CBO Scores the American Health Care Act Passed by the House - Cuts Deficit and Number of People Insured

Legal Alert

May 25, 2017

The Congressional Budget Office (CBO) has just released its estimate of the impact of the American Health Care Act (AHCA) passed by the U.S. House of Representatives on May 4^th of this year. (As a reminder, the AHCA was passed by the House before the nonpartisan CBO could determine its impact.) According to the CBO, when compared to the current Affordable Care Act (ACA), the AHCA would leave 23 million more people uninsured while reducing the cumulative federal deficit by $119 billion over the next ten years. The CBO also estimates that insurance premiums under the AHCA will increase by an average of 20% in 2018 and 5% in 2019. However, in 2020, the AHCA allows states to begin receiving waivers to allow health insurers in their states to sell less comprehensive coverage plans and impose higher premiums on some individuals who let their health coverage lapse. This means that average premiums will differ depending on how many states obtain waivers, so some states may see average premiums drops by up to 30%. After reviewing the report, House Speaker Paul Ryan (R., Wis.) stated that "this CBO report again confirms that the American Health Care Act achieves our mission: lowering premiums and lowering the deficit."

The AHCA has now moved to the Senate, where the CBO numbers will provide fuel for the fight between the competing factions of the Senate Republicans, the centrists, who are concerned about the higher number of uninsured, and the conservatives, who want to push for lower annual premiums. In the Senate, it appears that how to handle the Medicaid program for low-income Americans is also a hot button issue. As background, under the ACA, states could choose to expand Medicaid coverage to include additional groups, such as nondisabled adults. 20 Senate Republicans represent states that expanded Medicaid. Many of these Senators want to keep these groups covered by Medicaid, but the current AHCA cuts back on Medicaid expansion. Other Republican Senators want more generous tax credits for older Americans who will have higher premiums under the current AHCA bill. A working group of 13 Senate Republicans is currently pushing hard to have a proposed bill before Congress' August recess. As the Senate Democrats appear united in their opposition to the AHCA, 50 out of the 52 Senate Republicans will need to vote to approve its version of the AHCA. As suggested above, the Senate bill likely will differ significantly from the AHCA passed by the House. This will require getting "buy-in" on the changes from the House Republicans, which may be a difficult task. The bottom line is the process to "repeal and replace" the ACA is continuing, although the final contours of the AHCA are yet to be defined. Stay tuned for further updates.

For more information on this topic, contact your Health Care counsel at Smith, Gambrell & Russell, LLP.