CBO on ACA replacement: 24 million more uninsured, premiums lower by 2026

The Congressional Budget Office (CBO) estimates the gains in insurance coverage from the Affordable Care Act (ACA) would be wiped out if its Republican-sponsored replacement, the American Health Care Act (AHCA), is enacted.

The legislation would reduce the federal deficit by $337 billion between this year and 2026, according to the CBO, mostly thanks to cuts in Medicaid spending by rolling back the expansion of eligibility from the ACA. Hospitals would be one area where this reduction is offset: The CBO projects a $43 billion increase in Medicare payments due to a jump in disproportionate share hospital (DSH) payments expected from the increase in uninsured patients.

Much of the report deals with the effects on the insurance market. The uninsured rate would begin to rise in 2018, with 14 million losing coverage in 2018, growing to a total of 16 million in 2019.

“Most of the reductions in coverage in 2018 and 2019 would stem from repealing the penalties associated with the individual mandate. Some of those people would choose not to have insurance, because they choose to be covered by insurance under current law only to avoid paying the penalties. And some people would forgo insurance in response to higher premiums,” the report said.

By 2026, 24 million people will have lost coverage for a total of 52 million under the Medicare age of 65 being uninsured—19 percent of the non-elderly population in the U.S. This would surpass the previous national high of 48 million uninsured in 2010.

A key argument from President Donald Trump and Republicans supporting the ACA repeal is its increase in premiums on the individual market, averaging 25 percent in the last open enrollment period. The AHCA, however, wouldn’t immediately lower premiums, according to the CBO.

“Average premiums for single policyholders in the nongroup market would be 15 percent to 20 percent higher than under current law mainly because of the elimination of the individual mandate penalties. Eliminating those penalties would markedly reduce enrollment in the nongroup market and increase the share of enrollees who would be less healthy,” the report said.

The desired drop in premiums would come in 2020 and beyond, with prices down by 10 percent compared to the ACA by 2026. The CBO projects the risk pool will be younger than under the ACA, but insurers also wouldn’t be held to the same “actuarial value” requirements of the ACA, meaning the drop in premiums may be due to offering skimpier coverage.

The changes to the age-band ratio, allowing insurers to charge up to five times as much to older customers compared to younger ones, are projected to work in attracting younger customers, those the ACA exchanges has struggled to attract. But it will also substantially raise premiums for older customers.

The political reaction to the report was mixed. The staunchest supporters of the legislation, like HHS Secretary Tom Price, MD, cast doubt on the CBO’s findings.

“We disagree strenuously with the report that was put out," Price said. “It's virtually impossible to have that number occur. ... It's just not believable.”

House Budget Committee Chairman Diane Black, R-Tennessee, who succeeded Price in that post, focused on the CBO saying premiums would eventually decrease and the deficit would be reduced, adding the AHCA offers choices “even if that choice is to not have healthcare coverage.”

On the Democratic side, the report was used to attack the legislation, with U.S. Sen. Dick Durbin, D-Illinois, saying, “This is the Republicans’ answer to healthcare in America—24 million people without health insurance.”

The score may deal a devastating blow to the legislation’s chances of advancing. Assuming it passes out of the House, Republicans can only afford to lose two votes in Senate or the bill would fail to pass. One of those potential no votes, Sen. Bill Cassidy, MD, R-Louisiana, called the report “awful.”

“Can’t sugarcoat it. Doesn’t look good,” Cassidy said to POLITICO. “The CBO score was, shall we say, an eye-popper.”