CBO Finds House Healthcare Bill Saves $119 Billion, Would Cause 23 Million to Lose Coverage

Congressional Budget Office

Twenty-three million Americans would lose coverage over 10 years under the healthcare bill the House of Representatives passed May 4, 2017, based on an updated score released today by the (CBO).

CBO and the Joint Committee on Taxation estimate that through 2026, the House bill would save $119 billion; provisions dealing with health insurance would reduce the deficit by $783 billion, and those outside coverage would increase the deficit by $664 billion, mostly reducing revenues.

After emotional debate and a 217-213 vote in the House, the Senate formed a working group to overhaul the House version of the AHCA, which would scrap large portions of the Affordable Care Act (ACA). The House voted before CBO scored the AHCA with all its amendments, causing House Speaker Paul Ryan to wait before forwarding it to the Senate.

Because Congress is using the budget reconciliation process to replace the ACA—counting on just 51 votes in the Senate—any overhaul of former President Barack Obama’s signature law must pass certain tests; among them, the bill must save $2 billion over the next decade.

A March 13, 2017, CBO score, released when the bill had cleared House committees but before a floor vote, said the AHCA would cause 24 million Americans to lose coverage by 2026 while cutting the deficit by $337 billion. Most of the savings would come from an overhaul of Medicaid and an end to the system of income-based subsidies for buying individual coverage on the exchanges. A subsequent score based on early amendments reduced the savings to $150 billion over 10 years.

The first CBO score created shockwaves among moderate House Republicans, while many conservatives, known as the Freedom Caucus, said the bill did not go far enough to peel away ACA regulations. Republicans could not muster the votes for a floor vote on the original bill, set for March 24, 2017. Then, US Representative Tom MacArthur, R-New Jersey, negotiated the amendment to let states ask HHS for waivers from the ACA's essential health benefits, such as pregnancy and mental health coverage, and community rating, which shields those with pre-existing conditions from high premiums. In return for waivers, states must create high-risk pools to cover these consumers, and the AHCA includes $138 billion to subsidize the funds. While the MacArthur Amendment put the AHCA over the top in House, it appears to have cost its author his leadership position in the moderate Tuesday Group.

Since 2010, the law known as Obamacare has expanded Medicaid and extended coverage to 21 million Americans who previously lacked it. But the ACA has suffered from imbalances in the risk pool, as well as Congress’ decision to not fully fund mechanisms to cover unforeseen costs in the early years of the exchanges. Young, healthy people did not enroll on the exchanges in numbers large enough to offset the costs from enrollees with years of unmet medical need. Thus, insurers have left the market in many areas, and this trend has escalated in recent months due to the uncertainty over whether President Donald Trump will continue subsidies that help low- and moderate-income families purchase coverage.

This week, the Trump administration told a federal court it would delay for 90 days a decision on ending the subsidies. But the ongoing uncertainty is enough to cause US Senator Lamar Alexander, R-Tennessee, to suggest short-term stabilization measures for the ACA while Congress works out a long-term plan for healthcare, according to Roll Call.

Sparsely populated counties in states without Medicaid expansion are having a particularly hard time attracting and retaining insurers on their exchanges, and the entire state of Mississippi may lack an exchange insurer for 2018.

The CBO report suggests, if indirectly, that ending subsidies for people of modest means would alter healthcare decision making. CBO notes that insurers and consumers alike make choices based on market stability, and the “likelihood of premiums not rising in an unsustainable spiral.” Insurers would not participate if only those who bought coverage had costs so high that the business would be unprofitable, CBO states.

CBO portrayed a picture of a health insurance market that could be starkly different depending on where a person lives, and market stability could grow worse after 2020. About one-sixth of the population lives in areas likely to seek waivers involving both essential health benefits and community rating, which would mean premiums would be set based on health status, according to the CBO findings. Premiums would vary significantly, "and less healthy people would face extremely high premiums, despite the additional funding that would be available," the report finds.

For healthy people who buy coverage in these states, premiums would drop, perhaps by as much as 30% for the young. But for those who are sick, "the variation around that average would be very large." The CBO notes that the current ban on lifetime limits not defined as "essential" by a state would no longer apply; this could include expensive prescription drugs. The CBO predicts that out-of-pocket payments for those with relatively high healthcare spending would increase in states that obtain both permitted waivers.