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CBO Estimates 24 Million More Uninsured by 2026 Under House Health Care Proposal; Pennsylvanians Would Be Hit Hard by Coverage Changes

March 13, 2017

The Congressional Budget Office (CBO) score of the American Health Care Act (AHCA) confirms concerns raised by HAP President and CEO Andy Carter last week, that it “does not fulfill our core principle that any replacement plan must ensure continuity of coverage and care through access to a robust, competitive delivery system.”

More than half of Pennsylvania’s 1.1 million individuals who secured coverage under the Affordable Care Act (ACA) would likely lose their coverage by 2018, and by 2026, the number of uninsured in Pennsylvania would likely rise to pre-ACA levels.

In summary, the CBO found that enacting the legislation would:

  • Reduce the federal deficits by $337 billion over the 2017–2026 period. The largest savings would come from reductions in Medicaid spending and from the elimination of ACA marketplace subsidies.
  • Increase the number of uninsured by 14 million in calendar year (CY) 2018. Most of the increase would stem from repealing the individual mandate.
  • Increase the number of uninsured (relative to the number under the current law) to 21 million in 2020, and then to 24 million in 2026. The reductions will be driven, in large part, by changes in Medicaid enrollment due to proposed changes in the federal Medicaid matching rate, and per capita funding structure.
  • Lead, in 2026, to 52 million being uninsured, compared with 28 million who would lack insurance in that year under current law.

The CBO estimates that several provisions relating to Medicaid would decrease direct spending on this program by $880 billion over the 2017–2026 period. By 2026, approximately 14 million fewer individuals will be enrolled in the program. 

While some of the decline in Medicaid enrollment and spending will begin immediately, most of the changes would begin in 2020, when the legislation would eliminate the enhanced federal matching rate for new enrollees under the ACA’s expansion and would place a per-capita cap on payments to states. By 2026, Medicaid spending would be about 25 percent less than what CBO projects under current law.

While the CBO estimates reductions in federal spending, largely because of the reduction in federal financial participation supporting enrollment in Medicaid, they do not address what the cost to any one state would be to sustain the current level of coverage. Pennsylvania’s Department of Human Services has estimated that the cost to Pennsylvania to sustain health insurance under the Medicaid program for newly eligible persons as a result of expansion would be $2 billion per year.

And, while the AHCA provides grants to states to address the costs associated with people with higher health needs, states are required to match these funds. Pennsylvania’s state budget is already stretched to meet current obligations. Therefore, the matching requirement may cause Pennsylvania to forego these funds, putting in jeopardy access to affordable coverage for high risk patients.

The CBO said that the AHCA would increase average premiums in the individual market prior to 2020, but lower average premiums thereafter (compared to the projections under current law). According to the CBO, premiums would decrease as a result of several factors, including:

  • Grants to the states from the Patient and State Stability Fund
  • Reductions in the actuarial value of the plans
  • Younger mix of enrollees

However, the premium reductions would not be uniform––young adults would experience lower premiums, while older adults would experience substantially higher premiums. Given Pennsylvania’s aging population, this shift could pose problems in many communities across the commonwealth.

The CBO also estimates that over time, fewer employers will offer health insurance to their employees as a result of the mandate on employers being removed—particularly employers that have on average, younger and higher-income workforces. Prior to the ACA, Pennsylvania had been experiencing a decline in employment-based coverage; whereas under the ACA, enrollment in health insurance coverage for employed groups was largely stable. In Pennsylvania, 53 percent of the population receives health insurance through employment-based coverage.

There also are implications to Medicaid disproportionate share allotments as the AHCA calls for eliminating the cuts in Medicaid disproportionate share for non-expansion states in 2018, shifting the cost of those cuts to states, such as Pennsylvania, which expanded Medicaid. However, in 2020, the cuts are eliminated for all states, including Pennsylvania.

The CBO report points to the uncertainty that states, insurers, employers, individuals, hospitals, and other health care providers will face as various provisions are played out at the federal and state levels. There will be complex choices that will be presented as all stakeholders impacted will see various shifts in their costs.

HAP remains steadfast in its position that the progress that has been made to benefit 1.1 million Pennsylvanians through expanded coverage, should not be threatened. HAP and its members will continue to communicate with state and federal lawmakers and other elected officials about the negative consequences of passing the AHCA.

The bill has been marked-up by the U.S. House Energy and Commerce and Ways and Means Committees, and is awaiting full consideration by the House of Representatives.

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