Uninsured Up 24M Under ACA Repeal-Replace Bill, CBO Says

Disclosures

March 13, 2017

The number of uninsured Americans would increase by 14 million in 2018 and 21 million in 2020 under a House Republican bill to repeal and replace the Affordable Care Act (ACA), according to an analysis released today by the Congressional Budget Office (CBO).

The report, coproduced with the Congressional Joint Committee on Taxation (JCT), said most of the initial increase in the uninsured would result from the elimination of ACA's individual-mandate penalty for not obtaining insurance coverage. Some individuals who signed up for insurance to avoid the penalty, the CBO explained, would choose not to be insured absent the penalty. Other Americans would forgo insurance because a shrinking risk pool would drive up premiums in 2018 and 2019. Afterward, premiums in the individual and small-group insurance market would decline under the House bill, called the American Health Care Act (AHCA). One big contributor to lower premiums is the measure's Patient and State Stability Fund, which would give states $100 billion over 10 years to do things like offset the cost to insurers of high-dollar claims submitted by enrollees.

After 2020, the number of uninsured would continue to climb, hitting 52 million in 2026 — 24 million more than projected if the ACA were still on the books. Two of the major reasons are changes in Medicaid, the CBO said. One, the AHCA would undo the expansion of Medicaid eligibility — and the extra federal dollars that come with it — that 31 states chose under the 2010 healthcare reform law. Two, the House bill caps the federal contribution to state Medicaid programs on a per-capita basis. Overall, the House bill would cut federal spending on Medicaid by $880 billion from 2017 through 2026.

By eliminating the individual-mandate penalty, a similar penalty on employers, and various ACA taxes, the AHCA would reduce federal revenue by some $900 billion over 10 years. However, with federal outlays cut by roughly $1.2 trillion, the AHCA would reduce the federal deficit by an estimated $337 billion over that period, according to the CBO report.

More Healthcare Reforms to Come, Says House Speaker

Congressional Democrats seized upon the highly awaited CBO report as confirmation of their worst fears about the AHCA.

"The CBO score shows just how empty the president's promises, that everyone will be covered and costs will go down, have been," said Minority Leader Sen. Charles Schumer (D-NY) in a news release. "This should be a looming stop sign for the Republican repeal effort."

Schumer noted that the AHCA will force older Americans to pay more out of pocket for health coverage. Like the ACA, the AHCA offers Americans tax credits to buy a health plan, but unlike the ACA, it bases this subsidy on age, not on income. The CBO report spelled out how this approach would affect a 64-year-old person making $26,500 and buying private insurance in 2026.

Under the ACA, the 64-year-old's premium for the second-lowest-cost silver plan on an exchange would be $15,300. However, he or she would receive a $13,600 tax credit toward the premium based on income, making the out-of-pocket expense $1,700. The AHCA would give this same person a tax credit of $4,900 like all other 64-year-olds for a plan costing $19,500. The enrollee's share of the premium would be $14,600, or almost 760% higher than it would be with the ACA.

House Speaker Paul Ryan (R-WI), however, said the CBO report confirmed several positives about the bill — lower insurance premiums overall, improved access to high-quality and affordable care, and a smaller budget deficit on account of "massive tax relief." Ryan also cautioned that the report does not take into account additional healthcare reforms that Congress and the Trump administration will pursue to reduce costs and increase coverage options.

In an interview yesterday on the CBS TV program "Face the Nation," Ryan said he expected the CBO report to project an increase in the uninsured, but maintained that comparing the numbers under the ACA and the House bill was an apples-to-oranges affair. Unlike the ACA, the AHCA doesn't force anyone to buy a health plan, he said. "So there's no way you can compete with on paper a government mandate with coverage."

Tom Price, the secretary of the Department of Health and Human Services, told reporters today that the White House "strenuously" disagrees with the CBO report, and that the projected 14 million increase in the number of uninsured next year was "just not believable." His remarks echoed statements made by other Republicans in the run-up to the report's release that questioned the accuracy of any CBO estimate.

The CBO report appeared to contradict the claim made by Trump and Congressional Republicans that the ACA insurance exchanges, where individuals and small businesses buy private plans in the so-called nongroup market, were in a death spiral. The CBO and the JCT concluded that "the nongroup market probably would be stable in most areas under either current law or the [AHCA]." In regard to the ACA exchanges, the two agencies said, federal premium subsidies would insulate insurance shoppers from stiff premium increases and, together with the pressure exerted by the individual-mandate penalty, create "sufficient demand for insurance by people with low healthcare expenditures for the market to be stable."

Follow Robert Lowes on Twitter @LowesRobert

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