Earlier this week, Avalere health consulting released a report indicating that two proposals advocated by Senator Collins would reduce health insurance premiums. Senator Collins seized on this analysis. In a tweet on December 6, she claimed that the Avalere study “confirms my reinsurance bill & Alexander-Murray proposal would reduce health insurance premiums by 18% in 2019.”
The problem is that Senator Collins seems to be ignoring a very important point. The Avalere study doesn’t account for the impact that repeal of the individual mandate would have on health insurance markets. It’s like responding to a question about who won the game by saying, “My team scored 20 points” while ignoring that the other team scored twice that.
Fortunately, Congressional Budget Office (CBO) analysis makes it possible to put the Avalere study in context. It also makes it clear that Senator Collins’s efforts to protect Maine people from losing health insurance and paying higher premiums triggered by repeal of the individual mandate in the Senate tax bill are not enough. Approximately 46,000 Mainers will still lose their health insurance and many more will face higher premiums even if Senator Collins’ reinsurance bill AND the Alexander-Murray proposal are approved.
In fact, on the same day that the Avalere study was released, MECEP produced analysis detailing the coverage losses and premium increases that would result from passage of the Senate tax bill, Senator Collins’s reinsurance bill, and the Alexander-Murray proposal. We found that the proposals advocated by Senator Collins would reduce the number of Mainers that lost health insurance coverage as a result of the tax bill by 4,000. So instead of 50,000 Mainers losing coverage as CBO analysis suggests, 46,000 would instead. Similarly, we found that premiums would still go up significantly. Without the two proposals supported by Senator Collins, the annual premium for a 60 year-old living in Washington County would go up by $2,159 in 2019. With the two proposals, annual premium cost would go up by $1,296. These findings are highlighted in the table below:
How is it that our interpretation of the Avalere study is so different from Senator Collins’s? As stated previously, Senator Collins doesn’t seem to understand that the Avalere study doesn’t account for the adverse effects that the repeal of the individual mandate would have. In addition, she doesn’t seem to recognize that the impact of the Alexander-Murray bill is already reflected in existing data from CBO. With that as background, and at the risk of getting super-wonky, let’s apply this information to the Avalere study.
First, CBO analysis indicates that repeal of the individual mandate would increase the number of uninsured people by 4 million in 2019 and 13 million in 2027. In Maine, that translates into 25,000 fewer people with health insurance in 2019 and 50,000 in 2027. The CBO study also projects that average premiums would go up by about 10%. Applying those figures to Maine and accounting for variations in insurance rates based on age and geography means that a 60 year-old living in Washington County can expect to see premiums go up by $2,159 in 2019 and by $3,118 in 2027.
An important point is that the CBO analysis already assumes that cost savings reduction payments are in place, meaning they’ve already accounted for the impact that passing Alexander-Murray would have on the final outcome. So the real question is how will Senator Collins’ reinsurance proposal impact premiums and enrollment compared to the baseline projections provided by CBO? The Avalere study actually helps answer that question.
Avalere estimates that the reinsurance proposal alone will reduce premiums by 4% on average from 2018 to 2019. CBO projects that repeal of the individual mandate AND passage of Alexander-Murray would result in a 10% average annual premium increase. Combining these two data points means that the net effect of repealing the individual mandate plus passing Alexander-Murray and Senator Collins’s reinsurance proposal is a 6% increase in premiums (10% increase per CBO inclusive of individual mandate repeal plus Alexander-Murray minus 4% reduction per Avalere inclusive of Senator Collins’s reinsurance proposal).
But what about the 18% reduction cited by Senator Collins? The 18% reduction includes the effects of both the reinsurance proposal and Alexander-Murray. Because CBO estimates already account for Alexander-Murray, that figure is not relevant to any analysis that also considers repeal of the individual mandate and uses CBO data as the baseline. The relevant number to use from the Avalere study is the 4% reduction associated with the reinsurance proposal only at the level requested by Senator Collins.
In short, Senator Collins’s numbers don’t add up. Her starting point does not reflect current reality and double counts the impact of the Alexander-Murray proposal. Equally troubling is the fact that she is relying on her Republican colleagues in the U.S. House to enact her two proposals which they have already gone on record as being against. Even if they are enacted, they expire in two years and will do little to stabilize insurance markets because of uncertainty about whether or not they will be funded in the future.
No matter which numbers she chooses to cite, at the end of the day whether Senator Collins’s proposals are enacted or not, Mainers will be worse off.