AHCA CBO Score Analysis

 

Yesterday, the Congressional Budget Office released today its updated cost estimate of the American Health Care Act, as passed the House on May 4, 2017.

Coverage Numbers

The House-passed bill would result in 14M more uninsured individuals in 2018, rising to 23M more uninsured by 2026. This estimate for 2018 is the same, whereas 2M fewer individuals would be uninsured in 2020, and 1M fewer in 2026. This is due to lower premiums for nongroup coverage than in the previous version of the House bill. Policies would offer fewer benefits and would increase out-of-pocket costs for individuals who needed services.

Overall, 51M total would be uninsured in 2026 compared with 28M uninsured under current law.

Savings

The bill would reduce the deficit by $119 B over ten years. Due to additional spending added to the final version of the bill, the total amount of deficit reduction dropped by $ 32B. While the House-passed bill achieves the minimal savings of $2B in order to meet the requirements of reconciliation, Senate reconciliation rules also require that the final Senate bill must achieve at least as much money as the House bill. As Senate Republicans have signaled their interest in changing portions of the AHCA, such delaying Medicaid changes or plussing up financial assistance to purchase health insurance, any additional spending will need to be offset by other changes that save money.

Premiums

AHCA’s impact on premiums has been a hot topic of debate. The House-passed bill would increase average premiums in the nongroup market before 2020 and lower average premiums after that. In 2018, premiums would increase by 20 percent, and in 2019, premiums would increase by 5 percent. By 2026, average premiums would decrease for individuals. The average amount of the decrease would depend on where the individual lives.

CBO estimates that half the U.S. populations would live in states that would NOT request waivers from the essential health benefits rules or the community rating rules. Individuals in these states would see a 4 percent decrease in their premiums. A third of the population would live in states that would moderate changes to the market rules. Those individuals would see a 20 percent decrease in their premiums. One-sixth would live in states that would make significant changes in the rules. CBO estimates average premiums would decrease more than 20 percent because a younger and healthier population would be purchasing insurance and essential health benefit changes would cause plans to cover a smaller amount of health care costs.

Previous versions of the House bill would have caused premiums would increase by 15-20 percent in 2018 and 2019. By 2026, average premiums would decrease by 10 percent.

Medicaid

CBO did not project any changes in Medicaid from previous estimates of the bill. This lack of change is due to the fact that the final bill did not make significant changes to the previously scored version of the bill (the March 23rd version). Medicaid coverage would drop by 5M individuals in 2018, up to 14M less receiving Medicaid coverage in 2016. The cost savings to the federal government for the Medicaid provisions would be $834B.

Other Significant Comments

  • Enrollment in the nongroup market would decrease by 1M in 2018 and 3M in 2026.
  • Enrollment in the employment based coverage would increase by 1M in 2018 and 4M in 2026.
  • While CBO estimates that the number of states seeking waivers would increase from previous versions of the bill, the agency did not attempt to predict the manner in which states would use the money.
  • CBO estimates a net increase in of $43B in Medicare spending due to changes in Disproportionate Share Hospital payments.

What’s Next

While the Senate Republican working group continues their efforts to analyze and propose changes to the AHCA, they will now be able to working with CBO to estimate the cost of any proposed changes. They continue to need the input of the Senate parliamentarian to determine any if parts of the House are not allowed under the Byrd Rule, requiring those policies to be eliminated from the Senate version of the bill. With both the Senate and House heading out of Washington for the Memorial Day break, much of the impact of today’s CBO announcement will be felt more immediately in town halls and media appearances, rather than at the negotiating table in Senate.