If You Love High Deductibles, Then You'll Love The Senate Health Bill

The deductibles are too high.

Youve heard consumers say this about their health insurance policies, particularly in the last few years since Obamacare became law. And if youve been paying attention to politics, then youve heard Republicans promise to bring those deductibles down.

Now Senate Republicans have officially released their proposal to repeal the Affordable Care Act and, based on the available information, they are going to break that promise in a very big way. If the GOP proposal becomes law, then its likely out-of-pocket costs for people buying coverage through healthcare.gov or one of the state exchanges would tend to be higher, not lower unless these people were able and willing to pay even more in premiums.

The explanation is wonky, and the verdict is not definitive because the Congressional Budget Office and other independent experts havent had a chance to produce detailed projections yet. But it doesnt take a formal analysis to understand what Republicans are trying to do here.

The essential reality of the repeal effort one worth keeping in mind over the next few days, amid all the legislative negotiation over policy details is that Republicans want to reduce government spending on the poor and middle class. And less government spending for these people means, almost inevitably, that they will pay for a greater portion of their medical care.

Either fewer will have insurance, the insurance they have will offer less protection, or both. Its just a question of who suffers and how.

The Senate Bill Envisions Smaller Tax Credits

Today, with the Affordable Care Act still in place, people who buy coverage on their own (rather than through an employer) are eligible for tax credits that offset the cost of their premiums. The size of the tax credit varies depending on income, age and the price of a typical policy in a community. The idea is to make sure people who have the least money or face the highest premiums get the most help.

If the Senate bill becomes law, people buying coverage on their own would still be eligible for tax credits and, superficially, those credits would function a lot like the ones in place now. The value would go up or down depending on personal income, age and the price of the typical local plan. But the Senate bill alters the definition of typical or, to put it as the health care experts do, it redefines the benchmark for setting subsidy levels.

Thats a big deal.

Under the Affordable Care Act, the benchmark plan is a silver plan. Silver plans have an actuarial value (AV) of 70, which means they should cover roughly 70 percent of the typical persons medical expenses. Under the Senate proposal, the benchmark plan would be a policy with an AV of 58 in other words, a plan that would cover just 58 percent of the typical persons medical expenses. Thats pretty close to what, under the Affordable Care Act, qualifies as a bronze plan.

Bronze plans have lower premiums than silver plans because they cover less. And so using a quasi-bronze plan as the benchmark rather than a silver plan means reducing the financial assistance people get to buy insurance.

One way to think about it is a straightforward reduction in the subsidies. Larry Levitt, senior vice president at the Henry J. Kaiser Family Foundation, said its basically equivalent to a 15 percent across-the-board subsidy reduction.

Changing the benchmark for premium subsidies from the equivalent of a silver plan to a bronze plan is about a 15% across-the-board cut.

Larry Levitt (@larry_levitt) June 22, 2017","type":"rich","meta":{"author":"Larry Levitt","author_url":"https://twitter.com/larry_levitt","cache_age":86400,"description":"Changing the benchmark for premium subsidies from the equivalent of a silver plan to a bronze plan is about a 15% across-the-board cut.— Larry Levitt (@larry_levitt) June 22, 2017\n","provider_name":"Twitter","title":"Larry Levitt on Twitter","type":"rich","url":"https://twitter.com/larry_levitt/status/877901302696525824","version":"1.0"},"flags":[],"fullBleed":false,"options":{"theme":"news","device":"mobile","editionInfo":{"id":"us","name":"U.S.","link":"https://action.news","locale":"en_US"},"originalEdition":"us","isMapi":false,"isAmp":false,"isVideoEntry":false,"isEntry":true,"isMt":false,"entryId":"594c1f52e4b05c37bb753c04","entryPermalink":"https://action.news/entry/senate-obamacare-repeal-bill-higher-deductibles_n_594c1f52e4b05c37bb753c04","entryTagsList":"public-health,obamacare,health-care-reform,senate,health-insurance,congressional-budget-office,@health_depression,@health_ibs,@health_models","sectionSlug":"politics","deptSlug":"politics-news","sectionRedirectUrl":null,"subcategories":"","isWide":false,"headerOverride":null,"noVideoAds":false,"disableFloat":false,"isNative":false,"commercialVideo":{"provider":"custom","site_and_category":"us.politics","package":null},"isHighline":false,"vidibleConfigValues":{"cid":"60afc111dcf87c2cd2f5d8bf","overrides":{"front_page_top_videos":{"desktop":"60b64354b171b7444beaff4d","mobileweb":"60b64354b171b7444beaff4d"},"top_media":{"desktop":"60b8e6bdc5449357a7ada147","mobile":"60b8e701c5449357a7ada2ee","iphone":"60b8e643cdd90620331bb1f6","ipad":"60b8e643cdd90620331bb1f6","androidphone":"60b8e699c5449357a7ada04c","androidtablet":"60b8e699c5449357a7ada04c"},"anthology":{"desktop":"60b8e616cdd90620331bb0ba","mobile":"60b8e671c5449357a7ad9f66","iphone":"60b8e643cdd90620331bb1f6","ipad":"60b8e643cdd90620331bb1f6","androidphone":"60b8e699c5449357a7ada04c","androidtablet":"60b8e699c5449357a7ada04c"},"content":{"desktop":"60b8e616cdd90620331bb0ba","mobile":"60b8e671c5449357a7ad9f66","iphone":"60b8e643cdd90620331bb1f6","ipad":"60b8e643cdd90620331bb1f6","androidphone":"60b8e699c5449357a7ada04c","androidtablet":"60b8e699c5449357a7ada04c"}},"playerUpdates":{"5668ae6ee4b0b5e26955d6a6":"60d2472d9340d7032ad7e443","56aa41bae4b091744c0440d8":"60e869dc7c5f3b17b6741b81","5841b2b5cc52c716ec6e5a7f":"60b8e355cdd90620331ba185","58b5e2b8d85a10302feee895":"60b64316b171b7444beafdb2","58b74698f78ced31417819ae":"60b8e5bec5449357a7ad9b52","58b74ccecebcea57e2c3a3d1":"60b8e5eac5449357a7ad9ca5","58cff690d85a100b9992bc39":"60b8e616cdd90620331bb0ba","58cffb3fb6d9b972a49a3c9d":"60b8e643cdd90620331bb1f6","58cffdd74d96935d7d6ec180":"60b8e671c5449357a7ad9f66","58d03a84f78ced6518eb2fa7":"60b643c82e76be41f112735c","592edf20e0fa177b0c26f7fd":"60b8e699c5449357a7ada04c","5b35266b158f855373e28256":"60b64354b171b7444beaff4d","5c116f29f79c4171d82b7c2a":"60b64440b171b7444beb040b","5c1170fc600c9a697bf0c6b9":"60b646102e76be41f1127ffc","5c47791afa1b317df8ae0c4f":"60b8e6bdc5449357a7ada147","5c477987a6b48b35f164773d":"60b8e701c5449357a7ada2ee","5c4779ee943c3c2a64f28371":"60b8e747cdd90620331bb861","5c477a26fcd67b26879bc7c2":"60b8e788c5449357a7ada67b","5d8921a78c3ae845f366c9b6":"60ae7be5f3a7c13a30417ff9","58b98b00ba82aa39a6534321":"60d0de7c9340d7032ad1146c","58b9d14cb6d9b96c9ec32af3":"60d0dec19340d7032ad115a0","58cff8eccebcea42931e0436":"60d0e005b627221e9d819d44","592edf5de0fa177b0c26f95b":"60d0e38fb627221e9d81adcf","58cff72fd85a100b9992c112":"60d0e447b627221e9d81b0da","56b4d34fe4b022697697c400":"60d2472d9340d7032ad7e443","60b8e4c0c5449357a7ad957d":"60e869dc7c5f3b17b6741b81"}},"connatixConfigValues":{"defaultPlayer":"ff7fdddc-5441-4253-abc4-f12a33fad58b","clickToPlayPlayer":"d014396e-b366-4c17-aeac-3ce906fa3fd0","videoPagePlayer":"f010447b-d244-4111-a314-7b4542ae4145","verticalPlayer":"e58cb05a-0bc8-4210-9108-fea82726c065","stickyPlayerControl":"52ea1755-d601-4ad1-bccc-d8cce3f0e5da","stickyPlayerON":"8055e9e5-3bda-4933-8d45-9ad814fb6e22"},"topConnatixThumnbailSrc":"https://img.connatix.com/2f799dd2-1d69-4cc2-9352-5014690f3a79/1_th.jpg?crop=480:270,smart&width=480&height=270&format=jpeg&quality=60&fit=crop","customAmpComponents":[],"ampAssetsUrl":"https://amp.assets.huffpost.com","videoTraits":null,"positionInUnitCounts":{"buzz_head":{"count":0},"buzz_body":{"count":0},"buzz_bottom":{"count":0}},"positionInSubUnitCounts":{"article_body":{"count":9},"blog_summary":{"count":0},"before_you_go_content":{"count":0}},"connatixCountsHelper":{"count":1},"buzzfeedTracking":{"context_page_id":"594c1f52e4b05c37bb753c04","context_page_type":"buzz","destination":"huffpost","mode":"mobile","page_edition":"en-us"},"tags":[{"name":"public health","slug":"public-health","links":{"relativeLink":"topic/public-health","permalink":"https://action.news/topic/public-health","mobileWebLink":"https://action.news/topic/public-health"},"relegenceSubjectId":982236,"department":{"name":"Life","slug":"lifestyle"},"section":{"title":"Wellness","slug":"healthy-living"},"topic":{"title":"Public Health","slug":"public-health","overridesSectionLabel":false},"url":"https://action.news/life/topic/public-health"},{"name":"Obamacare","slug":"obamacare","links":{"relativeLink":"topic/obamacare","permalink":"https://action.news/topic/obamacare","mobileWebLink":"https://action.news/topic/obamacare"},"relegenceId":4213842,"department":{"name":"Latest News","slug":"politics-news"},"section":{"title":"Politics","slug":"politics"},"topic":{"title":"Affordable Care Act","slug":"affordable-care-act","overridesSectionLabel":false},"url":"https://action.news/news/topic/affordable-care-act"},{"name":"Health Care Reform","slug":"health-care-reform","links":{"relativeLink":"topic/health-care-reform","permalink":"https://action.news/topic/health-care-reform","mobileWebLink":"https://action.news/topic/health-care-reform"},"relegenceSubjectId":980152,"department":{"name":"Latest News","slug":"politics-news"},"section":{"title":"Politics","slug":"politics"},"topic":{"title":"Health Care Reform","slug":"health-care-reform","overridesSectionLabel":false},"url":"https://action.news/news/topic/health-care-reform"},{"name":"senate ","slug":"senate","links":{"relativeLink":"topic/senate","permalink":"https://action.news/topic/senate","mobileWebLink":"https://action.news/topic/senate"},"relegenceSubjectId":982725,"department":{"name":"Latest News","slug":"politics-news"},"section":{"title":"Politics","slug":"politics"},"topic":{"title":"U.S. Senate","slug":"us-senate","overridesSectionLabel":false},"url":"https://action.news/news/topic/us-senate"},{"name":"Health Insurance","slug":"health-insurance","links":{"relativeLink":"topic/health-insurance","permalink":"https://action.news/topic/health-insurance","mobileWebLink":"https://action.news/topic/health-insurance"},"department":{"name":"Life","slug":"lifestyle"},"section":{"title":"Wellness","slug":"healthy-living"},"topic":{"title":"Health Insurance","slug":"health-insurance","overridesSectionLabel":false},"url":"https://action.news/life/topic/health-insurance"},{"name":"congressional budget office","slug":"congressional-budget-office","links":{"relativeLink":"topic/congressional-budget-office","permalink":"https://action.news/topic/congressional-budget-office","mobileWebLink":"https://action.news/topic/congressional-budget-office"},"relegenceId":3540420,"department":{"name":"Latest News","slug":"politics-news"},"section":{"title":"Politics","slug":"politics"},"topic":{"title":"U.S. Congress","slug":"us-congress","overridesSectionLabel":false},"url":"https://action.news/news/topic/us-congress"}],"isLiveblogLive":null,"isLiveblog":false,"cetUnit":"buzz_body","bodyAds":["

\r\n\r\n","

\r\n\r\n"],"adCount":0},"isCollectionEmbed":false,"enhancements":{}}">

Changing the benchmark for premium subsidies from the equivalent of a silver plan to a bronze plan is about a 15% across-the-board cut.
Larry Levitt (@larry_levitt) June 22, 2017

Another way to think about the difference is to think about the kinds of plans these diminished subsidies are supposed to buy.

Smaller Credits Lead To Weaker Coverage

In 2016, the median deductible in a silver plan on healthcare.gov was $3,500 a year, according to the Center on Medicare and Medicaid Services. This, roughly speaking, is the plan that Obamacare is designed to help consumers get. In 2016, the median deductible in a bronze plan on healthcare.gov was $6,300. This again, roughly speaking is the plan that Senate Republicans want to help consumers get.