May 30, 2017

CBO Scored the Latest Version of the AHCA

Find out how the latest version affects you.

by Caitlin Martin

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Photo Credit: Mobllus In Moblll

CBO Reports and Why They Matter

The Congressional Budget Office (CBO) is an independent federal agency that analyzes legislation for Congress in terms of economic and budget impact. While it has been criticized recently for missing the mark on estimates of the Affordable Care Act and how many people would be insured under it — they predicted about 18% more people would enroll in the exchanges than actually did. In that report they were correct on an overall surge in coverage and about employer-sponsored coverage. The CBO is generally considered accurate and is both non-partisan and transparent. The primary function of the CBO is to project the cost of legislation and federal programs. You can learn more about the CBO here:

What Is The Congressional Budget Office (CBO)

And here:

Introduction to CBO

CBO Estimates Impact on Cost, Coverage, and Health Insurance Premiums

**Cost
**It is estimated that the latest version of Republican healthcare would reduce spending by $1.11 trillion between now and 2026. It will reduce tax revenues by $992 billion resulting in $119 billion in deficit reduction. This deficit reduction is $32 billion less than the previous version and $218 billion less than the original version.

**Coverage
**The CBO estimates that in 2018, 14 million more people would be uninsured under the Republican plan than under existing law. This number would reach 19 million in 2020 and 23 million in 2026. In 2026, the CBO estimates that 51 million Americans under 65 would be uninsured — under current law that number is 28 million.

Health Insurance Premiums
Under the new law, premiums are estimated to increase until 2020 compared to current law. In 2018 the increase is about 20% on average. In 2019, the increase is about 5% on average — this is when the funding provided by the new act to reduce premiums kicks in.

Starting in 2020, the picture is more complicated and will vary from state-to-state depending on decisions made at the state level regarding waivers, how they are implemented, and what share of the funding was applied to premium reduction. The CBO project three possible approaches that could be taken by state:

  • About half of our population lives in states that are unlikely to request waivers. In those states, premiums would be about 4% lower in 2026 than under the current law. These changes would vary for different age groups with younger adults seeing decreases and older adults seeing increases.
  • About a third of our population lives in states that would opt to make moderate changes to market regulations. Assuming these changes are related to essential health benefits, premiums would be about 20% lower in 2026 than under current law, although benefits such as maternity care, prescription coverage, and mental health care could be removed altogether from coverage.
  • About one-sixth of our population lives in states that would obtain waivers for both essential health benefits and community rating. This would allow premiums to be set on the basis of an individual’s health status. Premiums would be lower because a younger and healthier population would be buying insurance and plans would be expected to cover a smaller percentage of healthcare costs. Less healthy people in these states, including those with pre-existing conditions, would face extremely high premiums (and ever-increasing) premiums.

Some Uncertainty Exists in Report

The CBO warns that it is difficult to predict how federal agencies, states, insurers, employers, individuals, doctors, hospitals, and other players in the healthcare landscape would respond to the changes made by the legislation. The CBO worked to be as accurate as possible by developing estimates in the middle of the distribution of potential outcomes.

**What’s missing?
**This legislation is considered “major” and triggers the requirement that the estimate include the budgetary impact of its effects on the economy. Due to limited time to produce the report, the CBO was unable to quantify these potential effects. Read a summary of the report here:

H.R. 1628, American Health Care Act of 2017

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