March 13, 2017

CBO Analysis of ACA Insurance Gains: House Plan Amounts to Repeal and Erase

A new report by the non-partisan Congressional Budget Office (CBO) confirms most of our worst fears about the House Republican plan to repeal much of the Affordable Care Act (ACA) and radically change Medicaid.  The March 13th report released by the Republican-appointed director of the CBO shows the following:

  • Federal Medicaid funding would drop even more than we anticipated – with a total of $880 billion of cuts over the next ten years!
  • The number of uninsured Americans would jump to 52 million in 2026, which is an increase of 24 million compared to the CBO estimate for retaining the ACA.
  • By 2026 the sharp drop in people with insurance would essentially erase all the dramatic gains achieved in coverage over the last several years.

Many advocates in Wisconsin are especially concerned about the Medicaid provisions, which would change the fundamental nature of the health care safety net by capping the federal share of Medicaid spending (beginning in October 2019). That change wouldn’t boost the uninsured rate as fast as some other parts of the bill, but over time the caps would do irreparable damage to essential health care services for millions of children, seniors and people with disabilities.

A lot of the changes proposed by House Republicans would not take effect until 2019 or 2020, which some people speculated was a strategy to delay the damaging impacts until after the fall 2018 elections. But if that was the intent, then it’s one more reason why House leaders should go back to the drawing board. According to the CBO, the jump in the uninsured would start almost immediately – growing by 4 million this year and 14 million in 2018. The following graph from the Center on Budget and Policy Priorities shows the projected increases, starting with 2018:.

CBPP graph on CBO projections - repeal & erase

Like other analyses of the House plan, the CBO report concludes that the proposed changes relating to individual insurance plans (i.e., coverage purchased in the non-group market) would significantly increase premiums for older people, while reducing premiums for young people, especially those with higher incomes. Overall, the CBO projects that average premiums for people insured in the individual market would be 15-20% higher in 2018 and 2019 than under current law, but then would gradually drop and would be 10% lower in 2026, compared to current law.  Before proponents of the House plan celebrate that small bit of positive news in the report, they should consider the following:

  • Copays and deductibles for individual plans will be far higher if the Republican plan is approved.
  • I believe the CBO analysis only applies to people who are eligible for the new tax credits, so keep in mind that many people would not qualify for that assistance because the credits would be denied to anyone with an offer of employer-sponsored coverage – regardless of whether it’s affordable!
  • Although I’m not sure, I doubt that the CBO calculation of average premiums includes the 30% surcharge that will be applied to people who don’t maintain continuous coverage or cannot document their prior coverage. The report concludes that this part of the bill would have the opposite of the intended effect by causing 2 million fewer people to be insured.

I hope to follow up soon with observations about what the House plan would mean for Wisconsin, but one portion of the CBO analysis jumped out at me.  Because Wisconsin is near the top nationally in the percent of people with employment-based coverage, I was struck by the fact that the CBO forecasts that there would be a significant decrease in employer-sponsored insurance. The report projects that the number of Americans with employment-based coverage would drop by 7 million over the next decade because of the proposed changes.

To sum up, the nonpartisan analysis released today illustrates that the hastily written bill proposed by House Republicans would be catastrophic for millions of families. President Trump promised that he would make health insurance affordable for everyone, but the current House plan would take us backward and cause the number of people who are uninsured to nearly double! Since the damage to insurance coverage would start before the 2018 election, perhaps it’s not too much to hope that House leaders will rethink this disastrous plan.

Jon Peacock