Perhaps the high fives in the Rose Garden of the White House a few weeks ago may have been a bit premature. On Wednesday, May 24, 2017, the non-partisan Congressional Budget Office (CBO) released its analysis of the revised American Health Care Act (AHCA), and the review contained positive budgetary news, but the overall impact of the bill on health insurance in the country is a larger question.
First, the budgetary news. Because the Senate has chosen to pass healthcare reform legislation through the reconciliation process, any bill ultimately passed by the Senate must demonstrate that it has a zero to positive impact on the federal budget. The CBO found that the original bill from March 2017, would have ensured 24 million fewer people, but would save $150 billion taxpayer dollars. The revised bill, by contrast, will ensure 23 million fewer individuals but save $119 billion taxpayer dollars, according to the CBO.
The potential impact on the country, however, is the subject of a significant debate that will influence where the bill goes from here. As mentioned above, the CBO states that after a decade, AHCA would insure 23 million fewer people than the current law, the Affordable Care Act (ACA). The bill could also negatively impact many people with pre-existing conditions, who are currently protected under the ACA. The CBO indicated that some citizens would see lower insurance premiums, but many others, including those with pre-existing conditions, may not be able to afford health insurance, due to significantly higher premiums.
For example, a 64 year-old who makes $26,500 annually would pay $13,600 – $16,100 per year in insurance premiums. Under the current law, that person pays approximately $1,700 per year in premiums. The current law limits what insurers can charge and provides subsidies to the taxpayer, so insurance is more affordable.
Also, under the AHCA, states could choose to opt-out of the ACA’s ‘essential health benefits’ requirement, where insurers must cover certain categories including hospital stays, maternity and newborn care, as well as prescription medications. The CBO indicated that approximately 1/6 of the nation’s population, or approximately 51 million people, could see significantly reduced insurance benefits as a result.
Additionally, the revised AHCA cuts Medicaid spending by $800 billion, causing 14 million fewer people to be enrolled in 10 years. This savings comes from repealing the ACA taxes on high-income earners and medical companies. It also halts the penalty for those who do not purchase insurance and for employers who do not provide insurance coverage to their employees. These taxes and penalties helped fund the Medicaid expansion under the ACA.
The Senate has begun work on its own healthcare legislation. All indications are that the upper chamber of Congress will take a more systematic approach to drafting legislation. The CBO score of the revised AHCA will undoubtedly add fuel to a summer of meetings, hearings, and soundbites from Washington, D.C. We will continue to monitor this developing story and publish updates as necessary.