposed health care bill Monday, health care advocates said it confirmed what they had feared most: Millions of Americans would pay more for less health coverage, if they can afford insurance at all. 

Although the Senate vote is delayed and there are bound to be changes, the first pass by the CBO gives a good indication of what the future might look like for consumers if the bill, combined with a parallel measure proposed by House Republicans, becomes law. 

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"The [CBO] report makes it clear you're going to be paying more in premiums for health insurance that doesn't buy you much, and out-of-pocket costs are going to increase dramatically," said Caitlin Morris, director of affordability initiatives at the consumer health advocacy organization Families USA.  

Under the Senate bill, called the Better Care Reconciliation Act of 2017, 22 million fewer people would have insurance coverage by 2026 than under Obamacare, compared with about 23 million fewer under an Obamacare replacement plan passed by the House in May, according to CBO numbers. The Senate plan would also trim $321 billion from future budget deficits, $200 billion more than the estimated savings in the House plan.

The federal budget cuts may come at a price for consumers, according to the CBO. The Senate plan does keep the subsidies for low-income people designed to help them afford their health care premiums. But under the Senate plan, subsidies are available for people at 350 percent of the poverty level, versus 400 percent under current law. That means fewer people will qualify for any government subsidy, making it harder for them to afford coverage.

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The CBO estimates that average 2018 premiums in the exchanges for a benchmark health plan for a single policyholder would increase 20 percent. The "silver" plan in the exchanges is currently the benchmark plan, and it pays an average of about 70 percent of covered benefits. The increase in premiums comes from the fact that the penalties for people who do not purchase some type of approved health care insurance would disappear and, as a result, fewer people are likely to buy insurance.  The CBO also estimates that average premiums for single coverage will increase by 10 percent in 2019.

Then in 2020, when the Senate health bill is scheduled to kick in, premiums will decline by 30 percent, the CBO estimated. A major reason for the turnaround is the difference in the less generous benchmark plan the Senate bill uses to calculate premium subsidies. Starting in 2020, premium subsidies would be based on bronze plans, which cover only an average of 58 percent of covered benefits and have much higher deductibles.

That would leave many consumers between a rock and a hard place. It they use their subsidies to maintain the same type of coverage they receive now under Obamacare's silver plan, they would pay more of the premium costs -- average of 74 percent more in 2020, according to a Kaiser Family Foundation analysis. At the same time, if enrollees purchased the less generous bronze plan, they would likely pay less in premiums but much more in out-of-pocket costs, including co-pays, co-insurance and deductibles. In 2017, a single person pays an average deductible of $6,000 for a bronze plan, compared to $3,600 for a silver plan.

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For low-income people, explains the CBO report, "the premium for a silver plan would typically be a relatively high percent of income," while the deductible for a bronze plan "would be a significantly higher percentage of income. As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan…." the report said.   

A recent addition to the Senate health care bill may also affect premium costs. The so-called lockout provision would generally require insurers to impose a six-month waiting period before coverage can start for people who enroll in individual health plans who have let their previous insurance lapse for more than 63 days. 

The waiting period is designed to encourage healthy people to buy insurance and reduce the number of people who wait to buy insurance after they get sick or injured. Having more healthy people in the pool of insured helps keep premium costs down, and the CBO report does expect that the waiting period would "slightly increase" the number of people with insurance.

But Families USA's Morris worries that the lockout will have an adverse effect because only people with continuous health needs will pay the higher premiums to continue coverage. It won't be enough of an incentive to get healthy people to pay higher premiums for insurance, she said. 

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