AUGUST 2017 The Effects of Terminating Payments for Cost-Sharing Reductions Summary Because they would still be required to bear the costs The Affordable Care Act (ACA) requires insurers to offer of CSRs even without payments from the government, plans with reduced deductibles, copayments, and other participating insurers would raise premiums of “silver” means of cost sharing to some of the people who pur- plans to cover the costs. In order to qualify for CSRs, chase plans through the marketplaces established by that most enrollees must purchase a silver plan through the legislation. The size of those reductions depends on those nongroup insurance marketplace in their area, generally people’s income. In turn, insurers receive federal pay- have income between 100 percent and 250 percent of ments arranged by the Secretary of Health and Human the federal poverty level (FPL), receive premium tax Services to cover the costs they incur because of that credits toward the silver plan, and not be eligible for requirement. other types of coverage, such as employment-based coverage or Medicaid. According to CBO and JCT’s pro- At the request of the House Democratic Leader and the jections, for single policyholders, gross premiums (that House Democratic Whip, the Congressional Budget is, before premium tax credits are accounted for) for Office and the staff of the Joint Committee on Taxation silver plans offered through the marketplaces would, on (JCT) have estimated the effects of terminating those average, rise by about 20 percent in 2018 relative to the payments for cost-sharing reductions (CSRs). In particu- amount in CBO’s March 2016 baseline and rise slightly lar, the agencies analyzed what would happen under this more in later years. Such premiums for other plans policy: By the end of this month, it is known that CSR would rise a few percent during the next two years, on payments will continue through December 2017 but not average, above the increases already projected in the base- thereafter. line in response to uncertainty among states and insurers about how to respond under the policy. In later years, the Effects on Market Stability and Premiums agencies anticipate, premiums for other plans would not CBO and JCT expect that insurers in some states would generally rise above baseline projections because CSRs withdraw from or not enter the nongroup market are not available for those plans. because of substantial uncertainty about the effects of the policy on average health care costs for people purchas- When premiums for silver plans increased under the ing plans. In the agencies’ estimation, under the policy, policy, tax credit amounts per person for purchasing about 5 percent of people live in areas that would have insurance in the nongroup market would increase no insurers in the nongroup market in 2018. By 2020, because the credits are directly linked to those premiums. though, insurers would have observed the operation of According to CBO and JCT’s projections, many people markets in many areas under the policy and CBO and eligible for the credits with income between 100 percent JCT expect that more insurers would participate, so and 200 percent of the FPL—who, under the baseline, people in almost all areas would be able to buy nongroup receive most of the cost-sharing reductions paid—would insurance (as is projected to be the case throughout the use their increased tax credits to purchase the same silver next decade under CBO’s baseline projection).1 plans with low cost sharing that they would purchase if CSR payments were stopped after premiums were finalized or 1. Under the policy analyzed, because of the timing, insurers would were already being charged, CBO and JCT expect that additional know about the termination of the CSR payments before having insurers would exit the marketplaces in 2018 to reduce their to finalize premiums for next year. But if the timing was different, financial losses. 2 The Effects of Terminating Payments for Cost-Sharing Reductions AUGUST 2017 under the baseline, and they would pay net premiums insurance—reducing the number of uninsured people, (with the tax credits factored in) that were similar to on net, in most years. (Under the policy, demand for what they would pay if the CSR payments were contin- employment-based insurance among some employees ued. Alternatively, they could buy insurance that covered would be weaker because insurance in the marketplaces less of their health care expenses, and in many of those would be more attractive, and the agencies expect fewer cases, the tax credits would cover the premiums entirely. employers would offer health insurance to their workers Because CBO and JCT anticipate that most insurance in most years.) commissioners would eventually permit insurers to sub- stantially increase the gross premiums for silver plans in During the next two years, the increase in subsidies stem- the marketplaces and not to do so for other plans, almost ming from those two reasons would be partially offset by all people at other income levels would then buy other lower spending in areas where no insurers participated plans. (Under the baseline, some of those people would in the marketplaces in response to the policy, CBO and buy silver plans, and some would buy other plans.) JCT estimate. In those years, the number of uninsured people would be slightly higher or about the same as Effects on the Federal Budget and Health Insurance under the baseline. Coverage Implementing the policy would increase the federal Overall Effects deficit, on net, by $194 billion from 2017 through As a result of the increase in total subsidies under the 2026, CBO and JCT estimate. Total federal subsidies for policy, CBO and JCT project these outcomes, com- health insurance in the nongroup market—in partic- pared with what would occur if the CSR payments were ular, the sum of the premium tax credits and the CSR continued: payments—would increase for two reasons: The average amount of subsidy per person would be greater, and The fraction of people living in areas with no insurers more people would receive subsidies in most years. offering nongroup plans would be greater during the next two years and about the same starting in 2020; Because the tax credits would increase when premi- ums for silver plans rose, the agencies estimate that the Gross premiums for silver plans offered through the average subsidy per person receiving premium tax credits marketplaces would be 20 percent higher in 2018 and to purchase nongroup health insurance would increase. 25 percent higher by 2020—boosting the amount Increases in those tax credits for people with income of premium tax credits according to the statutory between 100 percent and 200 percent of the FPL would formula; roughly offset the reductions in CSR payments. How- ever, increases in premium tax credits for those with Most people would pay net premiums (after income between 200 percent and 400 percent of the FPL accounting for premium tax credits) for nongroup would substantially exceed the small reductions in CSR insurance throughout the next decade that were payments for this group. similar to or less than what they would pay otherwise—although the share of people facing slight By CBO and JCT’s estimates, the number of people increases would be higher during the next two years; receiving subsidies for nongroup health insurance would increase under the policy in most years. In particular, Federal deficits would increase by $6 billion in 2018, because tax credits would increase and gross premiums $21 billion in 2020, and $26 billion in 2026; and for plans other than silver plans in the marketplaces would not change substantially, many people with The number of people uninsured would be slightly income between 200 percent and 400 percent of the FPL higher in 2018 but slightly lower starting in 2020. would, compared with outcomes under the baseline, be able to pay lower net premiums for insurance that pays Those effects are uncertain and would depend on how for the same share (or an even greater share) of covered the policy was implemented. benefits. As a result, more people would purchase plans in the marketplaces than would have otherwise and For this analysis, the agencies have measured the bud- fewer people would purchase employment-based health getary effects relative to CBO’s March 2016 baseline to AUGUST 2017 The Effects of Terminating Payments for Cost-Sharing Reductions 3 produce estimates most comparable to those published for silver plans with higher actuarial values (and with earlier this year for legislation related to the budget lower deductibles), as follows: reconciliation process for 2017. In an analysis using a preliminary version of updated projections of spending For people with income between 100 percent and to subsidize health insurance purchased through the 150 percent of the FPL, 94 percent (with an average marketplaces that will be published soon, CBO and JCT deductible of about $300); find most of the results to be similar to those discussed here.2 The main exception is this: Premiums under the For people with income between 150 percent and policy would rise by a smaller amount in 2018—as 200 percent of the FPL, 87 percent (with an average the updated projections incorporate some increase in deductible of about $800); and premiums next year as a result of current uncertainty about future CSR payments. Specifically, the agencies For people with income between 200 percent and now expect that some insurers will assume that CSR 250 percent of the FPL, 73 percent (with an average payments will not be made in full during 2018 (as some deductible of about $2,900). insurers have indicated in preliminary filings), will incor- porate the associated costs into their premiums for that Insurance companies can cover those higher shares of year, and will, if CSR payments continue to be made, health care costs at current premium rates because they make adjustments in 2019 to account for them. Those receive CSR payments from the federal government expectations will be reflected in the updated projections based on the number of enrollees they have in each eligi- but were not included in the March 2016 baseline. bility category. To pay such shares of the cost of benefits in the absence of CSR payments, insurers would raise How Key Elements of the Current System premiums. Work In most marketplaces, people can choose among plans— The premium tax credits also reduce the amount that such as bronze, silver, and gold—for which the average certain low-income people pay for health care in the percentage of the total cost of covered medical expenses nongroup market. The eligibility for such tax credits paid by the insurer (that is, the actuarial value of the and the method for calculating the credit amounts in plan) differs. The share of medical expenses that is not the nongroup market would be unchanged under the paid by the insurer is paid by enrollees in the form of policy. The size of the premium tax credits depends on deductibles and other cost sharing. household income and on the premiums for a bench- mark plan—the second-lowest-cost silver plan—in an Silver plans differ from other plans because they must enrollee’s geographic area. An enrollee eligible for the tax provide CSRs to eligible enrollees: The actuarial value credits pays a certain maximum percentage of his or her depends on the policyholder’s income as a percentage of income toward the premiums for that benchmark plan, the FPL.3 Insurers are required to offer such plans to par- and the credits cover the amount by which the premi- ticipate in the marketplaces. For people at most income ums for the benchmark plan exceed that percentage of levels, the actuarial value for a silver plan is 70 percent; income. the average deductible for a single policyholder, for medical and drug expenses combined, is about $3,600 When the premiums for the benchmark plan go up, in 2017. People with income between 100 percent and the amount of the tax credits goes up, and the amount 250 percent of the FPL, however, are generally eligible of the premiums paid by an enrollee who is eligible for the credits is generally unchanged. Hence, an enrollee eligible for the premium tax credits is insulated from 2. Those updated estimates will be used to adjust the current set of variations in premiums in different geographic locations baseline projections of such spending, which were published in and is also largely insulated from increases in the premi- June 2017. See Congressional Budget Office, An Update to the Budget and Economic Outlook: 2017 to 2027 (June 2017), www. ums for the benchmark plan. If a person chooses a plan cbo.gov/publication/52801. with premiums higher than those for the benchmark plan, then he or she pays the difference as an additional 3. In addition, certain Native Americans are eligible for plans with no deductibles or other cost sharing; the eligibility rules for those amount toward the premiums, providing some incentive plans differ. to choose lower-priced insurance. Similarly, if the person 4 The Effects of Terminating Payments for Cost-Sharing Reductions AUGUST 2017 chooses a plan with premiums lower than the benchmark CBO and JCT anticipate that, under this policy, the plan’s, then he or she pays a lower cost. nongroup insurance market would also continue to be stable in most areas of the country. Subsidies to purchase In addition, the federal requirement that health insur- insurance combined with the individual mandate would ers maintain a minimum medical loss ratio, which is maintain sufficient demand for insurance by people with equivalent to capping the share of premiums that may go low health care expenditures. Substantial uncertainty toward insurers’ administrative costs and profits, would about how consumers might respond to the significant be unchanged under the policy analyzed here. That increases in premiums following the termination of CSR requirement, combined with the competitive pressure payments would lead some insurers to withdraw from or to attract enrollees to lower-priced insurance in markets not enter the nongroup market in some states, but the with more than one insurer, would eventually constrain agencies anticipate that the situation would be tempo- increases in premiums for silver plans—even though the rary. Under the policy, CBO and JCT estimate, about sums paid by subsidized enrollees in the marketplaces 5 percent of people live in areas of the country in which would largely be determined by their income, and the insurers would not participate in the nongroup market increases would primarily be borne by the federal govern- in 2018, but insurers would participate in nearly all areas ment in the form of larger premium tax credits. by 2020. (If the timing of the policy was different, its effects in 2018 would be different.) Effects on Market Stability Decisions about offering and purchasing health insur- Effects on Gross Premiums Charged by ance depend on the stability of the health insurance Insurers market—that is, on the proportion of people living in Under this policy, average premiums for the second-low- areas with participating insurers and on the likelihood of est-cost silver plan offered through the marketplaces for premiums’ not rising in an unsustainable spiral. The mar- single policyholders would be about 20 percent higher ket for insurance purchased individually with premiums in 2018 than the premiums projected in CBO’s March not based on one’s health status would be unstable if, for 2016 baseline, mainly because gross premiums alone, example, the people who wanted to buy coverage at any rather than premiums in combination with CSR pay- offered price would have average health care expenditures ments, would have to cover the insurer’s share of enroll- so high that offering the insurance would be unprofit- ees’ health care costs. In 2020 and subsequent years, able. by CBO and JCT’s estimates, the premiums for such benchmark plans would be about 25 percent higher than Although premiums have been rising, subsidized under the baseline. enrollees purchasing health insurance coverage in the nongroup market are insulated from increases in pre- Those increases would occur, CBO and JCT expect, miums when they purchase a plan with premiums at because most state insurance commissioners would or below those for the benchmark plan because the net eventually allow insurers to compensate for the termina- premiums they pay are based on a percentage of their tion of CSR payments by raising premiums substantially income. The subsidies to purchase coverage, combined for silver plans offered through the marketplaces. The with the requirement that most people obtain health agencies anticipate that insurers would propose to raise insurance coverage (also known as the individual man- premiums for those plans because they are the plans date), are anticipated to cause sufficient demand for required to bear—through cost-sharing reductions—the insurance by enough people, including people with low costs of having actuarial values of 87 percent or 94 per- health care expenditures, for the market to be stable in cent for people with income between 100 percent and most areas as the ACA is currently being implemented. 200 percent of the FPL who enroll. Many insurance Under the baseline, fewer than one-half of one percent commissioners would favor that increase, CBO and of people live in areas of the country that are projected JCT expect, because it would result in larger increases in to have no participation by insurers in the nongroup premium tax credits for people in their states and, thus, market. Several factors may affect insurers’ decisions to lower net premiums paid by enrollees than alternatives not participate—including lack of profitability and sub- that insurers might propose. Very few people at other stantial uncertainty about enforcement of the individual income levels (facing the same gross premiums but for mandate and about future payments for CSRs. coverage with an actuarial value of 73 percent or lower) AUGUST 2017 The Effects of Terminating Payments for Cost-Sharing Reductions 5 would then enroll in silver plans in the marketplaces purchasing insurance through the marketplaces would under the policy. Instead, they would purchase other enroll in a silver plan with net premiums, after account- plans, the agencies project. ing for premium tax credits, that were similar under this policy and under the baseline. Some people in that The gross premiums for bronze plans with actuarial income range would purchase bronze or gold plans for values around 60 percent and gold plans with actuarial which the tax credits would cover the premiums entirely; values around 80 percent would change much less as a however, in doing so, they would not be eligible for result of the policy, CBO and JCT anticipate, although CSRs. some increases would occur during the next two years because of insurers’ uncertainty about the policy’s effects. In general, CBO and JCT expect that most purchasers in The agencies expect that most state insurance commis- the nongroup market with income between 200 percent sioners would not allow insurers to significantly raise and 400 percent of the FPL could pay net premiums premiums for bronze and gold plans under the policy, equal to or less than those under the baseline for insur- especially after a year or two of experience, as those ance with an actuarial value the same as (or even greater plans are not accompanied with cost-sharing reductions. than) under the baseline. The main reason that purchas- Allowing premium increases for bronze and gold plans ers could pay less or obtain a higher actuarial value is because of increases in costs for silver plans would distort that the higher premiums for silver plans would boost prices in the market, because the increases would not the premium tax credit amounts.5 correspond to changes in costs for those plans and would result in lower premium tax credits than if the increases For purchasers in the nongroup market with income were concentrated among silver plans. above 400 percent of the FPL, net and gross premiums would be the same because they are not eligible for pre- However, for some bronze plans in the marketplaces, mium tax credits. Under the policy, they could pay about CBO and JCT project that gross premiums would mod- the same premiums for bronze or silver plans (by pur- estly increase: those with an actuarial value that insur- chasing outside the marketplaces) as under the baseline ers would increase (within the allowable range) in an and lower premiums for gold plans (because of the health attempt to attract people who would have bought silver of enrollees in the plans), CBO and JCT project. plans under the baseline but would not under the policy because of the large premium increases for them. Effects for People With Income Between 100 Percent and 200 Percent of the FPL For gold plans in the marketplaces, the agencies project To assess the potential effects of the policy change, CBO that gross premiums would be modestly lower under the and JCT constructed a set of examples to illustrate aver- policy because those plans would attract a larger share age amounts for gross premiums, premium tax credits, of healthier people who, under the baseline, would have and net premiums (after accounting for the tax credits) bought silver plans. Under the baseline, gold plans tend in 2026. The agencies project, for instance, that people to attract less healthy people who expect to have high with income at 125 percent of the FPL, regardless of age, health care expenditures, whereas silver plans attract would pay a net premium of $500 in 2026 to purchase healthier people as well.4 a silver plan—the plan with the highest actuarial value for them—under the policy and $450 under the base- Effects on Net Premiums Paid by Enrollees line (see Table 1, at the end of this document).6 People CBO and JCT anticipate that many people with income between 100 percent and 200 percent of the FPL 5. For related projections in California’s market, see Wesley Yin and Richard Domurat, Evaluating the Potential Consequences of Terminating Direct Federal Cost-Sharing Reduction (CSR) Funding 4. Federal risk-adjustment payments—which are made under (commissioned by Covered California, January 26, 2017), the baseline and would be under the policy as well—aim to http://tinyurl.com/yb86m89v. compensate insurers whose plans cover less healthy people, but the payments can address the risk only imperfectly. As a result, 6. Those estimates of net premiums are determined by CBO’s CBO and JCT anticipate that the greater share of healthy projection of the maximum percentage of income for calculating enrollees in gold plans under the policy would contribute to the premium tax credits in 2026, which differs under the policy modest reduction in premiums for those plans even though risk- and under the baseline. That projection takes into account the adjustment payments would be made. difference in the probability, as estimated under the policy and 6 The Effects of Terminating Payments for Cost-Sharing Reductions AUGUST 2017 with income at 175 percent of the FPL, the agencies However, CBO and JCT project that, under the policy, estimate, would pay a net premium of $1,850 under the people with income between 200 percent and 400 per- policy and $1,700 under the baseline for a silver plan. cent of the FPL who are eligible for premium tax credits Although gross premiums would be higher because of would mostly use those larger amounts to purchase the termination of CSR payments under the policy, net bronze or gold plans rather than silver plans—eventually premiums would be determined as a percentage of peo- boosting enrollment in the marketplaces. Bronze plans ple’s income, and larger premium tax credits would make would have a lower actuarial value and lower premiums up most of the difference. than silver or gold plans, offering potential enrollees a trade-off. But gold plans would have a higher actuarial Under the policy, because of the larger premium tax value than silver plans available to people in this income credits (reflecting the higher costs of silver plans), some range and, for many of those people, lower net premi- people in this income range would pay no net premiums ums—such that very few of them would choose a silver for a plan with a higher actuarial value than one they plan. could have purchased with no net premiums under the baseline. For example, under the policy, a 64-year-old For instance, in the agencies’ set of illustrative examples with income at 125 percent of the FPL could purchase for 2026 under the policy, a 40-year-old with income a gold plan and pay no net premiums but, under the at 225 percent of the FPL could pay a net premium baseline, could obtain only a bronze plan with no net of $1,150 for a bronze plan or $3,050 for a gold plan. premiums. (A silver plan would be available with a net premium of $3,350—more than the cost for a gold plan with a Effects for People With Income Between 200 Percent higher actuarial value.) Under the baseline, that person and 400 Percent of the FPL could pay $2,050 for a bronze plan, $3,050 for a silver Under the policy, CBO and JCT anticipate, people with plan, or $4,900 for a gold plan. Thus, under the policy, income between 200 percent and 400 percent of the FPL that person would have lower net premiums for a plan of would continue to have access to the same silver plans equal or higher actuarial value. that they are projected to purchase under the baseline— with net premiums being similar in 2026. For those peo- Gold plans would attract a larger share of enrollees ple, silver plans would have an actuarial value between under the policy—mostly people with income between bronze and gold plans. In the marketplaces, the gross 200 percent and 400 percent of the FPL who would have premiums for silver plans would be higher than under purchased a silver plan under the baseline. In addition the baseline, but premium tax credits for many people to the larger premium tax credits under the policy, lower in that income range would be larger (see Table 2, at the gross premiums would eventually contribute to higher end of this document). Outside the marketplaces, where enrollment. Under the policy, gross premiums for gold such tax credits could not be used, CBO and JCT expect plans would eventually be lower than those for silver that silver plans would be offered with gross premiums plans because, the agencies expect, silver plans would about the same as those charged under the baseline almost exclusively insure people with income between because insurers would design slightly different products 100 percent and 200 percent of the FPL and (with for sale there and could therefore price them differently CSRs) provide actuarial values of 87 percent or 94 per- than the plans sold in the marketplaces. Plans outside cent—significantly higher than the actuarial value of the marketplaces could be attractive to younger people around 80 percent for gold plans. Gross premiums for whose premiums were not a large enough percentage of gold plans under the policy would be modestly lower their income to qualify them for tax credits. than under the baseline because, in CBO and JCT’s esti- mation, enrollees would be healthier and therefore have lower health care expenditures. in CBO’s March 2016 baseline, that the specified percentages of income would be increased. Such an increase would apply if total Enrollees’ ages would make a bigger difference in their federal subsidies through the marketplaces (including subsidies net premiums for those at the higher end of this income for both premiums and cost sharing) exceeded 0.504 percent range. A 21-year-old with income at 375 percent of the of gross domestic product in the preceding year. CBO projects that the probability of reaching that percentage would be greater FPL, for instance, could pay the same net premium in under the policy than it is under the baseline. 2026 for a bronze plan ($4,300) or a silver plan ($5,100) AUGUST 2017 The Effects of Terminating Payments for Cost-Sharing Reductions 7 under the policy (by purchasing outside the marketplace) The total increase in the deficit that would result under as under the baseline, and $350 less for a gold plan.7 A the policy includes the following amounts: 64-year-old with that income would see more attractive options. Such a person could pay a net premium of Costs of $247 billion from net increases in $6,800 for a gold plan under the policy, compared with marketplace subsidies (an increase of $365 billion $6,750 for a silver plan under the baseline. For a bronze for premium tax credits offset by a reduction in plan, that person could pay $2,300 under the policy, CSR payments of $118 billion) stemming from compared with $4,350 under the baseline. Older peo- increases in the average subsidy per person for people ple’s much larger premium tax credits under the policy receiving the ACA’s tax credits for premium assistance explain the difference. to purchase nongroup health insurance and in the number of people receiving those subsidies in most Effects for People With Income Above 400 Percent of years and the FPL For people with income above 400 percent of the FPL, A net increase of $7 billion in federal outlays for silver plans offered through the marketplaces would Medicaid because of higher enrollment resulting be less attractive than other plans. Because those peo- from a reduction in the number of employers offering ple are not eligible for premium tax credits, however, health insurance to their workers in most years. the increase in their purchases of gold plans would be proportionately smaller than the increase for people Those increases in the deficit would be partially offset by: with income between 200 percent and 400 percent of the FPL—and the increase in their purchases of plans Savings of $47 billion, mostly associated with shifts outside the marketplaces, proportionately larger. In the in the mix of taxable and nontaxable compensation— agencies’ set of illustrative examples, a 40-year-old with resulting in more taxable income—from a net income at 450 percent of the FPL, for instance, could decrease in most years in the number of people pay the same net premium in 2026 for a bronze plan or estimated to enroll in employment-based health a silver plan under the policy (by purchasing outside the insurance coverage, and marketplace) as under the baseline, and $450 less for a gold plan. A net increase of $11 billion in revenues resulting from an increase in most years in the number of Effects on the Federal Budget employers subject to penalties for not offering health CBO and JCT estimate that, on net, adopting this insurance. policy would increase the federal deficit by a total of $194 billion over the 2017–2026 period. That change Effects on Health Insurance Coverage would result from a $201 billion increase in outlays and According to CBO and JCT’s estimates, the number a $7 billion increase in revenues (see Table 3, at the end of people uninsured under this policy would be about of this document). 1 million higher than under the baseline in 2018 but about 1 million lower in each year starting in 2020 (see Table 4, at the end of this document). In 2018, under 7. CBO and JCT expect that, under the policy, gross premiums for the policy, the largest effect on coverage would derive bronze and silver plans offered outside the marketplaces would from the drop in the number of insurers participating in be about the same as under the baseline and lower than those the nongroup market. for plans offered through the marketplaces in most areas. For bronze plans, the agencies anticipate, some insurers would raise By 2020, the effect on coverage would stem primarily the actuarial value of plans offered through the marketplaces to 65 percent (the maximum currently allowed) to try to attract from the increases in premium tax credits, which would enrollees who might have purchased silver plans if the premiums make purchasing nongroup insurance more attractive were lower. Bronze plans offered outside the marketplaces with for some people. As a result, a larger number of people an actuarial value of 60 percent would have lower premiums. For would purchase insurance through the marketplaces, silver plans, premiums would be lower for ones offered outside and a smaller number of people would purchase employ- the marketplaces because plans offered through the marketplaces would have premiums covering the costs of people eligible for ment-based health insurance. higher actuarial values (of 87 percent and 94 percent). 8 The Effects of Terminating Payments for Cost-Sharing Reductions AUGUST 2017 Uncertainty Surrounding the Estimates year. Some of those marketplaces would have no insurers CBO and JCT have endeavored to develop budgetary remaining—reducing federal costs but increasing the estimates that are in the middle of the distribution of number of people who were uninsured. Also, subsequent potential outcomes. Such estimates are inherently impre- lawsuits might result in outlays by the federal govern- cise because the ways in which federal agencies, states, ment. If the effective date for terminating CSR payments insurers, employers, individuals, doctors, hospitals, and was the beginning of 2019 instead of 2018, the effects in other affected parties would respond to the changes 2018 would be much smaller. made by this policy are all difficult to predict. Certainty Under this policy, the responses by states and insurers in Implementation of the policy through legislation, as the short term are particularly uncertain. For example, opposed to executive or judicial action, would provide under the policy, total federal subsidies would be smaller greater certainty about how the ACA would be carried and the number of uninsured people would be larger out in the short term. Executive or judicial action could if more people lived in areas with no insurers in the very well be challenged in lawsuits that would take some marketplaces than the agencies project, and vice versa. time to resolve—potentially extending the number of Also, the increases in premium tax credits could be larger years insurers might not participate in the marketplaces. than CBO and JCT project if states allowed very large increases in premiums in 2018 to ensure that they had CBO’s Baseline at least one insurer in an area. But the increases in tax In CBO and JCT’s initial cost estimate for the ACA and credits could be smaller than projected if more people in subsequent baseline projections, the agencies have than the agencies expect lived in states requiring insurers recorded the CSR payments as direct spending (that is, to spread premium increases in 2018 across bronze, sil- spending that does not require appropriation action)—a ver, and gold plans in the marketplaces as well as outside conclusion reached because the cost-sharing subsidies them, rather than focusing the increases on silver plans were viewed as a form of entitlement authority. The in the marketplaces. statute that specifies construction of the baseline requires that CBO assume full funding of entitlement authority.8 Additional Issues Depending on How the Policy Was Implemented In 2014, the government began making payments for CBO and JCT analyzed the effects of eliminating the cost-sharing subsidies, and the House of Representatives Administration’s authority to make CSR payments. For subsequently brought a lawsuit challenging the depart- their analysis, the agencies assumed that hypothetical ment’s authority to make such payments. On May 12, legislation with that end would be enacted by August 31, 2016, the District Court for the District of Columbia 2017, and that CSR payments would not be made after held that the government did not have the authority to December 31, 2017. If the Administration, either of its make payments for cost-sharing subsidies but allowed own volition or in response to a court order, announced it to continue making payments pending appeal. On by August 31, 2017, that it would not make CSR pay- February 22, 2017, at the request of the House of Rep- ments after December 31, 2017, the agencies expect that resentatives and the Administration, the U.S. Court of the results would be similar to those discussed here. If Appeals for the District of Columbia Circuit agreed to the policy was implemented differently, various addi- hold the appeal in abeyance while the Congress and the tional issues would arise. Administration seek a resolution, presumably through legislation. On August 1, 2017, that court allowed 17 Timing states and the District of Columbia to intervene in the If the announcement date and the effective date for case, so future actions in the case will now involve those the policy differed from what CBO and JCT used in parties in addition to the House of Representatives and this analysis, then the effects of the policy would differ. the Administration. For example, if CSR payments were terminated after insurers had finalized or had begun charging premiums not incorporating such a change, insurers would suffer significant financial losses. To reduce those losses, some 8. See section 257(b)(1) of the Balanced Budget and Emergency insurers would exit the marketplaces in the middle of the Deficit Control Act of 1985; 2 U.S.C. §907(b)(1). AUGUST 2017 The Effects of Terminating Payments for Cost-Sharing Reductions 9 CBO has not made any changes to its baseline projec- net cost of—various insurance options. Based on survey tions in response to that court case because the case is on data, that model incorporates a wide range of informa- appeal and the Administration has continued to make tion about a representative sample of individuals and the payments for cost-sharing subsidies. CBO typically families, including their income, employment, health updates its baseline budget projections at specific times status, and health insurance coverage. The model also each year to reflect legislative action, economic changes, incorporates information from the research literature and other developments. During the course of a year, about the responsiveness of individuals and employers however, events occur (usually, the enactment of legis- to price changes and the responsiveness of individuals to lation, actions by the courts, or decisions by executive changes in eligibility for public coverage. CBO regularly branch agencies) that are different from those anticipated updates the model so that it incorporates information in developing the baseline projections. If new informa- from the most recent administrative data on insur- tion indicates that an action or event that would affect ance coverage and premiums. CBO and JCT use that CBO’s baseline has happened or definitely will happen, model—in combination with models to project tax rev- CBO incorporates that information in its next regular enues, models of spending and actions by states, projec- update of its baseline. In addition, CBO immediately tions of trends in early retirees’ health insurance cover- takes that information into account in assessing what will age, and other available information—to inform their happen under current law when it analyzes the effects of estimates of the numbers of people with certain types of legislation being considered by the Congress, even if the coverage and the associated federal budgetary costs.9 agency has not published new baseline projections. If the Administration stopped making CSR payments because of executive or judicial action, CBO’s typical This document was requested by the House Democratic procedures for updating its baseline would not necessar- Leader and the House Democratic Whip. Kate Fritzsche, ily apply because of the conflict between that action and Jeffrey Kling, Sarah Masi, Eamon Molloy, and Allison the statutory requirements for constructing the baseline. Percy prepared it with guidance from Jessica Banthin and Holly Harvey and with contributions from Ezra Porter, Specifically, because the CSR payments are considered an Lisa Ramirez-Branum, Robert Stewart, and the staff of entitlement, projections incorporating that action would the Joint Committee on Taxation. Chad Chirico, Theresa differ from ones reflecting the statutory requirement Gullo, Mark Hadley, Alexandra Minicozzi, Robert that CBO assume full funding of entitlement authority. Sunshine, and David Weaver reviewed the document; Hence, CBO would consult with the Budget Commit- John Skeen edited it; and Casey Labrack prepared it for tees to decide whether and how to reflect the action in publication. the agency’s baseline and cost estimates. If the policy was implemented through legislation, no such conflict would An electronic version is available on CBO’s website arise, and its effects would be reflected in the baseline (www.cbo.gov/publication/53009). and cost estimates immediately. Methodology This policy’s effects would depend in part on how indi- viduals responded to changes in the prices, after sub- sidies, they had to pay for nongroup insurance and on Keith Hall their underlying desire for such insurance. Effects would Director also stem from how businesses responded to changes in August 2017 those prices for nongroup insurance and in the attrac- tiveness of other aspects of nongroup alternatives to employment-based insurance. To capture those complex interactions, CBO uses a microsimulation model to estimate how rates of cover- 9. For additional information, see Congressional Budget Office, “Methods for Analyzing Health Insurance Coverage” (accessed age and sources of insurance would change as a result of August 14, 2017), www.cbo.gov/topics/health-care/methods- alterations in eligibility and subsidies for—and thus the analyzing-health-insurance-coverage. 10 The Effects of Terminating Payments for Cost-Sharing Reductions AUGUST 2017 Table 1. Illustrative Examples, for Single Individuals With Income Under 200 Percent of the FPL, of Subsidies for Nongroup Health Insurance in 2026 Under CBO's Baseline and Under a Policy Eliminating CSR Payments Dollars Bronze Plan Gold Plan Silver Plan Actuarial Value of Plan Actuarial After Cost- Premium Net Value of Premium Net Actuarial Premium Net Sharing Tax Premium Plan Tax Premium Value of Plan Tax Premium Subsidies Premiuma - Creditb = Paid (Percent)c Premiuma - Creditb = Paid (Percent)c Premiuma - Creditb = Paid (Percent)c Single Individual With Annual Income of $18,900 (125 percent of FPL) and Not Eligible for Medicaid d Under the Baseline 21 years old 4,300 4,300 0 6,550 4,650 1,900 5,100 4,650 450 40 years old 5,500 5,500 0 8,350 6,050 2,300 80 6,500 6,050 450 94 60 64 years old 12,900 12,900 0 19,650 14,850 4,800 15,300 14,850 450 Under the Policy, in the Marketplaces 21 years old 4,700 4,700 0 6,200 5,900 300 6,400 5,900 500 40 years old 6,000 6,000 0 7,900 7,700 200 80 8,200 7,700 500 94 65 64 years old 14,100 14,100 0 18,600 18,600 0 19,200 18,700 500 Single Individual With Annual Income of $26,500 (175 percent of FPL) d Under the Baseline 21 years old 4,300 3,400 900 6,550 3,400 3,150 5,100 3,400 1,700 40 years old 5,500 4,800 700 8,350 4,800 3,550 80 6,500 4,800 1,700 87 60 64 years old 12,900 12,900 0 19,650 13,600 6,050 15,300 13,600 1,700 Under the Policy, in the Marketplaces 21 years old 4,700 4,550 150 6,200 4,550 1,650 6,400 4,550 1,850 40 years old 6,000 6,000 0 7,900 6,350 1,550 80 8,200 6,350 1,850 87 65 64 years old 14,100 14,100 0 18,600 17,350 1,250 19,200 17,350 1,850 Sources: Congressional Budget Office; staff of the Joint Committee on Taxation. All dollar figures have been rounded to the nearest $50. Amounts in light italic type show premiums for plans that very few people would buy because either more comprehensive coverage would be available at the same or a lower cost or equivalent coverage would be available at a lower cost. CSR = cost-sharing reduction; FPL = federal poverty level. a. For this illustration, CBO projected the average national premiums for a 21-year-old in the nongroup health insurance market in 2026 both under the baseline and under a policy in which CSR payments to insurers are eliminated. On the basis of those amounts, CBO calculated premiums for a 40-year-old and a 64-year-old, assuming that the person lives in a state that uses the federal default age-rating methodology, under which 64-year-olds can be charged premiums that are three times as much as those for 21-year-olds. CBO projects that, under both the baseline and the policy, most states will use the default 3-to-1 age-rating curve. b. Premium tax credits are calculated as the difference between the reference premium and a specified percentage of income for a person with income at a given percentage of the FPL. That specified percentage grows over time. The reference premium under current law is the premium for the second-lowest-cost silver plan available in the marketplace in the area in which the person resides. CBO’s projection of the maximum percentage of income for calculating premium tax credits in 2026 takes into account the difference in the probability, as estimated in CBO’s March 2016 baseline and under the policy eliminating CSR payments, that the specified percentages of income would be increased. Such an increase would apply if total federal subsidies through the marketplaces (including subsidies for both premiums and cost sharing) exceeded 0.504 percent of gross domestic product in the preceding year. CBO projects that the probability of reaching that percentage would be higher under the policy than it is under the baseline. c. The actuarial value of a plan is the percentage of costs for covered services that the plan pays on average. The federal government’s CSR payments to insurers reduce the cost-sharing amounts (out-of-pocket payments required under insurance policies) for covered people whose income is generally between 100 percent and 250 percent of the FPL. The subsidy amounts in this example would range from $1,600 for a 21-year-old with income at 125 percent of the FPL to $4,750 for a 64-year-old at the same income level and from $1,100 for a 21-year-old with income at 175 percent of the FPL to $3,350 for a 64-year-old at the same income level. Under current law, CSRs generally have the effect of increasing the actuarial value of the plan from 70 percent for a typical silver plan to 94 percent for people whose income is at least 100 percent of the FPL and not more than 150 percent; to 87 percent for people with income greater than 150 percent of the FPL and not more than 200 percent; and to 73 percent for people with income greater than 200 percent of the FPL and not more than 250 percent. For people whose income is greater than 250 percent of the FPL, a silver plan would have a standard 70 percent actuarial value. If CSR payments were eliminated, insurers would still have to provide plans with reduced cost-sharing to qualified individuals at the specified income levels. CBO projects that state insurance commissioners would most likely direct insurers to incorporate the amounts into the premiums only for silver plans because doing so would best take advantage of increases in premium tax credits. CBO anticipates that in most states, bronze plans available in the marketplaces would have an actuarial value of 65 percent, and gold plans, 80 percent. Silver plans would have an actuarial value of 70 percent for those not eligible for CSRs and 73 percent, 87 percent, or 94 percent for those eligible. Outside the marketplaces, plans would be available at actuarial values of 60 percent, 70 percent, and 80 percent, CBO anticipates. The premiums for plans reflect not only the difference in the percentage of costs paid but also the effects of induced demand, as people in plans with a higher actuarial value tend to consume more health services, and risk selection, as people with higher expected health care costs are more likely to buy plans with higher actuarial values. A risk-adjustment program under the Affordable Care Act mitigates but does not fully eliminate the effect of risk selection. d. Income levels reflect modified adjusted gross income, which equals adjusted gross income plus untaxed Social Security benefits, foreign earned income that is excluded from adjusted gross income, tax-exempt interest, and income of dependent filers. CBO projects that in 2026, a modified adjusted gross income of $18,900 will equal 125 percent of the FPL and an income of $26,500 will equal 175 percent of the FPL. AUGUST 2017 The Effects of Terminating Payments for Cost-Sharing Reductions 11 Table 2. Illustrative Examples, for Single Individuals With Income Over 200 Percent of the FPL, of Subsidies for Nongroup Health Insurance in 2026 Under CBO's Baseline and Under a Policy Eliminating CSR Payments Dollars Bronze Plan Silver Plan Gold Plan Actuarial Value of Plan After Actuarial Premium Net Actuarial Premium Net Cost-Sharing Premium Net Value of Tax Premium Value of Plan Tax Premium Subsidies Tax Premium Plan Premiuma - Creditb = Paid (Percent)c Premiuma - Creditb = Paid (Percent)c Premiuma - Creditb = Paid (Percent)c Single Individual With Annual Income of $34,100 (225 percent of FPL)d Under the Baseline 21 years old 4,300 2,050 2,250 5,100 2,050 3,050 6,550 2,050 4,500 40 years old 5,500 3,450 2,050 6,500 3,450 3,050 73 8,350 3,450 4,900 80 60 64 years old 12,900 12,250 650 15,300 12,250 3,050 19,650 12,250 7,400 Under the Policy, In the Marketplaces 21 years old 4,700 3,050 1,650 6,400 3,050 3,350 6,200 3,050 3,150 40 years old 6,000 4,850 1,150 8,200 4,850 3,350 73 7,900 4,850 3,050 80 65 64 years old 14,100 14,100 0 19,200 15,850 3,350 18,600 15,850 2,750 Under the Policy, Outside the Marketplaces 21 years old 4,300 0 4,300 5,100 0 5,100 6,200 0 6,200 40 years old 5,500 0 5,500 6,500 0 6,500 73 7,900 0 7,900 80 60 64 years old 12,900 0 12,900 15,300 0 15,300 18,600 0 18,600 Single Individual With Annual Income of $56,800 (375 percent of FPL)d Under the Baseline 21 years old 4,300 0 4,300 5,100 0 5,100 6,550 0 6,550 40 years old 5,500 0 5,500 6,500 0 6,500 70 8,350 0 8,350 80 60 64 years old 12,900 8,550 4,350 15,300 8,550 6,750 19,650 8,550 11,100 Under the Policy, In the Marketplaces 21 years old 4,700 0 4,700 6,400 0 6,400 6,200 0 6,200 40 years old 6,000 800 5,200 8,200 800 7,400 70 7,900 800 7,100 80 65 64 years old 14,100 11,800 2,300 19,200 11,800 7,400 18,600 11,800 6,800 Under the Policy, Outside the Marketplaces 21 years old 4,300 0 4,300 5,100 0 5,100 6,200 0 6,200 40 years old 5,500 0 5,500 6,500 0 6,500 70 7,900 0 7,900 80 60 64 years old 12,900 0 12,900 15,300 0 15,300 18,600 0 18,600 Single Individual With Annual Income of $68,200 (450 percent of FPL)d Under the Baseline 21 years old 4,300 0 4,300 5,100 0 5,100 6,550 0 6,550 40 years old 5,500 0 5,500 6,500 0 6,500 70 8,350 0 8,350 80 60 64 years old 12,900 0 12,900 15,300 0 15,300 19,650 0 19,650 Under the Policy, In the Marketplaces 21 years old 4,700 0 4,700 6,400 0 6,400 6,200 0 6,200 40 years old 6,000 0 6,000 8,200 0 8,200 70 7,900 0 7,900 80 65 64 years old 14,100 0 14,100 19,200 0 19,200 18,600 0 18,600 Under the Policy, Outside the Marketplaces 21 years old 4,300 0 4,300 5,100 0 5,100 6,200 0 6,200 40 years old 5,500 0 5,500 6,500 0 6,500 70 7,900 0 7,900 80 60 64 years old 12,900 0 12,900 15,300 0 15,300 18,600 0 18,600 Continued 12 The Effects of Terminating Payments for Cost-Sharing Reductions AUGUST 2017 Table 2 continued. Sources: Congressional Budget Office; staff of the Joint Committee on Taxation. All dollar figures have been rounded to the nearest $50. Amounts in light italic type show premiums for plans that very few people would buy because either more comprehensive coverage would be available at the same or a lower cost or equivalent coverage would be available at a lower cost. CSR = cost-sharing reduction; FPL = federal poverty level. a. For this illustration, CBO projected the average national premiums for a 21-year-old in the nongroup health insurance market in 2026 both under the baseline and under a policy in which CSR payments to insurers are eliminated. On the basis of those amounts, CBO calculated premiums for a 40-year-old and a 64-year-old, assuming that the person lives in a state that uses the federal default age-rating methodology, under which 64-year-olds can be charged premiums that are three times as much as those for 21-year-olds. CBO projects that, under both the baseline and the policy, most states will use the default 3-to-1 age-rating curve. b. Premium tax credits are calculated as the difference between the reference premium and a specified percentage of income for a person with income at a given percentage of the FPL. That specified percentage grows over time. The reference premium under current law is the premium for the second-lowest-cost silver plan available in the marketplace in the area in which the person resides. CBO’s projection of the maximum percentage of income for calculating premium tax credits in 2026 takes into account the difference in the probability, as estimated in CBO’s March 2016 baseline and under the policy eliminating CSR payments, that the specified percentages of income would be increased. Such an increase would apply if total federal subsidies through the marketplaces (including subsidies for both premiums and cost sharing) exceeded 0.504 percent of gross domestic product in the preceding year. CBO projects that the probability of reaching that percentage would be higher under the policy than it is under the baseline. c. The actuarial value of a plan is the percentage of costs for covered services that the plan pays on average. The federal government’s CSR payments to insurers reduce the cost-sharing amounts (out-of-pocket payments required under insurance policies) for covered people whose income is generally between 100 percent and 250 percent of the FPL. The subsidy amounts in this example would range from $150 for a 21-year-old with income at 225 percent of the FPL to $450 for a 64-year-old at the same income level. Under current law, CSRs generally have the effect of increasing the actuarial value of the plan from 70 percent for a typical silver plan to 94 percent for people whose income is at least 100 percent of the FPL and not more than 150 percent; to 87 percent for people with income greater than 150 percent of the FPL and not more than 200 percent; and to 73 percent for people with income greater than 200 percent of the FPL and not more than 250 percent. For people whose income is greater than 250 percent of the FPL, a silver plan would have a standard 70 percent actuarial value. If CSR payments were eliminated, insurers would still have to provide plans with reduced cost-sharing to qualified individuals at the specified income levels. CBO projects that state insurance commissioners would most likely direct insurers to incorporate the amounts into the premiums only for silver plans because doing so would best take advantage of increases in premium tax credits. CBO anticipates that in most states, bronze plans available in the marketplaces would have an actuarial value of 65 percent, and gold plans, 80 percent. Silver plans would have an actuarial value of 70 percent for those not eligible for CSRs and 73 percent, 87 percent, or 94 percent for those eligible. Outside the marketplaces, plans would be available at actuarial values of 60 percent, 70 percent, and 80 percent, CBO anticipates. The premiums for plans reflect not only the difference in the percentage of costs paid but also the effects of induced demand, as people in plans with a higher actuarial value tend to consume more health services, and risk selection, as people with higher expected health care costs are more likely to buy plans with higher actuarial values. A risk-adjustment program under the Affordable Care Act mitigates but does not fully eliminate the effect of risk selection. Because plans and premiums available in and outside the marketplaces would differ more under the policy than they do under current law, individuals would have a greater incentive to compare options in both markets. d. Income levels reflect modified adjusted gross income, which equals adjusted gross income plus untaxed Social Security benefits, foreign earned income that is excluded from adjusted gross income, tax-exempt interest, and income of dependent filers. CBO projects that in 2026, a modified adjusted gross income of $34,100 would equal 225 percent of the FPL, an income of $56,800 will equal 375 percent of the FPL, and an income of $68,200 will equal 450 percent of the FPL. AUGUST 2017 The Effects of Terminating Payments for Cost-Sharing Reductions 13 Table 3. Estimate of the Net Budgetary Effects of Terminating Payments for Cost-Sharing Reductions Billions of Dollars, by Fiscal Year 2017- 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2026 Change in Subsidies for Coverage Through Marketplaces and Related Spending and Revenuesa,b 0 6 13 22 28 32 35 36 37 37 247 Medicaid 0 -1 -1 * 1 1 1 2 2 2 7 Change in Small-Employer Tax Creditsb,c 0 * * * * * * * * * * Change in Penalty Payments by c Employers 0 0 * * -1 -1 -2 -2 -2 -3 -11 Change in Penalty Payments by Uninsured People 0 0 * * * * * * * * * d Medicare 0 0 * * * * * * * * -2 Other Effects on Revenues and Outlayse 0 _ 1 _ 1 __ -1 __ -4 __ -7 __ -8 __ -9 __ -10 ___ -10 ___ -47 ___ Total Effect on the Deficit 0 6 14 21 24 25 26 26 26 26 194 Memorandum: Total Changes in Direct Spending 0 4 9 17 23 26 30 31 31 31 201 f Total Changes in Revenues 0 -3 -5 -4 -1 2 3 5 5 5 7 Details of Change in Subsidies for Coverage Through Marketplaces and Related Spending and Revenues Premium tax credits Effects on outlays 0 13 22 29 35 38 41 43 44 44 309 Effects on revenues 0 _ 2 __ 4 __ 5 __ 6 __ 7 __ 8 __ 8 __ 8 __ 8 __ 56 ___ Subtotal 0 15 25 35 41 45 49 51 52 52 365 Cost-sharing outlays 0 -8 -12 -13 -13 -13 -14 -14 -15 -16 -118 Outlays for the Basic Health Program 0 * * * * * * * * * * Collections for risk adjustment 0 0 -1 -1 -1 -1 -1 -1 -1 -1 -6 Payments for risk adjustment 0 _ 0 __ 1 __ 1 __ 1 __ 1 __ 1 __ 1 __ 1 __ 1 __ 6 ___ Total 0 6 13 22 28 32 35 36 37 37 247 Sources: Congressional Budget Office; staff of the Joint Committee on Taxation. Estimates are based on CBO’s March 2016 baseline, adjusted for subsequent legislation. Budget authority would be equal to the outlays shown. Except as noted, positive numbers indicate an increase in the deficit, and negative numbers indicate a decrease in the deficit. Numbers may not add up to totals because of rounding. * = between -$500 million and $500 million. a. Related spending and revenues includes spending for the Basic Health Program and net spending and revenues for risk adjustment. b. Includes effects on both outlays and revenues. c. Effects on the deficit include the associated effects that changes in taxable compensation would have on revenues. d. Effects arise mostly from changes in payments to hospitals that treat a disproportionate share of uninsured or low-income patients. e. Consists mainly of the effects that changes in taxable compensation would have on revenues. f. Positive numbers indicate an increase in revenues; negative numbers indicate a decrease in revenues. 14 The Effects of Terminating Payments for Cost-Sharing Reductions AUGUST 2017 Table 4. Effects of Terminating Payments for Cost-Sharing Reductions on Health Insurance Coverage for People Under Age 65 Millions of People, by Calendar Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Total Population Under Age 65 273 274 275 276 276 277 278 279 279 280 Uninsured Under Current Law 26 26 27 27 27 27 27 28 28 28 Change in Coverage Under the Policy a Medicaid 0 * * * * * * * * * Nongroup coverage, including marketplaces 0 -1 * 2 3 3 4 4 3 3 Employment-based coverage 0 1 * -1 -2 -3 -3 -3 -3 -3 Other coverageb 0 * * * * * * * * * Uninsured 0 1 * -1 -1 -1 -1 -1 -1 -1 Uninsured Under the Policy 26 27 27 27 26 27 27 27 27 27 Percentage of the Population Under Age 65 With Insurance Under the Policy Including all U.S. residents 90 90 90 90 90 90 90 90 90 90 Excluding unauthorized immigrants 93 92 93 93 93 93 93 93 93 93 Sources: Congressional Budget Office; staff of the Joint Committee on Taxation. Estimates are based on CBO’s March 2016 baseline, adjusted for subsequent legislation. They reflect average enrollment over the course of a year among noninstitutionalized civilian residents of the 50 states and the District of Columbia who are under the age of 65, and they include spouses and dependents covered under family policies. For these estimates, CBO and the staff of the Joint Committee on Taxation consider individuals to be uninsured if they would not be enrolled in a policy that provides financial protection from major medical risks. Numbers may not add up to totals because of rounding. * = between -500,000 and 500,000. a. Includes noninstitutionalized enrollees with full Medicaid benefits. b. Includes coverage under the Basic Health Program, which allows states to establish a coverage program primarily for people whose income is between 138 percent and 200 percent of the federal poverty level. To subsidize that coverage, the federal government provides states with funding that is equal to 95 percent of the subsidies for which those people would otherwise have been eligible.