CBO Analysis of American Health Care Act (AHCA)



Yesterday, the Congressional Budget Office (CBO), a nonpartisan federal agency within the legislative branch of the United States government released its analysis of the American Health Care Act (AHCA).

Here are some of the key points from the CBO analysis:

By 2026, 52 Million People Total Would Not Have Coverage

If the American Health Care Act becomes law, by 2026 52 million people would be uninsured. The analysis suggests that people will be without coverage, as a result of the bill’s repeal of the individual mandate obligating people to obtain insurance or pay a penalty. As you may recall, instead of the penalty the AHCA includes a continuous coverage requirement that would allow insurers to charge consumers 30 percent more in their premiums if they let their coverage lapse for more than 63 days.

The Federal Deficit Would Be Reduced by $337 Billion Over Ten Years

The bill is expected to reduce the federal deficit by $337 billion over the next decade. This reduction is essentially because the bill does not expand Medicaid and repeals the ACA subsidies created that were in place to help low- and middle-income Americans buy private health coverage.

Fewer People Would Enroll in Employer-Sponsored Plans

The report projects that 7 million fewer people would enroll in employer-based coverage by 2026. This projection is based on the assumption that because the AHCA reduces the employer penalty to zero for not offering health care coverage for certain employers that employers would drop coverage.

From a SHRM perspective, employers & employees continue to believe that offering health benefits is important way to recruit, retain & value talent. Employers have offered health care benefits since WWII and the number of individuals insured by employer-sponsored coverage continues to grow. According to Kaiser’s Employment Health Benefits 2010 Annual Survey, 157 million individuals were covered by employer-sponsored coverage. Today, over 177 million Americans and their families have health insurance through their employer.

Premiums Would Increase

Without the individual mandate, the CBO projects average premiums for single policyholders will increase by 15 to 20 percent in 2018 and 2019 under the AHCA bill. Because people will no longer have to pay a penalty for going uninsured, fewer healthier people will sign up, which will create an unbalanced risk pool.  By 2020, however, the CBO states that the increase in premiums will be offset by other funding that the AHCA law provides and an increased number of younger enrollees. By 2026, average premiums are projected to be 10 percent.  This is because the AHCA would allow insurers to charge older adults five times more for coverage and providing tax credits to people based on their age, family size and income.

Medicaid Spending Would Fall

Under the AHCA, the federal government would set per-person caps in spending on Medicaid beneficiaries rather than match spending each year. The ACA allowed states to expand the Medicaid program to low-income people, but not all states have opted to implement that provision. The AHCA phases out expansion by 2020 in addition to changing the way Medicaid is paid for.

The House Budget Committee is set to markup the AHCA this Thursday, March 16 at 10am. http://budget.house.gov/hearingschedule/reconciliation-markup.htm


Read more at the SHRM HR Public Policy Issues Health Care page


The SHRM Blog does not accept solicitation for guest posts.

Add new comment

Please enter the text you see in the image below: