CMS scores the AHCA: 8 key takeaways

CMS' Office of the Actuary released its score Tuesday of the American Health Care Act, which the U.S. House of Representatives approved May 4.

Here are eight main findings from CMS on the healthcare bill.

1. Compared to current law, the number of uninsured under the AHCA would increase by 13 million over the next decade, reaching a total of 43 million by 2026. Comparatively, under the ACA, the total number of uninsured is expected to hit 31 million by 2026. The bulk of the increase in uninsured under the AHCA stems from reduced Medicaid eligibility, the repeal of the individual mandate and the overall reduction in subsidies available to purchase health insurance. Under the replacement healthcare bill passed by the House, CMS expects 8 million fewer Americans enrolled in Medicaid by 2026, 3 million fewer people enrolled in employer-sponsored coverage and 1-2 million fewer people to have coverage from the health insurance marketplaces by 2026.

2. The AHCA would reduce federal expenditures by $328 billion from 2017-2026. Again, the bulk of reductions stem from Medicaid. The law would repeal Medicaid expansion beginning in 2020 — while allowing those who are already enrolled to continue coverage at the higher federal matching rates — and restructure the Medicaid program to a per capita allotment. These Medicaid changes alone are associated with a $383 billion savings in federal expenditures by 2026. Reductions in subsidies for individuals who buy insurance in the marketplace also contribute $160 billion in savings. The Medicaid and subsidy savings, combined with another $42 billion in savings from elimination of the Basic Health Program, are partially offset by increased expenditures associated with Medicare and the Patient and State Stability Fund, which is intended to help states offset the impact of high-cost enrollees.

3. The CMS estimate is more optimistic than that of the Congressional Budget Office, which suggested 23 million more Americans would go uninsured by 2026 compared to current law. The CBO also projected a smaller financial impact, projecting the AHCA would reduce the federal deficit by $119 billion over the next decade.

4. CMS suggests the AHCA would reduce overall national spending on healthcare by 0.6 percent to $258 billion over the next decade. National health expenditures are projected to account for 19.9 percent of the GDP by 2026, which represents a 0.2 percent improvement over projections under the ACA.

5. CMS also found the legislation would create a slight shift in costs from the federal government and private organizations onto households and states from 2017-2026. CMS expects out-of-pocket spending to be $221 billion higher under the AHCA than under current law in the next decade. However, $200 billion of this increase is expected to be offset by the repeal of two taxes — the Medicare tax on the wealthy and the health insurance tax — as well as declines in employer-sponsored coverage. CMS expects those who no longer have employer coverage to be primarily younger, lower-income people. Though the report does not specify, people who choose to forgo employer-sponsored coverage or are no longer offered a plan will likely use fewer healthcare services, reducing out-of-pocket spending. This puts the estimated net increase in spending for households at 0.2 percent, or about $21 billion. States are also expected to pick up about 0.5 percent in additional healthcare spending, a total of about $37 billion by 2026. Meanwhile, CMS found the federal government's share of national health expenditures would fall 1.9 percent from 2017-2026 and private businesses' share would drop about 0.5 percent over the same time period.

6. By 2026, individuals who buy insurance on the exchanges would pay 27 percent more — or about $162 more per month — for healthcare under the AHCA, compared to what they are expected to pay under the ACA. The average estimated premium would be $380 and additional cost-sharing would total $380 per month in 2026, due to less generous coverage and the elimination of the cost-sharing reduction subsidies, according to CMS.

7. The AHCA could have mixed effects on marketplace stability, according to CMS. For example, CMS suggests the following provisions could strengthen the marketplaces: the 30 percent surcharge on marketplace enrollees who do not maintaining continuous health insurance coverage, the ability of individuals on the exchanges to purchase non-ACA compliant plans and the Patient and State Stability Fund. However, other provisions, particularly some options under the state waiver program, could make the marketplaces untenable, such as those "that would severely limit the [essential health benefits] package or allow healthy individuals to be underwritten on an annual basis," the Office of the Actuary report reads. These scenarios were not included in CMS' estimate because the agency expects they would destabilize the marketplaces by making coverage unaffordable for large portions of the population.

8. The AHCA would exhaust the Medicare Hospital Insurance trust fund by 2026, two years earlier than expected. These funds would be depleted sooner, primarily due to the repeal of the Medicare tax on high earners and the increase in Medicare disproportionate share hospital spending associated with treating greater volumes of uninsured patients. Taking all Medicare changes into account — which only affect the program's financing, not its coverage — the AHCA would increase Medicare spending by $121 billion over the next decade, according to CMS.

 

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