CBO sees peril in Senate bill for uncrowded regions

Photo by Liz Ruskin

The Congressional Budget Office has what amounts to a warning for “sparsely populated areas” in its analysis of the Senate’s draft health care reform bill. The CBO said while most insurance markets would remain stable under the Senate bill, the legislation would drive out insurers that serve a “small fraction” of the population, or these areas will see premiums rise very high.

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The CBO attributes this to the bill’s lower subsidies, which it said will entice fewer people to buy insurance. The bill would end the mandate to buy insurance. And markets with few purchasers are less profitable for insurers.

The CBO isn’t pointing to Alaska, but no other state would lose as much in subsidies, and no other state is as sparsely populated.

Judy Solomon is vice president at the left-leaning Center on Budget and Policy Priorities. On several scores, Solomon said she can’t think of a state that fares worse, in either the Senate or and the House bill, than Alaska.

“If it’s not the worse, it’s probably tied or way up there in terms of the most serious harm,” Solomon said.

Insurers are already withdrawing from some markets under current law. The CBO did not quantify the withdrawal effect of the Senate bill.

The law would also impose major changes on Medicaid. The state estimates Alaska would lose $2.8 billion in Medicaid spending over six years if the House bill went into effect. Solomon said the Senate bill would inadequately compensate states for inflation.

“Over time, the difference between what states need to support their Medicaid program and what the federal government contributes just gets larger and larger and more and more costs are shifted to states,” Solomon said.

The Senate bill has few defenders from right-wing think tanks, though Heritage Foundation said it’s better than existing law.

One fan of the Senate bill is the insurer Anthem. The company says the bill will stabilize the individual market by spending $50 billion and eliminating a tax on insurance plans.

The CBO says the Senate bill will increase the number of uninsured by 22 million and reduce the deficit by $321 billion.

Neither of Alaska’s senators has stated a position on the bill.