On March 13th, the Congressional Budget Office (CBO) released a report (Click Here to Download the Report) providing its estimates of the impact the American Health Care Act (AHCA) would have on federal spending, the health insurance market, and the number of Americans with health care coverage. Below is a top line summary of the report, as well as the AMA’s statement in response.
Coverage Estimates
- 14 million fewer people would have health insurance coverage in 2018.
- 24 million fewer people would have health insurance coverage in 2026.
- 52 million people would be uninsured in 2026 compared with 28 million under current law.
- 14 million fewer people will be enrolled in Medicaid in 2026.
- 9 million fewer would be enrolled in the individual market in 2020 than under current law; that number would fall by 2026 to 2 million less than current law.
- 2 million people would lose employer coverage compared to current projections for 2020.
- 7 million people would lose employer coverage by 2026.
Medicaid
$880 billion reduction in Medicaid spending over the 2017-2026 period (rollback expansion and lower payments to states through per capita caps).
CBO noted that “states would need to decide whether to commit more of their own resources to finance the program at current law levels or whether to reduce spending by cutting payments to health care providers and health plans, eliminating optional services, restricting eligibility for enrollment or (to the extent feasible) arriving at more efficient methods for delivering services.”
Subsidies to low/moderate income individuals/families
$637 billion in savings by eliminating ACA subsidies, offset by $361 billion in spending for new tax credits, thus $312 billion net reduction in subsidies, note that new tax credits are only age adjusted so impact of subsidy reduction is heightened for low-income individuals.
In general, tax credits for lower income people would be less under AHCA than current law while they would be higher for upper income people, especially those with incomes about 400% of the Federal Poverty Level.
Premiums
Premiums would rise for the first two years and then decline after that to levels below expected under current law (attract more younger people into risk pools).
Premiums are also expected to decrease due to the elimination of the actuarial value equivalent requirement.
Older individuals would pay more for premiums.
While older people receive a larger tax credit, premiums would be up to 5 times higher than younger individuals (currently 3 times).
Impact on Deficit
$337 billion reduction in deficit spending over ten year period.
AMA Statement on CBO Estimates of Health Reform Bill
https://www.ama-assn.org/ama-statement-cbo-estimates-health-reform-bill
