The American Health Care Act — the health care legislation that the House passed at the beginning of May — would lead to 23 million more Americans being uninsured in 10 years, versus what would be expected under Obamacare, according to a new report from the Congressional Budget Office.
The House bill would also cut taxes by $662 billion over the next decade, according to a separate analysis released Wednesday by the Joint Committee on Taxation, mostly by repealing Obamacare taxes on the wealthy and health care industries.
House leaders were criticized intensely for having their members vote on the bill without a full report on its possible effects on May 4. Three weeks later, the consequences of that vote, if the bill as written were to become law, are finally clear.
Central parts of the bill — such as its Medicaid overhaul, projected to cut spending by $834 billion over 10 years and reduce enrollment by 14 million — didn’t change much from the earlier versions. But some key compromises that proved politically essential to getting the bill through the House — letting states waive some of Obamacare’s insurance rules and a funding increase to cover people who could be at risk of losing coverage under those waivers — were analyzed for the first time in Wednesday’s CBO report.
The CBO score will define the House bill for political purposes — expect vulnerable Republicans who helped push the bill through to face withering attacks over the projected coverage losses. It also helps set the parameters for the health care debate in the Senate, where Republicans are using a complex budget procedure to pass their health care bill with a bare majority and avoid a Democratic filibuster.
The House bill as is will not pass the Senate or be signed by President Donald Trump. But the new report tells us a few important things.
23 million more Americans are projected to be uninsured
Trump promised universal coverage, and the initial versions of the American Health Care Act fell well short. The CBO's earlier findings — that 24 million more Americans would be uninsured in 2026, versus what would be expected under Obamacare — quickly became omnipresent in the debate.
The revised version of the AHCA that ultimately passed the House did little to change that projection, according to CBO. The office estimated that more people would be covered by employer-based coverage, because companies would see the individual market as less appealing under the GOP bill and choose to offer coverage, while there would be an uptick in people who would otherwise buy insurance in the private market being uninsured.
The math works out to about 1 million more people being covered in the final House bill than in early versions, a minimal difference. About 14 million more people would be uninsured in 2018, according to CBO, increasing to 23 million in 2026.
Sick people in states with AHCA waivers would be priced out of insurance
One question looming over the House bill was what the last-minute changes — allowing states to waive some Obamacare rules and a funding increase to help those who might be adversely affected — would actually do.
According to CBO, about half of Americans live in states that would not seek waivers from the Obamacare regulations prohibiting insurers from charging sick people more than healthy people and requiring certain services to be covered. About one-third of Americans live in states that would seek moderate relief from those rules.
One-sixth of Americans live in states that CBO expects to pursue broad waivers from those Obamacare rules. The analysts predict that the individual insurance markets in those states would start to destabilize after 2020, as insurance becomes unaffordable for people with high medical costs.
From the report:
CBO and JCT expect that, as a consequence, the waivers in those states would have another effect: Community-rated premiums would rise over time, and people who are less healthy (including those with preexisting or newly acquired medical conditions) would ultimately be unable to purchase comprehensive nongroup health insurance at premiums comparable to those under current law, if they could purchase it at all — despite the additional funding that would be available under H.R. 1628 to help reduce premiums.
“As a result, the nongroup markets in those states would become unstable for people with higher-than-average expected health care costs,” CBO’s analysts wrote. “That instability would cause some people who would have been insured in the nongroup market under current law to be uninsured.”
Those changes also have an important procedural test to pass now that the new CBO score is out.
Some budget experts are dubious that the AHCA state waivers pass muster under the Senate rules. Those rules are supposed to limit these bills to policies that directly affect government spending or revenue. Changing insurance regulations might not make the cut.
But, some experts have told me, if the CBO projects that the waivers do have a significant budget impact — more likely if the office expects a fair number of states would want them — then they become easier to justify under the Senate rules.
CBO estimated that the final House bill saved overall $32 billion less than previous iterations. The question for the Senate will be whether that is enough of an impact to justify keeping the waivers under its procedural restrictions.
Does it save enough money under Senate rules?
The bill does clear the first hurdle it needs to to comply with those Senate rules. It saves money, about $119 billion, over the next 10 years. It needed to save $2 billion, a nominal amount in the scope of the federal government’s budget.
But it’s more complicated than that.
Washington was sent into a tizzy last week when Bloomberg reported that House leaders had not actually sent the AHCA to the Senate because they were waiting for a CBO score. The implication was that the House might have to change its bill and pass it again — or even start over.
I broke down all the back-of-the-envelope math that fueled this speculation. Last week, there were two fears. The first was that the bill would not save any money at all, which CBO now says it does. But the second was that certain provisions within the bill wouldn’t save enough money.
The bill has to save $2 billion overall — but those savings must be divided evenly, $1 billion each, through provisions under the jurisdiction of two different Senate committees, the Finance Committee and the Health, Education, Labor and Pensions Committee.
So does the new bill pass that test?
At first blush, no, according to the Committee for a Responsible Federal Budget’s Ed Lorenzen, who first flagged the issue to me last week. Repealing an Obamacare public health fund and other Obamacare subsidies saves $106.6 billion, according to CBO, but a new fund set up for states to stabilize their insurance markets costs $117 billion.
Some experts believe those are the only provisions that fall under the health committee’s jurisdiction — and so, by that math, the bill wouldn’t save the $1 billion it must for the health committee, the possibility that led to much of the speculation last week.
But there will be a debate in the Senate over the arithmetic and which committees are responsible for which provisions in the bill. The outcome of that debate will ultimately determine whether the final House bill meets the standards it must under the Senate rules, Lorenzen said.
The Senate now has a budget baseline for its own health care plan
Another important parameter has been set for Senate Republicans now that we have the CBO’s projections of what the House bill would do.
Under its procedural rules, the Senate is not allowed to save any less money in its health care bill than the House did. The previous CBO report said an earlier version of the House plan saved $150 billion, but the House added some provisions and funding at the last minute that changed that. Now the bill saves $119 billion.
The Senate is planning to spend more money — by beefing up the financial assistance for people to buy private insurance and by more slowly phasing out Obamacare's Medicaid expansion — and any of those new costs will have to be offset to match that $119 billion in savings that the House bill as passed achieved.