CRFB analysis: Full ACA repeal could cost up to $350 billion

The latest analysis from the bipartisan Committee for a Responsible Federal Budget suggests repealing the entire ACA could cost anywhere from $150 billion to $350 billion by the end of 2027, depending on the calculation methods used.

This estimate is down from a previous CRFB analysis that put the cost of a full repeal at nearly $500 billion by 2026. The CRFB adjusted its analysis down largely because of recent premium hikes, according to the report.

The CRFB's current high estimate of a full ACA repeal is $350 billion, which is based on conventional scoring. The low estimate of $150 billion is based on dynamic scoring. Unlike conventional scoring, dynamic scoring attempts to forecast larger economic changes under new policies by taking jobs, wages, investment, federal revenue and economic growth into account.

Here is a breakdown of these estimates.

1. CRFB estimates repealing the coverage provisions of the ACA would save $1.55 trillion by the end of 2027. These savings are realized largely from repealing Medicaid expansion ($1.1 trillion) and from insurance and cost-sharing subsidies ($900 billion). This is partially offset by losing the revenue generating individual mandate (-$250 billion) and other various provisions (-$200 billion).

2. Repealing the taxes associated with the ACA would cost $800 billion. This comes from the Medicare payroll taxes on high-income individuals as well as the investment income tax. Additional revenue loss would come from repealing taxes on insurance companies, medical device companies and pharmaceutical companies. A repeal of the "Cadillac tax" on luxury employer-based insurance plans would cost $100 billion over the next 10 years, according to CRFB estimates.

3. Repealing Medicare cuts would cost $1.1 trillion. The CRFB says the main two contributors to this estimate are Medicare Advantage cuts and Medicare cuts. Reversing Medicare Advantage cuts would cost $450 billion by 2027 and ending reductions in fee-for-service Medicare would cost about $500 billion, according to CRFB.

4. Repealing the ACA in full would increase the size of the economy by 0.5 to 1 percent over 10 years. The CRFB suggests removing income-related premium subsidies would incentivize people to work more hours, and could potentially generate $200 billion in net savings.

In sum, the CRFB suggests repealing the ACA would save $1.75 trillion (combining the repeal of coverage provisions and the $200 billion in net savings by growing the economy). However, it suggests these savings would be offset entirely by a $1.9 trillion loss (combining the $800 billion loss from repealing taxes and the $1.1 trillion Medicare cuts).

However, the law may only be partially repealed. The CRFB offered some insight on the budgetary effect of a partial repeal, but did not provide full estimates. For example, the CRFB said repealing all coverage provisions of the ACA, but keeping Medicare reductions and taxes, could save between $1.55 trillion and $1.75 trillion. Doing this would mean 23 million people would lose coverage, which could increase costs to the healthcare system. But, this would mean Congress would have funds to adopt an ACA replacement that could again expand coverage.

The analysis is based on data from the Congressional Budget Office. Read the full report here.


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