The CBO estimates that the proposed plan would leave 52 million Americans uninsured
The House Republicans recently announced their plan to repeal and replace the Affordable Care Act. And last week, the Congressional Budget Office and the Joint Committee on Taxation took a look at the bill and released a report based on their findings. Among their key takeaways was that by 2018, 14 million more people would be uninsured under the proposed legislation versus under the current Obamacare plan. That number would rise to 21 million in 2020 and would hit 24 million by the year 2020.
So in total, as CNN reports, an estimated 52 million people would be uninsured by 2026 under the GOP plan compared to the 28 million who would lack insurance under the current law.
The future of Medicaid
According to the CBO, the initial increase of the uninsured in 2018 would be due to people choosing not to buy insurance, as the American Health Care Act would repeal tax penalties for those that opt out signing up for plans. But in later years, the surge in uninsured Americans would likely be due to changes in Medicaid programs for low-income citizens – the report noted that “some states would discontinue their expansion of eligibility” for Medicaid and that there would be a per beneficiary cap on federal spending. Per the CBO, by 2026, federal Medicaid spending would be 25 percent lower under the American Health Care Act than what is projected under the current Affordable Care Act. The report also estimated that the number of Medicaid beneficiaries would be 17 percent lower (14 million fewer people would be covered by Medicaid).
The impact on premiums
Over the next few years, insurance premiums are expected to continue to rise. In fact, it is estimated that they will increase by 15% to 20% in the individual market throughout both 2018 and 2019. Following 2019, however, experts say that under the proposed legislation, premiums should begin to fall. With the American Health Care Act in place, the average premiums are said to be about 10% lower than they are under the current Obamacare system by the year 2026.
The CBO and JCT note that though the general prediction is for premiums to increase prior to 2020 and decrease after, parts of the population would be impacted differently based upon their age. According to the report, under the current law, a 64-year-old can generally be charged premiums that cost up to three times as much as those offered to a 21-year-old. But under the proposed legislation, that allowable difference would shift to five times as much unless a state chose otherwise. That change would tend to reduce premiums for younger people and increase premiums for older people.
A look at the numbers
Per The New York Times, here is a real life scenario for how the plan would benefit certain parts of the population over others:
Under current law, in 2026, a single 21-year-old earning $26,500 with an insurance policy that costs $5,100 a year would get a tax credit of $3,400 and would have to pay $1,700 of the premium. Under the Republican bill, that person’s share of the cost would drop to $1,450.
By contrast, a 64-year-old earning the same amount would fare much worse. That person’s $15,300 health plan would be offset by a $13,600 tax credit under current law, leaving the consumer responsible for $1,700. Under the Republican plan, health insurers would be free to charge older people more, raising that person’s premium to $19,500. But the tax credit would be only $4,900, and that person’s share of the premium would then be $14,600.
A massive reduction in the federal deficit
If passed, The American Health Care Act would help to significantly lower the federal deficit. Per the CBO report, enacting the legislation would reduce federal deficits by $337 billion over the 2017-2026 period. That would result in a $323 billion on-budget savings and $13 billion in off-budget savings. Outlays would be reduced by $1.2 trillion over the period, and revenues would be reduced by $0.9 trillion.”
Per the report, the largest savings would come from reductions in outlays for Medicaid and from the elimination of the Affordable Care Act’s subsidies for nongroup health insurance. And the largest costs associated with the new plan would rise from repealing many of the changes the ACA made to the Internal Revenue Code – including “an increase in the Hospital Insurance payroll tax rate for high-income taxpayers, a surtax on those taxpayers’ net investment income, and annual fees imposed on health insurers—and from the establishment of a new tax credit for health insurance.”
Here are a few additional components of the plan:
- The bill will eliminate tax penalties for uninsured Americans
- Income-based government subsidies will be replaced with refundable tax credits based on age.
- The amount that can be contributed to a Health Savings Account (HAS) would be increased in 2018 to $6,550 for an individual and $13,100 for a family.
- It would phase out the expansion of Medicaid after 2020
- Insurance companies would freely be allowed to charge older Americans more for healthcare plans
- The ban on discriminating based on preexisting conditions would remain and insurers must charge patients with certain conditions the same rates as those without preexisting conditions.
- Americans who don’t maintain continuous coverage will be subjected to a 30% surcharge for premiums when they decide to buy more coverage.
- Some large employers may no longer be required to offer health insurance under the new bill.