March 17, 2017

In This Issue
House Budget Committee Approves AHCA, House Floor Vote Expected Next Thursday
CBO Releases Report Showing 52 Million to be Uninsured under AHCA, 7 Million to Lose Employer-Sponsored Insurance
Senate Confirms Seema Verma for CMS Administrator
President Trump Releases Proposed Budget Calling for Drastic Cuts in Federal Health Spending
Trump Administration Pushing States to Apply for ACA Waivers
John Greene and Chris Hartmann Discuss the Latest AHCA News on this Week’s Podcast
Miss Yesterday’s Compliance Corner Webinar on the Fiduciary Rule and HRA Changes? Watch it Now!
NAHU Education Foundation’s Operation Engage Reminders
HUPAC Roundup
What We're Reading
E-mail the Editor
Visit the NAHU Website
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CBO Releases Report Showing 52 Million to be Uninsured under AHCA, 7 Million to Lose Employer-Sponsored Insurance

The Congressional Budget Office (CBO) released their report on the American Health Care Act (AHCA) on Monday, indicating that 14 million Americans would lose their existing healthcare coverage by next year under the AHCA, growing to 24 million in the next 10 years, to bring the total uninsured population to 52 million. This amounts to a net increase of 4 million uninsured from before the ACA was signed into law, when 48 million were uninsured. The plan would also reduce the federal deficit by $337 billion by 2026, with $880 billion in reduced Medicaid spending and $673 billion cut by eliminating the ACA's subsidies. In place of those subsidies, the CBO projects that the AHCA tax credits would cost the federal government $361 billion over 10 years. The CBO is the nonpartisan group tasked with determining the cost of legislation to the federal government, both in a loss of revenue and increase in spending.

The biggest cause of the increase in the uninsured rate is due to the elimination of the individual and employer mandate penalties. The report estimates that after the initial fallout of 14 million uninsured in 2018, 2 million additional individuals would opt against enrolling in coverage each year thereafter. The employer-based market would also see a noted change, with the CBO projecting that roughly 2 million fewer people would enroll in employment-based coverage in 2020, which would grow to roughly 7 million in 2026, and that “over time, fewer employers would offer health insurance.” The employer-based market currently enrolls more than 175 million Americans in health insurance coverage and NAHU strongly supports measures to maintain this system.

The CBO basis their assumption of the gradual erosion of employer-sponsored insurance on the loss of the mandate penalties and that the AHCA’s tax credits would be available to a broader group of individuals than those under the ACA. Further, “some employers would choose not to offer coverage and instead increase other forms of compensation in the belief that nongroup insurance was a close substitute for employment-based coverage for their employees.” The drop in coverage is also due partly on the employee’s behalf, as “fewer employees would take up the offer of such coverage in the absence of the individual mandate penalties.” Previous CBO reports similarly expected that the ACA would result in a drop in employer-based coverage, a projection which has not occurred.

CBO projects that federal revenues would be reduced by $883 billion over the next 10 years, largely by eliminating the vast majority of the ACA’s taxes. Of this, $275 billion would come from eliminating the net investment tax, $145 billion from the health insurance tax (HIT), and another $592 billion would come from taxes unrelated to health coverage proposals. The CBO also projects that delaying the Cadillac/excise tax until 2025, as written in the AHCA, would cost the federal government $49 billion in lost revenue.

Republicans tasked themselves with coming up with a reconciliation bill that would reduce the deficit by a minimum of $2 billion over 10 years, meaning that the score by the CBO meets this requirement and allows Congress to continue pursuing this bill. House Speaker Paul Ryan (R-WI) responded to the score saying that he was “encouraged” and that the increase in the uninsured was due to repealing the ACA’s individual mandate penalties. Ryan noted, “We are saying the government is not going to force people to buy something they don't want to buy. If we end the Obamacare mandate that says you must buy this plan, then guess what? People aren't going to buy it.”

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