The Congressional Budget Office (CBO) released its analysis of the budgetary effects of the American Health Care Act (AHCA) legislation introduced in the House of Representatives last week. The CBO analysis, also known as “scoring,” examines federal revenues and expenditures as well as the bill’s effects on numbers of people insured and the cost of insurance. The news isn’t as bad as was feared, but it’s bad enough to build Congressional opposition from both the political right and left.
Overall, the AHCA (bill text) will save the federal government about $337 billion over 10 years, mainly by curtailing Medicaid expansion, changing how federal Medicaid funds are allocated to states, and eliminating the current Affordable Care Act’s (ACA) individual and business insurance mandates. Federal taxes are estimated be reduced by $883 billion and spending reduced by $1.2 trillion. CBO predicts that the number of uninsured people under the AHCA will double over the next ten years relative to the number uninsured under the ACA, with a disproportionate of the newly uninsured being those aged 50 to 64 with incomes at 200 percent of the federal poverty level or less. Currently, about 10 percent of the U.S. population is uninsured; under the AHCA, that number will increase to between 15 to 19 percent by 2026. In other words, CBO estimates in 2026 Obamacare would leave 28 million people uninsured; the AHCA would leave 58 million people uninsured.
Insurance costs would increase between 15 and 20 percent from 2017 to 2020 relative to ACA-based estimates, but after 2020 the AHCA’s tax credit-based individual incentives and greater latitude for insurance companies to diversify product offerings (including the return of stripped-down coverage options and increased use of the much-touted Health Savings Account, or HSA) are forecast to make insurance 10 percent less costly than it would be under the ACA.
To cushion the impact on health care providers and insurers, so-called “disproportionate share hospitals” that serve large numbers of uninsured and Medicare patients will see cuts in federal subsidies under the ACA restored by the AHCA. The CBO report states: “The cuts are currently scheduled to be $2 billion in 2018 and to increase each year until they reach $8 billion in 2024 and 2025.” In addition, community health centers would receive an additional $422 million, or 4.2 percent in additional funding, for 2017. So-called “patient and state stability fund grants” will provide $10 billion a year in federal funding between 2018 and 2026 “for a variety of purposes,” including subsidizing the cost of insuring high-risk, high-usage patients in the individual market.
Under this plan, as was expected, Planned Parenthood has been targeted for federal defunding.,. Curiously, CBO interprets the defunding as happening for only “a one-year period following enactment” rather than the expected GOP effort to pass a permanent ban on Medicaid reimbursement to Planned Parenthood clinics. It is a bit odd to look str