The Congressional Budget Office (CBO) may have dealt a knockout blow to Republican efforts to repeal and replace the Affordable Care Act (ACA) when it reported on May 24 that 23 million more Americans would be uninsured in 2026 if the House-passed bill became law.
CBO, a non-partisan policy research arm of Congress, is relied upon by senators and representatives of both parties for its objective analysis of legislative and budgetary issues.
The bill, the American Health Care Act (AHCA), which the House of Representatives approved May 4 by a vote of 217 to 213 with no Democratic support, will soon be considered by the U.S. Senate.
In arriving at its estimate of 23 million more people without health insurance in 2026, CBO identified three key provisions of AHCA that would take the greatest toll:
The single largest contributor to the increase in the number of uninsured would be the measure’s proposed cuts of some $880 billion over 10 years in the federal-state Medicaid program, which provides health insurance for low-income, disabled and elderly Americans. AHCA would both restructure Medicaid and roll back the eligibility expansion that was part of the 2010 health reform law.
CBO forecasts that by the year 2026 there would be 14 million fewer Medicaid enrollees than under current law.
AHCA proposes to make two big changes in the ACA that CBO forecasts would result in fewer people obtaining health insurance in the individual, or non-group market in 2026: (a) reduced government subsidies to help pay enrollees’ premiums; and (b) repeal of the ACA’s “individual mandate” to have health insurance.
The House-passed legislation would redesign ACA’s income-based premium subsidies to flat, age-based tax credits. CBO says that while this change could lower net (after-subsidy) premiums for some lower-income, younger enrollees, it could sharply increase net premiums for older Americans. A 64-year-old single person with annual income of $26,500 would see her net, after-subsidy premium soar from $1,700 annually to $16,100, according to CBO. Higher net premiums would cause many Americans to go without insurance.
Elimination of the individual mandate, long a goal of Republicans who believe the federal government should not force people to buy insurance, would also contribute to an increase in the number of people without health insurance.
These two changes combined are expected to cause 6 million fewer people to be enrolled in health insurance in the year 2026.
Of all the forecasts in the CBO report, the one with the least media coverage, and of greatest interest to employers, is the estimate that in 2026 roughly 3 million fewer people would be enrolled in employment-based health coverage.
CBO attributes this reduction to two dynamics. One, employers deciding whether or not to offer health coverage to employees based on the comparability of plans offered in the non-group market. CBO assumes that if exchange plan benefits and net premiums are comparable to health plans employers sponsor, some employers are less likely to offer employees coverage.
And two, CBO concludes that AHCA’s elimination of the individual mandate will lead fewer employees to take up the offer of employer-sponsored coverage.
Employers struggling to comply with ACA’s “employer shared responsibility” requirements and avoid penalties will be pleased that CBO does not attribute the reduction in employment-based coverage to AHCA’s elimination of penalties for failing to offer affordable and minimum value coverage.
Taken together, CBO forecasts that these three drivers will cause 23 million more Americans to be uninsured in 2026 if AHCA becomes law. Incidentally, CBO also says that in that case a total of 51 million Americans would have no health insurance in the year 2026, meaning that even if ACA remains as is, some 28 million people will still be uninsured.
CBO readily concedes that its estimates are “inherently uncertain” and “inexact.” Like all forecasting, mistakes can be made. Indeed, CBO’s 2010 forecast of the number of people who would enroll in the ACA federal and state insurance exchanges has been off by a factor of about half.
Nevertheless, like economists and meteorologists, CBO forecasts must be made and Congress must rely on estimates of the effects of proposed legislation. In any event, there seems little question that the House-passed Republican legislation would result in many millions more Americans without health insurance.
The next step for the House-passed bill is the U.S. Senate, where Republicans hold a slim 52-48 majority. This means the future of the AHCA, and the ACA, is in the hands of the Senate Republican leadership, specifically Senate Majority Leader Mitch McConnell (R-KY) and the chairs of two committees with jurisdiction over health legislation—Senator Orrin Hatch (R-UT), chair of the Finance Committee and Senator Lamar Alexander (R-TN), chair of the Committee on Health, Education, Labor and Pensions. This assumes no Democratic support for AHCA.
Whatever was the disposition of the 52 Republican senators toward AHCA, the CBO report clearly changes everything. Senators are acutely aware that the 23 million figure highlighted in the CBO report represents their constituents—in every state. Regardless of their concerns about the sustainability of the Affordable Care Act—and it does have serious problems—lawmakers cannot be seen to be throwing 23 million people off health insurance.
Senators will also be concerned about a controversial provision in the House bill that would allow states to seek waivers from certain ACA requirements, including that insurers cannot charge higher premiums to people with pre-existing medical conditions.
For these reasons, the Republican leadership can be counted upon to seek input from all 52 Republican senators on their top concerns about AHCA. For sure these will include AHCA’s proposed Medicaid cutbacks, potential sharp increases in net premiums for lower income citizens, especially seniors, and the issue of higher premiums for people with pre-existing conditions. These drivers of the 23 million number have little chance of surviving in a Senate rewrite of the bill.
Politico Magazine quoted Republican Senator Susan Collins of Maine: “There is no way that I can personally support a bill that is going to result in 23 million Americans losing their health insurance coverage, that will cause an 850 percent premium increase of a low-income adult aged 64, of which there are many in my state, and that does nothing to ultimately bend the cost curve of health care.”
Beyond policy substance, the CBO report must raise the question whether it will be even possible for the Republican-led Senate to produce a bill to repeal and replace “Obamacare” and, as important, when?
All this is complicated by the reality that the further Senate Republicans move away from AHCA, the closer they will come to ACA—and to the Democrats. At some point Republicans and Democrats may start talking about compromise, some blend of consensus provisions of AHCA and ACA both sides could live with. Growing instability in the ACA exchanges could prompt Republicans and Democrats to develop an emergency measure.
Before release of the CBO report it was difficult to predict whether or when Congress would develop legislation to repeal and replace the ACA and send it to President Trump for signature. The CBO report has made it impossible to predict.
With more than 30 years of experience in federal legislative and regulatory affairs, Jim O’Connell focuses on HR and PAYROLL POLICY ISSUES, keeping customers informed about fast-changing and complex compliance regulations and workforce trends. Follow him on Twitter JOCWashDCView Collection