This week the Congressional Budget Office (CBO) projected that The American Health Care Act, which has been proposed by House Republicans as a replacement for the Affordable Care Act (ACA), would result in 24 million Americans losing their health insurance while raising premiums for those covered on the individual market. CBO is the official nonpartisan budget keeper of legislation on Capitol Hill, and its projections on the impact of policy proposals can determine whether they have the political momentum to pass the House and Senate.
The budget office concluded that the GOP measure would reduce federal deficits by $337 billion over the coming decade. However, the reductions are largely a result of cuts to Medicaid, which would reduce its enrollment by 14 million, according to the CBO estimate. Average premiums would rise by as much as 20 percent in 2018 and 2019 before falling in later years.
CBO forecasts that an estimated 14 million people would drop their insurance next year because the proposal repeals the tax penalties associated with the individual mandate. In other words, if people are not required to buy insurance, many will stop doing so. That number would climb to 24 million in later years when the bill’s cuts to Medicaid take effect. CBO also projects seven million fewer U.S. residents would be insured through their employers by 2026 because of the bill’s provisions to repeal the employer mandate.
After rising sharply in the first two years, premiums, on average, would drop by 10 percent for people on the individual market over the next decade. However, premiums would vary significantly for people of different ages because of a change Republicans would make allowing older people to be charged more for insurance coverage, compared to young people, than allowed under the ACA.
For instance, CBO estimates that under the ACA, a 64-year-new with an annual income of $26,500 with an insurance policy that costs $15,300 would receive a $13,600 tax credit, leaving the consumer responsible for $1,700. Under the House GOP bill, those out-of-pocket costs would increase to $14,600 – a 750-percent increase – both because health insurers would be able to charge older people more, raising the premium to $19,500, and because the tax credit would be lower, about $4,900.
As another example, a 21-year-new with the same annual income and an insurance policy that costs $5,100 under current law would be eligible for a $3,400 tax credit and responsible for the remaining $1,700. Under the House bill, those out-of-pocket costs would decrease to $1,450.
Two House committees have approved the legislation, and House Speaker Paul Ryan wants to bring it to the full House next week. Although many Republicans back the bill, some conservatives say it doesn’t go far enough in repealing Obamacare, while some moderates in states that expanded Medicaid do not want their constituents losing coverage.
GOP leaders hope the Senate will consider the measure before breaking for an early April recess. However, opposition from both ends of the Republican spectrum suggests that Senators might demand significant changes.
Verma confirmed as CMS Administrator
In other news, the Senate on Monday voted 55-43 to confirm Ms. Seema Verma for CMS Administrator. Ms. Verma is well known for her work with Indiana officials to reform the state’s Medicaid program. As head of CMS, she will play a key role in Medicare and Medicaid reforms under the Trump administration, including major payment policy changes called for under MACRA. In addition, Verma will have a hand in implementing Republican proposals to change the Affordable Care Act (ACA) if the proposals become law.
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