Late Monday, March 13, The Congressional Budget Office (CBO) released its required analysis of the American Health Care Act concluding that it would both reduce the number of people with health insurance while cutting health care costs to the federal government.

The analysis determined that 14 million people would become uninsured next year (2018), 21 million would lose insurance by 2020 and in ten years, (2026) 24 million more people would be without health insurance.  The figures are in comparison to what the current ACA will provide.  By 2026 the number of uninsured would total 52 million people compared to the projected 28 million.  That total of 52 million would be the highest in history.

Supporters of the legislation, led by Speaker Paul Ryan (R-WS) touted the savings as the CBO said federal deficits would be reduced by $337 billion over ten years.  The main reason for that is that it would cut Medicaid by $880 billion over that same ten-year period.

The savings from Medicaid would be because the expansion of Medicaid coverage due to the ACA would be rolled back and because Congress would create a complex block grant called, per capita cap.  The per capita cap would create a formula based on 2016 costs and populations based on the number of disabled, elderly, children and adults and then adjust this formula by a medical inflation factor.  CBO said that the inflation factor would not be enough to keep pace with future costs.  As a result, that funding would be shifted to the states.

Bill sponsors claim the annual cap—which would force states to cover all Medicaid costs once a state reaches its annual cap—would cause some saving strategies but the CBO indicates that in addition to any savings strategies states would apply they would also:

  • Reduce health provider reimbursements
  • Eliminate some optional populations states currently cover
  • Restrict eligibility in other ways.

CBO indicated that premiums would go up next year by 15 percent (as healthy and younger customers drop out) while premiums would level off and be reduced by 10 percent in ten years over the current ACA impact.  The analysis also found the age groups most hurt by increasing premiums and costs would be people just under Medicare age, age 64 and under.  That is because the bill changes current ACA law which prohibits insurers from charging older consumers by more than three time the rates of a twenty-one-year-old.  The House bill allows insurers to charge up to five times the premium. The bill would also restructure tax credits to make them less generous and now longer tied to income levels.

Political Next Steps

The next steps are less clear.  On Thursday, the House Budget Committee merged the two bills adopted the week before into one bill.  The Budget Committee adopted the bill by a vote of 19 to 17 with three Republican voting no.  The Committee did not have the ability to change the legislative language but they did offer recommended changes including allowing a work requirements under Medicaid. From there the bill goes to the House Rules Committee. Ryan and the President are already negotiating to make the bill more conservative and there was an indication that states will have the ability to have work requirements under Medicaid and a state option to convert Medicaid into a full-fledged block grant.

The next stop is the Rules Committee which will set up the rule for the debate on the floor where changes in legislative language can be made.  Because of current House vacancies of five members, Speaker Ryan lacks four Republican votes and he needs 216 votes for passage.  He says he will get them.  He can afford to lose 21 Republicans.  The louder critics appear to be more conservative members who feel the bill still provides too much.  There are some Republicans who feel it cuts too much, particularly with Medicaid.

The Speaker hopes to thread the needle this week and hold the floor vote on Thursday and then send it over to the Senate.

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