Congressional Budget Office Releases Their Budgetary Review Of American Health Care Act

On Monday the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) released their estimate of the budgetary impact from the proposed American Health Care Act that is expected to raise the number of uninsured Americans by 14 million by 2018 and increase average premiums in the non-group market until 2020 but lower them afterwards, on par with projections under the current law.

The rise in the number of uninsured Americans is estimated to reach 21 million in 2020 and to 24 million in 2026, mostly due to reductions in Medicaid enrollment from some states halting their expansion of eligibility, and a spending cap being implemented per enrollee in the program.

According to CBO and JCT’s estimates, average premiums for single policyholders in the non-group market jumps 15-20 percent higher in 2018 and 2019 than current law, mostly due to penalties on individual mandates being removed, resulting in fewer numbers of relatively healthy Americans signing up.

However, average premiums for single policyholders in the non-group market would be approximately 10 percent lower by 2026 than current law.

After increasing in 2018 and 2019, average premiums will begin to moderate in 2020.

Grants to states from a Patient and State Stability Fund, used by states to limit the costs to insurers with high claims, combined with ending the requirement of insurers to offer health care plans covering percentages of the cost of covered benefits, and a younger mix of enrollees, are estimated to offset the increase in average premiums from repealing the individual mandate penalties.

Still based on current legislation, insurers would be allowed to charge five times more for older enrollees than younger ones.

Under the current law with the Affordable Care Act, insurers are allowed to charge three times more for premiums.

The proposed increase could substantially raise premiums for older Americans while lowering them for younger Americans.

AARP and AMA Criticize American Health Care Act

AARP and the American Medical Association (AMA) have come out against the proposed House legislation contained in the American Health Care Act.

“AARP opposes this legislation, as introduced, that would weaken Medicare, leaving the door open to a voucher program that shifts costs and risks to seniors” AARP Executive Vice President Nancy LeaMond wrote in a March 7th statement.

“Before people even reach retirement age, big insurance companies could be allowed to charge them an age tax that adds up to thousands of dollars more per year. Older Americans need affordable health care services and prescriptions. This plan goes in the opposite direction, increasing insurance premiums for older Americans and not doing anything to lower drug costs” AARP Executive Vice President Nancy LeaMond  added.

The American Medical Association said that the American Health Care Act is “flawed” and would have an “adverse impact” on patients and the health of the nation.

In a March 8th letter to Congressional leaders, the American Medical Association criticized the proposed legislation for replacing income-based subsidies that are currently operational with the Affordable Care Act in return for age-based tax credits from the proposed American Health Care Act.

“As drafted, the AHCA would result in millions of Americans losing coverage and benefits. By replacing income-based premium subsidies with age-based tax credits, the AHCA will also make coverage more expensive… if not out of reach for poor and sick Americans. For these reasons, the AMA cannot support the AHCA as it is currently written” the AMA wrote.

Impact On The Federal Budget

Based on the latest estimate from the CBO and JCT, the proposed legislation under the American Health Care Act would lower federal deficits by $337 billion over the 2017-2026 with the largest savings coming from reductions from outlays in Medicaid and ending the Affordable Care Act’s (ACA’s) subsidies for non-group health insurance.

The largest costs under the proposed legislation comes from repealing the past changes made under the Affordable Care Act’s concerning the Internal Revenue Service’s (IRS) in areas such as “increasing the hospital insurance payroll tax rate for high-income taxpayers, a surtax on those taxpayers’ net investment income, annual fees imposed on health insurers, and the establishment of a new tax credit for health insurance.”

The proposed legislation under the American Health Care Act is intended to replace the 2010 Affordable Care Act, known as Obamacare, that President Trump had previously claimed is “imploding” and the media is ignoring it.

Although the American Health Care Act hasn’t yet been brought to the floor for a vote in the House, it faces an uphill climb in the Senate where support for the health care legislation is weaker.

Written and Edited By:

Johnathan Schweitzer

@SchweitzFinance

schweitz31@gmail.com


 

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