What the CBO revealed about the American Health Care Act
The nonpartisan Congressional Budget Office (CBO) has released its analysis of the American Health Care Act, which is the Republican plan to gut Medicaid and repeal much of the Affordable Care Act. Last week we summarized the key elements of the law. Here are the key findings from the CBO’s analysis.
Headline: 24 million people would lose health care coverage, including 14 million next year.
A total of 24 million people would lose insurance by 2026, bringing the total uninsured population in the U.S. to 52 million people. More people would lose insurance than have gained insurance or Medicaid coverage under the Affordable Care Act (ACA). (The ACA expanded coverage to 20 million people.)
24 million is a lot of people: it’s the entire populations of Alaska, Delaware, Hawaii, Idaho, Kansas, Maine, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Rhode Island, South Dakota, Vermont, West Virginia, and Wyoming combined.
The rise in uninsurance would begin next year, when an estimated 14 million people would become uninsured. This 14 million includes 6 million fewer people on individual insurance plans (those bought on the ACA marketplace or independently), 5 million fewer people on Medicaid, and 2 million fewer people on employer-sponsored plans.
By 2026, the CBO predicts a net increase in individual insurance plans as the markets stabilize (more on that below), but significant drops in the number of people insured through Medicaid and through employers. The 24 million people who are estimated to become newly uninsured include some 14 million fewer people on Medicaid, 7 million fewer people on employer plans, and 2 million fewer people on individual plans than today.
What would happen to insurance costs and coverage for people who remain on individual insurance plans?
Headline: The CBO predicts that insurance markets and premiums would remain relatively stable―but only because deductibles would go up, coverage would shrink, and poorer, sicker, and older people would be priced out.
The CBO predicts that for people on individual insurance plans, average premiums would go up by 15-20% in 2018 and 2019, but then stabilize, ending up 10% lower in 2026, on average, than they would be under the ACA. (The CBO also predicts that under either the ACHA or the ACA, insurance markets will stabilize, avoiding the much-feared death spiral in both cases.)
Republicans will tout this as evidence of the law’s strength, but focusing narrowly on these premiums ignores three enormous costs. First, while premiums are expected to stabilize, deductibles are expected to further increase, which would raise people’s health care costs and keep people from getting care.
Second, the AHCA eliminates the ACA’s requirement that insurance plans cover a specific percentage of the cost of people’s care. This would allow insurers to provide less coverage, which would lower premiums but raise people’s out-of-pocket costs and keep people from getting care.
Third, insurance premiums would stabilize for those who remain insured in no small part because the people who need insurance and care the most—older people, sicker people, and poorer people—would be priced out, leaving insurance companies with a younger, healthier (and therefore more profitable) pool of people to insure. People with high incomes who live in metro areas where health care is cheaper would pay less under the law, but older people with low incomes who live in rural areas where health care is more expensive would pay much more. Because of this, the CBO estimates, a 21-year-old with an income of $68,000 would see her subsidized premiums drop from $5,100 a year to $1,450 a year, while a 64-year-old with an annual income of $26,500 would see her subsidized premiums rise from $1,700 now to $14,600 under the AHCA. With that 750% increase, premiums alone would cover more than half of the 64-year-old’s annual income, a sum that she simply could not afford.
There are two provisions of the AHCA that would price people out. The first is a new rule that would allow insurance companies to charge older people five times as much as they charge younger people. The second is a shift from the ACA’s income-based subsidies to lower, age-based subsidies that are neither adjusted for people’s incomes nor for the cost of care where they live.
The entire purpose of an insurance system is that everyone pays in, and those who need a pay-out get one. The private, for-profit insurance system already fails to achieve this by cutting many people out, but by further raising people’s out-of-pocket costs, restricting people’s coverage, and cutting tens of millions of people out entirely, the AHCA would make matters much worse.
Headline: Medicaid’s budget would be slashed by $880 billion over the next decade, a 25% cut that would push 14 million people out of the program.
The CBO estimates that Medicaid’s budget would be slashed by $880 billion over the next decade, a 25% cut that would push 14 million people out of the program. The cut would come in two forms: ending (and slowly choking off) the Medicaid expansion, and capping and cutting federal Medicaid payments to states. Both cuts would begin in 2020.
This $880 billion cut to Medicaid is almost equal to the $883 billion that the CBO estimates the AHCA would cut in taxes. As we previously wrote, drawing on analysis from the Center on Budget and Policy Priorities, this tax cut is highly regressive: the AHCA is designed to take health care away from poor people in order to give money to corporations and the wealthy.
Headline: The AHCA would cut off federal funding to Planned Parenthood for one year and prevent any insurance plan that receives tax credits from covering abortions. This would severely restrict reproductive health care for women and transgender people, particularly in poor, medically underserved communities.
The AHCA would cut off a full year of funding for Planned Parenthood, which the CBO estimates would ultimately amount to $234 million cut to reproductive health care. This cut would restrict health care access for Planned Parenthood’s 2.5 million patients, most of whom are low income women. And according to the CBO, it would hurt women in poor, medically underserved communities the most. The report estimates that one in six women in such communities would lose access to care. The CBO also predicts that choking off funding would lead to a large increase in births, enough to cost Medicaid (which would cover many of the births) an extra $77 million.
In addition, the AHCA would ban any individual or small-employer insurance plan that receives tax credits from covering abortions for anyone. This appears to be an attempt to eliminate all private insurance coverage of abortions.
Headline: Republicans in Congress have no intention to make sure everyone gets health care. This bill is not a healthcare bill, but a tax-cut bill designed to take from the poor to give to the wealthy.
The two big health care problems facing people in this country are high costs and barriers to access. This bill doesn’t try to fix either problem, and the CBO's analysis makes clear that for tens of millions of people, the AHCA would actually make these problems worse. It is not, in other words, a health care plan. Instead, it is a plan to redistribute money from the poor to corporations and the wealthy.
Headline: People who drop insurance coverage are forced to. They aren’t making a choice.
Republicans will claim that the 14 million people who drop insurance coverage would be “choosing” to be uninsured, but this ignores reality. The only options people are allowed to choose between are a private insurance plan that costs more than they can afford, a cheaper but skimpier private plan that doesn’t cover the healthcare they need, or no insurance at all. In fact, “choosing” between insurance plans isn’t the choice we need at all. If we create a single public insurance system to take over from for-profit insurance corporations, health care costs would go down, everyone would be guaranteed access to care, and we’d all have the choice we really need, which is the freedom to choose our own doctors and medical care.