Estimates: Cost & Coverage of Proposed ACA Legislation

The Republican plan to replace the Affordable Care Act would save the government billions over the next 10 years, but leave 14M people without insurance in 2018 compared with current law, an analysis by the nonpartisan Congressional Budget Office.

The health-care plan calls for repealing a majority of the Affordable Care Act’s taxes starting in 2018 and phase out the Medicaid expansion in 2020 for the 31 participating states and the District of Columbia.

Issues of cost and coverage have been a focal point of the debate so far. Here’s how the GOP bill compares to a continuation of the Affordable Care Act.

The CBO estimates that, in 2018, the Republican plan would result in 14M more uninsured people than under current law.  This results from repealing the penalties associated with the individual mandate," the report says. This is projected to rise to 21 million uninsured in 2020 and then to 24 million in 2026.

The drop in the number of insured would result in part because people would opt to go without coverage once the requirement that most Americans have coverage or pay a penalty is repealed, according to the report by the CBO and the Joint Committee on Taxation.

While the move is expected to decrease the number of insured people, it is expected to save the federal government significant money over time.  Estimates would result in a $1.2 trillion decrease in direct spending and an $883 billion reduction in revenues over the 2017-2026 period. The net effect on the federal deficit would be a $337 billion savings in the same period.

The CBO analysis is based on how much more or less a legislative proposal would cost compared to current policy. In its calculations, the CBO used estimates that the bill would be enacted by May 2017.

Expectations:

The bill will likely lower costs in part by replacing subsidies provided to lower-income people on the ACA’s exchanges with tax credits pegged to age and income. The tax credits would phase out for higher-income earners.

Beginning in January 2020, the federal government would transition into a system in which a set amount of funding would be sent to the states each year. Costs would likely rise by removing the requirement that Americans buy health coverage or pay a penalty.

Official CBO scores for the ACA before it passed in 2010 projected the law would reduce deficits by $143 billion over the 2010-19 period.  Actual deficits turned out to be deeper than either forecast. The CBO anticipates smaller deficits under the GOP health plan, relative to its baseline projection.

The Republican plan calls for current subsidies and tax credits for enrollees in the individual market to be replaced by a new tax credit structure in 2020.

Premiums would tend to increase before 2020, rising up to 20% higher than under the ACA (because of the demise of the penalty for not having coverage). Premiums would then go down: In 2026, single person average premiums in the individual market would be about 10% lower than under the health law now.

Actual premium amounts would vary significantly based on age, with the biggest changes coming to seniors, many of whom would pay more, and lower income people, many of whom would receive less of a tax credit.

The CBO concludes that these changes would lead to a larger share of enrollees would be younger people and a smaller share would be older people.

Source: WSJ: March 13, 2017