CBO and America’s AHCA Headache

The much-anticipated Congressional Budget Office (CBO) score of the American Health Care Act (AHCA), the GOP’s effort to dismantle the Affordable Care Act (ACA) released yesterday, indicates that the bill would cause 23 million people to become uninsured while reducing the federal deficit by $119 billion. In that sense, there is little change from their assessment of the original version of AHCA.   

The key information here, then, is that the MacArthur-Meadows amendment, adopted to achieve the votes necessary to pass the House, costs tens of billions of dollars while doing very little to stem coverage losses. Disturbingly, the amendment endangers millions of more lives. The new CBO report shows that the AHCA still is what it is, and it’s horrific.     

As with the original version of the AHCA, average premiums would increase at a greater rate initially and at a lower rate in the longer term, as older individuals and those with preexisting conditions lose their increasingly unaffordable coverage. Additional premium control is achieved by allowing plans to increase out-of-pocket costs for enrollees and restrict benefits. It’s like offering people a Jalopy instead of a Ford and telling them car prices are falling. 

Cuts to Medicaid, a program serving 77 million Americans, among them vulnerable children, seniors, families, and the disabled, are by far the largest driver of the cost reductions in the bill. Overall, as the CBO reports points out, Medicaid would be cut by $834 billion over the next ten years by rescinding coverage in states that elected to expand their programs under the ACA and changing the program from a guarantee to an annual fixed-cash allotment, so-called per capita caps.

If you think Medicaid is ‘just for poor people,’ consider this: the program covers half of all births in the U.S. If we care about those babies and their moms, then we’re all Medicaid beneficiaries in the truest sense.

The replacement of the ACA’s premium subsidies with new tax credits for commercial insurance is the second of the two largest drivers of the $119 billion deficit savings in the bill.  This includes a net budget reduction of $276 billion by restricting the current premium assistance available and targeting it by age rather than income level.  The AHCA also repeals all cost-sharing assistance that 80 percent of individuals enrolled in the exchange markets currently receive. If they sound familiar, it’s because these are the same subsidies President Trump has threatened to drop as an (unsuccessful) negotiating tactic with Democrats.   

As with the original AHCA, the vast bulk of spending in the law comes from repealing taxes on high-income households and health care companies. This $664 billion in tax cuts dwarfs the $117 billion in the law ostensibly dedicated to actually helping people get health care.

With regard to those (literally) late-night amendments the House adopted just before its final vote, CBO says that, in states that adopt the waivers they create, premiums would go down for the young and healthy and go up sharply for those who are older or have pre-existing conditions. While they haven’t changed the overall impact of the legislation, the impact on vulnerable populations in these states would be dire.

The bill is currently under consideration in the Senate where points of contention include Medicaid cuts, increased costs for the vulnerable, and other disruptions to the marketplace.  A group of 13 Senators is meeting in secret almost every day to consider changes to the House-passed bill. While touted as a “fresh start” from the much-maligned AHCA, so far all indications are that they are planning only incremental modifications.

In conclusion, the CBO score makes clear what many have already concluded: the AHCA is an exercise in cutting coverage from our most vulnerable to fund tax cuts for the wealthy. No matter how you spin the score, this predominant impact of the legislation remains the same.

Senate Republicans now faces a fundamental choice. Do they take seriously their assertions, made over the last seven-plus years, that they have a way to strengthen our health care system? Or do they go the way of AHCA, which gives scant regard to that pursuit in favor of an ideology willing to sacrifice protections for the most vulnerable in order to redistribute wealth to the powerful. When this is said and done, Americans will know the difference.

Billy Wynne is Managing Partner of TRP Health Policy where he and his team deliver sophisticated policy analysis and strategic counsel and advocacy services to health systems, Fortune 500 companies, investors, foundations, and other healthcare companies. A frequent guest speaker on cable news, Billy is also frequently quoted by Politico, the Washington Post, Inside Health Policy, and other media outlets. Previously he served as Health Policy Counsel to the Senate Finance Committee. He has a B.A. from Dartmouth College and a law degree from the University of Virginia.

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