House-passed health care bill would increase uninsured by 23 million in 2026, nonpartisan analysis projects

The number of uninsured people in the US would increase by 23 million by 2026 if the American Health Care Act (AHCA, HR 1628) as passed by the House of Representatives were enacted, the nonpartisan Congressional Budget Office (CBO) projected in a report issued late Wednesday, May 24, 2017.1 A CBO analysis of a previous version of the AHCA projected that enactment of the legislation would have increased the number of uninsured by 24 million in 2026.

The House on May 4, 2017, narrowly approved the bill.

The release of the CBO report clears the way for the bill to move to the Senate for consideration under the budget reconciliation process, which would make it possible for the Senate to pass the AHCA with a simple majority of 51 votes, rather than 60 votes generally needed to bring legislation up for a vote under Senate rules. Significant changes may be under consideration in the Senate.

Overall, the AHCA would:

  • Reduce federal health care spending;
  • Redesign advanceable, refundable tax credits for individuals who do not have access to employer-sponsored coverage;
  • Restructure and cap federal Medicaid funding to the states;
  • Repeal most taxes and fees enacted under the Affordable Care Act (ACA);
  • Provide $138 billion over 10 years in federal funding for state programs intended to help stabilize and reduce health insurance premiums in the non-group market.

Organizations representing hospitals, physicians, health plans and consumers have issued statements critical of the bill.

Key highlights of the CBO’s analysis of the AHCA as passed by the House are provided below.

Effect on the federal budget

CBO estimates that from 2017–2026, the AHCA would reduce direct spending by $1.1 trillion and reduce revenue by $992 billion, for a net reduction of $119 billion in the federal deficit from 2017 to 2026.

The greatest savings from 2017 to 2026 under the AHCA would come via a reduction of $834 billion in projected Medicaid spending and from the replacement of the ACA’s tax credits and subsidies for Exchange coverage with new tax credits for nongroup health insurance coverage. Eliminating the ACA’s tax credits and subsidies for Exchange coverage in 2020 would reduce federal spending by $665 billion, while providing new tax credits for nongroup coverage under the AHCA beginning in 2020 would cost the federal government $375 billion through 2026.

Effect on health coverage

The CBO and the Joint Committee on Taxation (JCT) estimate that in 2018, 14 million more people would be uninsured under the AHCA than under current law, rising to 19 million more uninsured in 2020, and 23 million more in 2026. Enacting the AHCA would result in 51 million uninsured people under age 65 in 2026, compared with 28 million people who are projected to be uninsured under the ACA in 2026.  According to the CBO, the increase in the number of uninsured would be “disproportionately larger among older people with lower income – particularly people between 50 and 64 years old with income of less than 200% of the federal poverty level” ($24,120 for one person in 2017).2

Specifically for each market, CBO projects that:

  • Medicaid enrollment would be lower throughout the coming decade, resulting in 14 million fewer Medicaid enrollees by 2026, a reduction of about 17 percent compared to the number of people projected to be enrolled in Medicaid under current law;
  • Enrollment in nongroup coverage, including in the ACA Exchanges, would decrease by 8 million in 2018 and by 10 million in 2019 before the new AHCA tax credits would become available in 2020. In 2026, the CBO projects that enrollment in nongroup coverage would be 6 million less than it would be under the ACA, reflecting the elimination of the individual mandate penalty to purchase coverage and the fact that the average AHCA tax credit for nongroup coverage would be less than the current tax credits and subsidies available under the ACA;
  • The number of individuals in employer-sponsored plans would be 3 million less than projected to be covered in employer-sponsored plans under the ACA in 2026.

In addition, the CBO projects that “a few million” individuals would purchase health insurance products that “would not cover high-cost medical events and a range of services.” As a result, then CBO would not consider them to have health coverage, thus further increasing the number of uninsured in the CBO’s analysis of the AHCA. CBO projects that such policies “would be priced to closely match the size of the credits” available under the AHCA beginning in 2020.

Stability of markets

The CBO analysis concludes that under current law, the ACA’s tax credits and subsidies to purchase health coverage in conjunction with the individual mandate “are anticipated to cause sufficient demand for insurance by enough people, including people with low health care expenditures, for the market to be stable in most areas.” The CBO noted that “some areas of the country have limited participation by insurers in the nongroup market under current law,” and that factors that could prompt insurers to exit markets include “substantial uncertainty about enforcement of the individual mandate and about future payment of cost-sharing subsidies.”

Under the AHCA, the CBO and the JCT project that the insurance markets “would continue to be stable in many parts of the country.”Funds available through the Patient and State Stability Fund and the AHCA’s tax credits are among the factors that “would bring about market stability in most states before 2020,” according to the analysis.

However, the CBO and JCT estimate that “about one-sixth of the population resides in areas in which the nongroup market would start to become unstable beginning in 2020” as a result of market responses to decisions by some states to seek waivers that would:

  • Allow states to modify the ACA’s essential health benefits (EHB) requirements;
  • Permit states to eliminate the ACA’s community rating requirement, in effect allowing health plans to apply medical underwriting to individuals who have not maintained continuous coverage.

In states that seek waivers to community rating, the CBO and JCT project that the markets would become unstable for people with higher-than-average expected health care costs because community-rated premiums are projected to rise over time. Such people with higher-than-average expected health care costs would not be able to purchase “comprehensive nongroup coverage at premiums comparable to those under current law, if they could purchase at all,” according to the CBO. The analysis projects that funds added to the AHCA to help reduce premiums for high-cost enrollees “would not be sufficient to substantially reduce the large premiums increases” they would face.

Impact on premiums and out-of-pocket payments

On average, enactment of the AHCA as passed by the House would increase premiums by 20% in 2018 and by 5% in 2019, reflecting the impact of funds that would be made available through the Patient and State Stability Fund.

Beginning in 2020, the CBO projects that average premiums would depend in part on whether states are awarded waivers for EHBs or community rating and how the states implemented the waivers. According to the CBO, about half of the US population lives in states that would not pursue waivers, while about one-third of the population lives in states that would pursue waivers and make moderate changes to market regulations and about one-sixth of the population would live in states that would obtain waivers for both the EHBs and community rating requirements under the ACA.

In summary, the CBO projects that enactment of the AHCA would yield:

  • “Much larger” net premiums than under current law for older people with lower incomes;
  • Premiums that are about the same or smaller, depending upon the state’s approach to market regulation for younger people with lower incomes;
  • Lower net premiums for higher income people of most ages, on average.

The CBO also projects that as a result of health insurance products in the nongroup market offering a narrower scope of benefits than under current law, individuals who use services not covered under the plans available under the AHCA would face “substantial increases in their out-of-pocket costs.”

Taxes and fees

CBO estimated that repeal or delay of certain taxes and fees under the ACA would reduce federal revenue by $664 billion from 2017 to 2026. These provisions include repeal of the medical device excise tax, the branded prescription drug manufacturer fee, and the health insurance fee; the surtax on investment income and the increase in payroll tax rate for certain high-income taxpayers. The projection also includes a loss of revenue resulting from the further delay of the excise tax on high-cost employer-sponsored coverage and other changes to tax-favored savings vehicles.

Next steps in the Senate

Congressional Republicans are using the budget reconciliation process for AHCA, which allows the Senate to consider and pass the bill by a simple majority of 51 votes, rather than the 60 generally needed to bring legislation to a vote under Senate rules. It is unlikely that any Democrats will support the bill. As a result, Senate Republicans will need to meld a diverse set of policy views to win the support of at least 50 of their members, with the expectation that Vice President Pence in his role as President of the Senate might be called in to cast a tie-breaking vote to advance the bill if needed to secure the necessary 51 votes.

Senate staff plan to begin drafting the next iteration of the bill the week of May 30, 2017.While taking into account the variety of policy views among Senate Republicans, they also will have to work within the confines of the budget rules. The reconciliation rules are strict and require that legislation be limited to issues tied to the federal budget deficit, taxes or the federal debt limit. The rules tie the Senate’s hands from making other substantive policy changes they might otherwise like to pursue. The budget reconciliation rules do not allow a complete rewrite or repeal of the ACA.

Now that the CBO score has been released, the Senate parliamentarian will sift through the legislation, line-by-line, and determine what can be included in the reconciliation bill and what needs to be removed according to the budget rules. For example, House provisions such as waivers to the ACA’s essential health benefits and community rating requirements will be examined to determine if they are within the budget reconciliation rules or fall outside of those rules as not being focused on taxes or the federal budget deficit.

Importantly, the budget reconciliation rules also require the Senate bill to reduce the federal budget deficit by at least as much as the House bill – in this case, at least $119 billion from 2017 through 2026.

Due to the budget rules that the Senate must abide by, it is important to keep in mind that the AHCA, in essence, would reconfigure a smaller pool of federal dollars to provide coverage in the commercial insurance markets and through the Medicaid program in order to yield the federal deficit reduction required to use the budget reconciliation process. As noted above, these changes fall into four major buckets: the federal premium assistance tax credits, Medicaid financing, funding for state pooling mechanisms, and the taxes and fees used to offset the federal spending. The Senate will have strong views on how the federal dollars should be dialed up or down to create what they believe is the most efficient way to expand coverage and lower premiums, especially in light of the new CBO analysis.


Anne Phelps
Principal | Deloitte Risk and Financial Advisory
US Health Care Regulatory Leader
Deloitte & Touche LLP
Latest conversations from Anne Phelps on Twitter

Daniel Esquibel
Senior Manager | Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

1“H.R. 1628: American Health Care Act,” Congressional Budget Office, Cost Estimate, May 24, 2017.
2Annual Update of the HHS Poverty Guidelines, Department of Health and Human Services, January 31, 2017.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

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