23M fewer would have health insurance under AHCA, CBO projects

The House GOP's bill to repeal and replace large portions of the Affordable Care Act (ACA) would increase the number of U.S. residents without insurance by 23 million by 2026 and reduce the federal deficit by $119 billion over a decade, according to a CBO analysis released Wednesday.

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Background

CBO on March 23 estimated that an earlier version of the AHCA would have increased the number of U.S. residents without insurance by 24 million by 2026 and would have reduced the federal deficit by $150 billion over a decade.

But those projections were made before House Republicans modified the AHCA to include two new amendments:

• One, known as the MacArthur amendment, that would allow states to apply for waivers to opt out of the ACA's essential health benefits, let insurers impose health status underwriting on individuals who do not maintain continuous coverage, and allow insurers to charge older enrollees more for coverage; and
• Another that adds $8 billion in funds to reduce health costs for people with pre-existing medical conditions.

The House voted to approve the bill on May 4, shortly after the amendments were added and before the final CBO score.

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AHCA's effect on the uninsured population

CBO projected that under the House-approved AHCA, 14 million fewer people would be insured next year, compared with current law. By 2026, CBO estimated that 51 million people under age 65 would be uninsured, compared with 28 million who would be uninsured under the ACA.

In particular, CBO estimated 14 million fewer people would be insured by Medicaid in 2026, a reduction of about 17 percent from current enrollment projections. CBO also estimated that the AHCA would reduce federal funding for Medicaid by $834 billion by 2026.

Premiums and plan quality

CBO's estimated that in 2018 and 2019, premiums under the AHCA would increase by an average of about 20 percent and 5 percent, respectively, compared with projections under current law. However, beginning in 2020, when the AHCA's waiver amendment would take effect, the law's effects on premiums would vary depending on a person's geographic location and age, the Wall Street Journal reports.

CBO noted that projections of individual states' decisions regarding waivers "would be highly uncertain." As such, CBO estimated the probabilities of different outcomes related to the waivers, but stated that the estimates are not "explicit predictions about which states would make which decisions."

For instance, CBO estimated that 50 percent of the U.S. population would live in states that do not request the waivers provided by the MacArthur amendment. In those states, CBO said average premiums would be about 4 percent lower in 2026 than under current law. However, those premiums would vary by age because the AHCA, beginning in 2019, widens the current age-band ratio, allowing insurers to charge older enrollees up to five times more than younger enrollees.

CBO estimated about one-third of the U.S. population lives in a state that would waive the ACA's essential health benefits, resulting in premiums that average 20 percent lower than current law in 2026 as younger and healthier adults purchase less comprehensive coverage. Again, however, CBO said those premium reductions could range widely depending on age and location.

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About one-sixth of the U.S. population, CBO estimated, would live in a state that would waive both the ACA's essential health benefits and its community ratings requirements, which require insurers to charge healthy and sicker individuals about the same amount. CBO said it was unable to estimate how much lower premiums would be for healthier individuals in those states. It said, however, that over time, sicker individuals "would ultimately be unable to purchase" comprehensive coverage at premiums comparable to today's prices, "if they could purchase it at all."

The report predicted that benefits most likely to be excluded in essential health benefit waiver states would include coverage for maternity, mental health, and substance misuse services. As such, CBO said out-of-pocket costs for those services "could increase by thousands of dollars in a given year for the nongroup enrollees."

Overall, CBO said the AHCA's higher age-band ratio and new tax credit structure would increase net premiums for older people with lower incomes. After tax credits, CBO estimated a typical 64-year-old with an annual income of $26,500, would have an average net premium of about $16,000 a year by 2026, compared with $1,700 under current law.

Effects on deficit

Overall, CBO projected the AHCA would reduce the federal deficit by $119 billion over a decade, clearing the $2 billion savings bar needed to pass under the Senate's reconciliation rules.

However, the Senate also will need to consider the bill in two parts—one by the Senate Finance Committee and one by the Senate Education, Health, Labor, and Pensions (HELP) Committee. Under Senate rules, each section of the bill must independently reduce the deficit by at least $1 billion over 10 years to be eligible to pass via reconciliation. However, according to Vox, it is not yet clear if the bill clears that hurdle because senators could disagree on which provisions fall under which committee's jurisdiction.

Reaction

House Speaker Paul Ryan (R-Wis.) in a statement said, "This CBO report again confirms that the American Health Care Act achieves our mission: lowering premiums and lowering the deficit."

But Democrats and some Senate Republicans criticized the AHCA's implications. Senate Minority Leader Chuck Schumer (D-N.Y.) said, "The report makes clear that Trumpcare would be a cancer on the American health care system."

Sen. Bill Cassidy (R-La.) said, "Congress' focus must be to lower premiums with coverage which passes the Jimmy Kimmel Test. The ACHA does not."

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The updated score also did little to quell industry stakeholders' concerns. AARP in a statement said "the CBO analysis served as another example that the House legislation would make harmful changes to our current health care system." The group criticized the bill for "putting a greater financial burden on older Americans" and "eroding [their] ability to live independently."

American Hospital Association President and CEO Rick Pollack in a statement said the latest CBO score "reinforce[s]" the organization's "deep concerns" with the bill. He added, "We cannot support legislation that the CBO clearly indicates would jeopardize that coverage for millions of Americans."

Senate prospects

CBO's findings are likely to guide senators who are working on their own plan to repeal and replace the ACA, the Journal reports.

Senate HELP committee chair Lamar Alexander (R-Tenn.), said, "It's informative to know the estimated impact of the House health care bill—but the Senate is writing its own bill, which will receive its own score from the Congressional Budget Office before the Senate votes."

McConnell on Wednesday signaled it will take time to reach an agreement. He said, "I don't know how we get to 50 [votes] at the moment. ... But that's the goal."

(Pear, New York Times, 5/24; Sanger-Katz, "The Upshot," New York Times, 5/24; Howell, Washington Times, 5/24; Cancryn/Ferris, Politico, 5/24; Scott, Vox, 5/24;  Fram/Alonso-Zaldivar, AP/Washington Times, 5/24; Armour/Peterson, Wall Street Journal, 5/25; Carney, The Hill, 5/24;  Congressional Budget Office report, 5/24; Scott, Vox, 5/24; House Speaker release, 5/24; AARP release, 5/24; American Hospital Association release, 5/24).