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CBO Confirms Devastating Consequences of the House-passed American Health Care Act

On May 24, 2017, the Congressional Budget Office (CBO) released an updated cost estimate for the American Health Care Act passed by the U.S. House of Representatives on May 4, 2017, adjusting their analysis for last minute amendments to H.R. 1628. (See ITUP summary of AHCA here.)

The March 23, 2017 CBO analysis of a previous version of H.R. 1628 estimated that more than 24 million Americans would become uninsured under the AHCA compared to current law under the Affordable Care Act (ACA). CBO estimates that the amended bill results in slightly more people with health insurance but would still leave more than 23 million Americans uninsured.

CBO estimates:

  • By 2018, 14 million more people would be uninsured because of AHCA and by 2026 a total of 51 million people under age 65 would be uninsured, compared to 28 million under the ACA.
  • According to CBO, the AHCA would disproportionately increase the number of uninsured among older people with lower incomes; people between 50 and 64 years of age with incomes below 200 percent of the federal poverty level (FPL).
  • AHCA as passed by the House would reduce federal deficits by $119 billion, down from $337 billion in the prior version. The savings come primarily from cuts to Medicaid and the replacement of ACA premium tax credits with less generous tax credits adjusted only for age. ACA tax credits are adjusted by age, geography and income to reflect different premiums by region and to provide more assistance to lower income individuals.
  • Health insurance premiums would be lower, but CBO attributed the lower premiums, in large part, to coverage with lower benefits, covering a smaller proportion of an individual’s health care costs.

CBO repeated its conclusion that under ACA health insurance markets remain relatively stable, although in some areas of the country there is more limited participation of insurers. After considering the impact of state waivers available in the AHCA, CBO concludes that markets would also be relatively stable in states that do not apply for waivers or in states that obtain waivers from the community rating provisions of the ACA (allowing insurers to charge individuals higher premiums based on health status).

However, markets in states that obtain waivers to both the community rating provisions, and the ACA requirement of essential health benefits, would start to become unstable in 2020. CBO estimates that about one-sixth of states would obtain the dual waivers.

According to CBO, waiver of community rating would result in a rise in premiums over time for those with preexisting or newly acquired medical conditions.  These individuals would ultimately be unable to purchase comprehensive coverage on the individual market, if they are able to purchase coverage at all. Additional funding in the AHCA to help reduce premiums would be insufficient, according to the CBO (MacArthur amendment). The ACA protections, such as the requirement to offer and renew coverage regardless of pre-existing conditions, retained in the AHCA, would be meaningless for these individuals because affordability of coverage would once again become the issue.

In states that secure waivers of the ACA essential health benefits (EHB) requirement, some people in individual coverage would experience substantial increases in what they spend for health care in the form of out-of-pocket costs.  CBO estimates that benefits likely to be excluded in states with the EHB waiver include maternity care, mental health and substance abuse benefits, rehabilitative and habilitative services, and pediatric dental. CBO also points out the ACA ban on annual and lifetime benefit limits would not apply to health benefits no longer defined by states as essential.

The latest CBO analysis confirms that the AHCA would lead to millions more uninsured compared to the ACA. Although much of the federal debate surrounding AHCA focused on insurance markets and coverage for individuals with pre-existing health conditions, much of the federal savings and the increase in the uninsured follows from the dramatic cuts to the Medicaid program ($880 billion) under the AHCA.  The President’s just released budget for 2018 continues and adds to the reductions in federal Medicaid spending.

For more about what’s at stake for California from the proposed Medicaid cuts, see the latest issue of ACA Watch, “The ACA and Medi-Cal: What’s at Stake?

Click here for the ITUP summary of the President’s proposed 2018 federal budget.

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