Letter to the Honorable Mike Enzi regarding the budgetary effects of H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act, as passed by the Senate on December 3, 2015
CBO and the staff of the Joint Committee on Taxation (JCT) have estimated the budgetary effects of H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act, as passed by the Senate. CBO and JCT estimate that enacting H.R. 3762 would decrease deficits by about $474 billion over the 2016–2025 period.
That estimate includes two components: Excluding macroeconomic feedback effects, the act would reduce deficits by about $282 billion. In addition, the changes in economic output and other macroeconomic variables that would result from enacting the legislation would reduce deficits by about $193 billion, CBO and JCT estimate. The budgetary effects of the act would result from changes to both direct spending and revenues. (CBO has not estimated any effects this act might have on discretionary spending.)
The largest budgetary effects of enacting the legislation would stem from:
- Repealing subsidies for health insurance coverage obtained through exchanges beginning in 2018 and, prior to that year, eliminating the limitation on the amount people would have to repay if the premium tax credit they receive during the year exceeds the allowed amount based on their actual income;
- Repealing the optional expansion of eligibility for Medicaid that was established in the Affordable Care Act (ACA), beginning in 2018;
- Eliminating penalties associated with the requirements that most people obtain health insurance coverage and that large employers offer their employees health insurance coverage that meets specified standards, while keeping those requirements in place, beginning in 2016;
- Repealing the federal excise tax imposed on some health insurance plans with high premiums; and
- Repealing many of the provisions of the ACA that are estimated to increase federal revenues (apart from the effect of the provisions related to insurance coverage). Those with the most significant budgetary effects include the Hospital Insurance payroll tax rate for high-income taxpayers, a surtax on those taxpayers’ net investment income, and annual fees on health insurers.
Other parts of the legislation that affect the budget would:
- Repeal reductions to state allotments for Medicaid payments to hospitals that treat a disproportionate share of uninsured or low income patients;
- Eliminate the Prevention and Public Health Fund and rescind any unobligated balances of the fund;
- Terminate the enhanced federal matching rate for personal care attendant services and supports provided under the Community First Choice Act beginning in calendar year 2018;
- Increase the amount of funding authorized and appropriated to the Community Health Center Fund and for grants to states to address substance abuse;
- Prohibit federal funds from being made available, for one year, to certain entities that provide abortions; and
- Repeal a portion of the Medicaid funding provided to U.S. territories.
As required by the Concurrent Resolution on the Budget for Fiscal Year 2016, CBO and JCT have assessed the effect of H.R. 3762 on long-term deficits and direct spending. Both including and excluding macroeconomic feedback, CBO and JCT estimate that enacting the legislation would not increase net direct spending in any of the four consecutive 10-year periods beginning in 2026. Both including and excluding macroeconomic feedback, the agencies estimate that enacting the legislation would increase on-budget deficits by at least $5 billion in at least one of the four consecutive 10-year periods beginning in 2026.