As posted on the website of the House Committee on Rules on March 22, 2017, incorporating manager's amendments 4, 5, 24, and 25
CBO and the staff of the Joint Committee on Taxation (JCT) have prepared an estimate of the direct spending and revenue effects of H.R. 1628, the American Health Care Act, as posted on the website of the House Committee on Rules on March 22, 2017, incorporating manager’s amendments 4, 5, 24, and 25.
As a result of those amendments, this estimate shows smaller savings over the next 10 years than the estimate that CBO issued on March 13 for the reconciliation recommendations of the House Committee on Ways and Means and the House Committee on Energy and Commerce. The estimated effects on health insurance coverage and on premiums for health insurance are similar to those estimated for the committees’ recommendations.
Effects on the Federal Budget
CBO and JCT estimate that enacting H.R. 1628, with the proposed amendments, would reduce federal deficits by $150 billion over the 2017-2026 period; that reduction is the net result of a $1,150 billion reduction in direct spending, partly offset by a reduction of $999 billion in revenues. The provisions dealing with health insurance coverage would reduce deficits, on net, by $883 billion; the noncoverage provisions would increase deficits by $733 billion, mostly by reducing revenues.
Pay-as-you-go procedures apply because enacting the legislation would affect direct spending and revenues. CBO and JCT estimate that enacting the legislation would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2027.
Effects on Health Insurance Coverage
CBO and JCT estimate that, in 2018, 14 million more people would be uninsured under the legislation than under current law. The increase in the number of uninsured people relative to the number under current law would reach 21 million in 2020 and 24 million in 2026. In 2026, an estimated 52 million people under age 65 would be uninsured, compared with 28 million who would lack insurance that year under current law.
Effects on Premiums
H.R. 1628, with the proposed amendments, would tend to increase average premiums in the nongroup market before 2020 and lower average premiums thereafter, relative to projections under current law. In 2018 and 2019, according to CBO and JCT’s estimates, average premiums for single policyholders in the nongroup market would be 15 percent to 20 percent higher under the legislation than under current law. By 2026, average premiums for single policyholders in the nongroup market would be roughly 10 percent lower than under current law.
Uncertainty Surrounding the Estimates
The ways in which federal agencies, states, insurers, employers, individuals, doctors, hospitals, and other affected parties would respond to the changes made by the legislation are all difficult to predict, so the estimates in this report are uncertain. But CBO and JCT have endeavored to develop estimates that are in the middle of the distribution of potential outcomes.
Comparison With the Previous Estimate
On March, 13, 2017, CBO and JCT estimated that enacting the reconciliation recommendations of the House Committee on Ways and Means and the House Committee on Energy and Commerce (which were combined into H.R. 1628) would yield a net reduction in federal deficits of $337 billion over the 2017-2026 period. CBO estimates that enacting H.R. 1628, with the proposed amendments, would save $186 billion less over that period. That reduction in savings stems primarily from changes to H.R. 1628 that modify provisions affecting the Internal Revenue Code and the Medicaid program.
Over the 2017-2026 period, modifications to provisions affecting the Internal Revenue Code that are not directly related to the law’s insurance coverage provisions would reduce JCT’s estimate of revenues by $137 billion. Reducing the threshold for determining the medical care deduction on individuals’ income tax returns from 7.5 percent of income to 5.8 percent would reduce revenues by about $90 billion. Other changes include adjusting the effective dates and making other modifications to the provisions that repeal or delay many of the changes in the Affordable Care Act, which would reduce revenues by $48 billion.
A number of changes to the Medicaid program would reduce CBO’s estimate of savings by $41 billion over the 2017-2026 period. The reduction would result from revising the formula for calculating the per capita allotments in Medicaid to allow for faster growth of the per capita cost of aged, blind, and disabled enrollees. The effects of changing that formula would be offset somewhat by the effects of three other provisions that would increase savings: reducing the per capita allotment in Medicaid for the state of New York in proportion to any financing the state receives from county governments; providing states the option to make eligibility for Medicaid conditional on satisfying work requirements for enrollees who are not single parents of children under age 6 or who are not pregnant or disabled; and allowing states to receive a block grant for Medicaid coverage of children and some adults instead of funding based on a per capita cap.
Other smaller changes resulting from the manager’s amendments would reduce savings by an estimated $8 billion over the period.
Compared with the previous version of the legislation, H.R. 1628, with the proposed amendments, would have similar effects on health insurance coverage: Estimates differ by no more than half a million people in any category in any year over the next decade. (Some differences may appear larger because of rounding.) For example, the decline in Medicaid coverage after 2020 would be smaller than in the previous estimate, mainly because of states’ responses to the faster growth in the per capita allotments for aged, blind, and disabled enrollees—but other changes in Medicaid would offset some of those effects.
The legislation’s impact on health insurance premiums would be approximately the same as estimated for the previous version.