March 14, 2017

24M more would be uninsured under House GOP bill, CBO estimates

Daily Briefing

    The House GOP plan to replace the Affordable Care Act (ACA) would increase the number of U.S. residents without insurance by 24 million by 2026, while reducing federal budget deficits by $337 billion over a 10-year period, according to a Congressional Budget Office (CBO) analysis.

    Background: Here's the House GOP plan to repeal, replace the ACA

    According to the New York Times, CBO's projections could make the bill a harder sell to some critics, but they also provide talking points for House GOP leaders who can tout the bill's effects on the U.S. deficit and federal spending.

    Details of CBO's projections

    Uninsured population would rise by 24 million

    Under the bill, CBO project, 14 million more U.S. residents would lack insurance in 2018, largely because the bill would repeal of the ACA's individual and employer mandates. That number would climb to 24 million in later years when the bill's cuts to Medicaid took effect. Older, low-income U.S. residents would be disproportionately affected by the coverage losses.

    CBO also projected that seven million fewer U.S. residents would be insured through their employer by 2026 under the bill because of its provisions to repeal the individual and employer mandates.

    In total, CBO projected 52 million would be uninsured in 2026—a nearly 86 percent increase compared with current law.

    According to Politico, CBO's estimate suggests more U.S. residents would be uninsured under the House GOP bill than before the ACA was enacted. Data from a National Health Interview Survey showed in 2010 a total of 48.3 million were uninsured.

    Federal Medicaid spending would fall by 25 percent

    CBO in the report stated that under the House GOP bill "some states would discontinue their expansion of eligibility" for Medicaid, and federal spending per beneficiary would be capped. As a result, CBO projected that by 2026 federal Medicaid spending would decline by $880 billion or 25 percent, compared with projections under current law.

    Further, the number of Medicaid beneficiaries would fall by 17 percent, or about 14 million fewer beneficiaries, according to CBO.

    Average premiums would jump 15 percent compared to the ACA—but fall in future years

    CBO said average premiums for people buying insurance on the individual market would increase by 15 to 20 percent in 2018 and 2019, compared with current law. But, after 2019, premiums would be lower than under current law—ultimately about 10 percent lower by 2026.

    Out-of-pocket costs would rise for many—but fall for some younger patients

    Further, the CBO said that for many consumers, deductibles and out-of-pocket costs would be higher —in part because the bill would allow insurers to sell less generous plans and, beginning in 2020, would repeal the ACA's cost-sharing subsidies for low-income individuals. According to CBO, the effect of those changes would vary significantly among different age groups because the House bill would allow insurers to charge older U.S. residents up to five times more for coverage than younger individuals.

    For instance, CBO estimated that under the ACA, a 64-year-old with an annual income of $26,500 with an insurance policy that costs $15,300 would receive a $13,600 tax credit, leaving the consumer responsible for $1,700. Under the House GOP bill, those out-of-pocket costs would increase to $14,600—a 750 percent increase—both because health insurers would be able to charge older people more, raising the premium to $19,500, and because the tax credit would be lower, about $4,900.

    But for some individuals, the House GOP plan would reduce out-of-pocket costs. For instance, a 21-year-old with the same annual income and an insurance policy that costs $5,100 under current law would be eligible for a $3,400 tax credit and responsible for the remaining $1,700. Under the House bill, those out-of-pocket costs would decrease to $1,450.

    Planned Parenthood provisions could reduce access to care

    CBO also projected that a provision to defund Planned Parenthood for one year would result in about $178 million in savings in 2017. However, those funding cuts would mean about 15 percent of U.S. residents who "would probably reside in areas without other health care clinics or medical practitioners would lose access to care," CBO said.

    The budget office added that the reduced access to care would increase births "by several thousand" and as a result Medicaid spending would rise $21 million in 2017 and $77 million between 2017 and 2026. All told, the provision would reduce Medicaid spending by $156 million over the next decade.

    Individual insurance market would remain stable

    CBO projected that the tax credits included in the House GOP's bill "would generally be less generous" than the ACA's federal subsidies. Still, the individual insurance market would not collapse because of other provisions that would "lower average premiums enough to attract a sufficient number of relatively healthy people to stabilize the market."

    Trump administration criticizes report; Democrats raise alarms

    The Trump administration dismissed the estimates, suggesting that the report offered an incomplete picture of the bill. HHS Secretary Tom Price said, "It didn't look at the regulatory reforms that we're going to put into place. It didn't look at the state innovation grants. It didn't look at the flexibility that we're going to allow the states."

    The House GOP has an ACA repeal bill—but do they have the votes?

    House Speaker Paul Ryan (R-Wis.), meanwhile, said he was "encouraged" by the report's projections, noting that the analysis found the House GOP bill would "provide massive tax relief, dramatically reduce the deficit, and make the most fundamental entitlement reform in more than a generation." But he added, "I recognize and appreciate concerns about making sure people have access to coverage."

    According to the Times, CBO's analysis appeared to do little to reassure Republican lawmakers who were already uneasy about the bill. For instance, Sen. Susan Collins (R-Maine) said the report was "cause for alarm" and "should prompt the House to slow down and reconsider certain provisions of the bill."

    Democratic lawmakers said the report only strengthened their opposition to the bill. Senate Minority Leader Chuck Schumer (D-N.Y.) said, "The CBO score shows just how empty the president's promises, that everyone will be covered and costs will go down, have been."

    What 81 health care CEOs think about the ACA debate

    Reps. Frank Pallone (D-N.J.) and Richard Neal (D-Mass.), the top Democrats on the House committees overseeing health care, in a statement said, "This report also reaffirms that the Republican plan does absolutely nothing to control costs or protect consumers," adding, "Instead, it guts Medicaid, raises costs on older Americans, and pulls billions of dollars from Medicare, all in order to pay for tax cuts for the rich."

    Industry groups remain wary

    Several industry stakeholders who already had expressed concern about the legislation said the CBO report strengthened their objections.

    American Hospital Association President Rick Pollack in a statement said, "The CBO number reinforces our concerns about the importance of maintaining coverage for those vulnerable patients who need it," adding, "We cannot support a bill that the CBO and others clearly indicate would reduce coverage for so many people."

    America's Essential Hospitals in a statement called the projected coverage losses in the CBO analysis "unacceptable."

    In a release, AARP EVP Nancy LeaMond said the projections reaffirm the organization's concerns about the House GOP bill, which CBO found would "disproportionately" place the biggest financial burdens on older U.S. residents.

    Ceci Connolly of the Alliance of Community Health Plans called the CBO score "extremely troubling," adding, "No one wants to see America move backward."

    (Kaplan/Pear, New York Times, 3/13; Scott, STAT News, 3/13; AP/Modern Healthcare, 3/12; Cheney et al., Politico Pro, 3/13 [subscription required]; Williams/Mershon, CQ News, 3/13 [subscription required]; Pradhan et al., Politico, 3/13; Nather, "Vitals," Axios, 3/14; Stein, Vox, 3/13; AHA News Now, 3/13; AARP release, 3/13; America's Essential Hospitals release, 3/13).

    What to know about the House GOP's repeal and replace plan

    House Republicans just released their proposal to repeal and replace portions of the Affordable Care Act. This session will provide participants with an overview of key aspects of the proposal, including a look at possible changes to the individual insurance market and Medicaid program.

    In addition, we will provide our early analysis on the impact of the proposal on providers and thoughts on how providers should be preparing for changes to the ACA.

    Register now

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