CBO: Republican Reform Plan Cuts Costs, but Wouldn’t Boost Coverage

The House Republicans' health care reform bill would cost only a fraction of the Democrats' proposal and reduce the cost of insurance premiums, but it would leave the percentage of U.S. residents who lack health insurance unchanged, according to a Congressional Budget Office analysis of the legislation, the Los Angeles Times reports (Hook, Los Angeles Times, 11/5).

The House Republican bill, which was leaked on Tuesday, would:

• Make it easier for insurers to sell coverage across states;
• Allow small businesses to ban together and increase their purchasing power through "association health plans" that would be sponsored by trade and professional associations and chambers of commerce;
• Offer $50 billion in federal "incentive payments" over the next decade to states that reduce the cost of insurance or the percentage of uninsured residents;
• Cap non-economic damages in medical malpractice lawsuits at $250,000; and
• Increase incentives for people to use health savings accounts.

Under the GOP health care plan, states would be required to subsidize high-risk insurance pools to cover people denied coverage by private insurance and develop a "stable funding source" for the pools.

Premiums paid by people with pre-existing conditions could only be 50% higher than average premiums for standard insurance in a state.

States would be offered $15 billion over 10 years to help pay for the high-risk pools, which would exclude undocumented immigrants (California Healthline, 11/4).

The plan does not include an expansion of Medicaid, individual or business mandates, subsidies to help low- or middle-income U.S. residents purchase coverage or a ban on denying coverage to people with pre-existing conditions, all of which are included in the House Democrats' proposal (HR 3962).

Effects on Coverage

CBO estimated that the GOP bill, which has been offered as an amendment to the Democrats' proposal, would cost $61 billion over 10 years and would cover about 83% of U.S. residents by 2019, about the same as the current rate (Los Angeles Times, 11/5).

Under the GOP bill, about 52 million U.S. residents would be uninsured in 2019, compared with an estimated 55 million without any change in law, according to CBO (Wayne, CQ Today, 11/4).

In contrast, the Democratic proposal in the House would cost $1.2 trillion and would ensure that 96% of U.S. residents have health coverage (Los Angeles Times, 11/5).

According to CQ Today, both proposals would reduce the federal deficit by offsetting spending reductions and through tax increases, according to CBO.

CBO also projected premium costs would decline under the Republican bill (CQ Today, 11/4). The plan would cut premiums by:

• 5% to 8% for those in the individual market;
• 7% to 10% for those in the small-group market; and
• Up to 3% in the large group market.

The CBO report stated that the projections are "very preliminary" and subject to uncertainty.

According to CBO, the plan to limit medical malpractice suits would result in savings of $41 billion over 10 years (Herszenhorn, "Prescriptions," New York Times, 11/4).

Although the GOP bill has virtually no chance of becoming law, Republicans are introducing the measure in part to deflect criticism that they have stood in the way of reform without offering their own solutions, according to the Times.

Reaction, Defense

Democrats immediately focused on CBO's estimate that the bill would likely maintain the same rate of uninsurance.

Rep. George Miller (D-Calif.) said, "CBO confirmed that Republicans' only solution for health reform is to preserve the status quo" (Los Angeles Times, 11/5).

However, House Republicans said that they did not intend to lower the rate of uninsured because they see that goal as unaffordable ("Prescriptions," New York Times, 11/4). Instead, Republicans noted that the proposal would bring down premium costs.

House Minority Leader John Boehner (R-Ohio) said, "The Republican plan will lower health care costs for American families, and that's good news for everyone struggling in today's economy" (Los Angeles Times, 11/5).