The Congressional Budget Office (CBO) released its report on the American Health Care Act (AHCA) on Monday. Estimates for impact on cost and coverage suggest that the AHCA would:

Reduce the federal budget by $337 billion between 2017 and 2026.

Savings come primarily from:

  • Reducing the Medicaid match rate for the expansion group, and changing Medicaid funding to per capita caps in 2020 ($880 billion).
  • Eliminating the ACA premium tax credits and cost-sharing subsidies for people who purchase health insurance in the nongroup (i.e., health insurance exchange) market ($673 billion).
  • Eliminating penalties associated with the individual mandate and employer requirements ($210 billion).

The costs primarily come from:

  • Repealing taxes on net investment income, removing the Medicare Hospital Insurance Trust Fund tax for higher income earners, and eliminating fees on health insurers ($420 billion).
  • Creating a new refundable premium tax credit ($361 billion).
  • Funding for state grants through the Patient and State Stability Fund ($80 billion).

Reduce the number of people with health insurance coverage by 24 million between 2017 and 2026.

Compared to current law:

  • In 2018, 14 million fewer people would have health insurance coverage, primarily due to the repeal of the individual mandate and higher premiums.
  • By 2020, that number would rise to 21 million and then to 24 million in 2026. 14 million of the newly uninsured would come from Medicaid, primarily due to states eliminating the Medicaid expansion group, some states not expanding Medicaid that would have in the future, and changing Medicaid financing to per capita cap funding. Much of the remaining uninsured would be due to losses in nongroup coverage and employer-based coverage.

In total, by 2026, under the AHCA, 52 million people would be uninsured, relative to 28 million people under the current law. Put another way, by 2026, the AHCA would increase the rate of the non-elderly uninsured to 19 percent, relative to the expected rate of 10 percent if the current law remained in effect.

And this deserves a direct quotation,

“the increase would be disproportionately larger among older people with lower income; in particular, people between 50 and 64 years old with income of less than 200 percent of the FPL would make up a larger share of the uninsured” (p.21).

There have been a variety of responses to the CBO report. Largely, the emphasis in the media has focused on the significant loss of coverage estimated under the bill. There has also been continued conservative criticism of the CBO estimates, noting that the CBO estimated the impact of the Affordable Care Act (ACA) incorrectly, and thus there is significant reason to doubt, and even entirely discredit, the CBO estimates.

Whatever the uncertainty is in the CBO estimates, it is pretty clear that this Obamacare replacement proposal does not achieve the promised “insurance for everybody” that then President-Elect Trump so famously declared, or Health and Human Services (HHS) Secretary Tom Price’s assurance that “our plan will cover more individuals at a lower cost and give them the choices that they want for the coverage that they want.” 

Not surprisingly, this is likely why we have seen a shift in tone from the Trump Administration, with Press Secretary Sean Spicer re-framing the implications of the CBO report, suggesting the Republican plan to repeal and replace Obamacare will give “more people the option to get healthcare” and that “insurance for everybody” was not so much a promise, but rather a “goal”.

We will continue to take a closer look at some of the less publicized highlights of the CBO report in the coming days.