Whitfield L. Knapple, MD, FACG
Chair, ACG National Affairs

On Monday, March 13, 2017, the Congressional Budget Office (CBO) released its “score” or cost and other projections for the recently released American Health Care Act (AHCA).  This is the bill that the House Republicans released last week to repeal and replace the Patient Protection and Affordable Care Act (ACA).  On March 16, 2017, the House Budget Committee combined the two House Republican  drafts that came out of the House Energy & Commerce and Ways & Means Committees last week.  The Budget Committee voted 19-17 to approve the AHCA without amendment. All Democrats and three Republicans – Reps. Mark Sanford (R-SC), Dave Brat (R-VA), and Gary Palmer (R-AL) – voted against advancing the bill. The AHCA will now head to the House Rules Committee, which will prepare the legislation for a floor vote.

Speaker Paul Ryan (R-WI) said on Friday, March 17th that the U.S. House will vote on the bill next Thursday, March 23rd.  While it is unlikely that Speaker Ryan would put the bill up for a vote without first knowing it would pass, ACG continues to monitor this delicate process in finalizing a bill that is palatable to House Republicans, but will also pass the U.S. Senate.

ACG also continues to work with Congress on ensuring the bill has protection for pre-existing conditions as well as incentives for preventive services.

What did the CBO say? What is ACG monitoring?

The CBO provided a mix bag of news.

The positive is that the AHCA would reduce the U.S. federal budget deficit by $337 billion (2017-2026).  How?

  • The bill reduces federal spending by $1.22 trillion, mostly from reductions in Medicaid spending ($880 billion) and changes to subsidies and tax credits (net $312 billion reduction).
  • The bill also, however, provides for $833 billion in reduced federal revenues due to repealing taxes contained in the ACA. Some examples include the net investment tax ($157.6 billion), the health insurance tax ($144.7 billion), and Medicare tax increase ($117.3 billion).
  • The CBO also noted that health insurance premiums would drop by 10% by 2026. Although this is due in part to the ability of insurers to charge higher premiums to older individuals.

The negative is that the CBO estimates that 52 million would be uninsured by 2026, compared to 28 million under current law.  How?

  • The CBO projects 14 million people would lose health insurance coverage in 2018, and 24 million people would lose coverage in 2026.
  • The reductions come largely due to expected changes in Medicaid enrollment, where 14 million fewer people will be enrolled in Medicaid by 2026. CBO noted that “states would need to decide whether to commit more of their own resources to finance the program at current law levels or whether to reduce spending by cutting payments to health care providers and health plans, eliminating optional services, restricting eligibility for enrollment or (to the extent feasible) arriving at more efficient methods for delivering services.”
  • While premiums may drop after 2020, the CBO also estimates a 15-20% increase in premiums in 2018 and 2019.
  • The CBO estimates that 9 million fewer people would be enrolled in the individual market in 2020 than under current law, which would fall to 2 million less than current law by 2026.
  • The CBO estimates that 2 million people would lose employer coverage compared to current projections for 2020; 7 million people would lose employer coverage by 2026.

ACG is closely watching the discussion on essential health benefits and “actuarial value.”    Actuarial value is essentially used to measure the benefit “generosity” of a health insurance plan. Under the ACA, actuarial value is used to indicate the average percent of medical expenses paid by the plan, with the remainder of the costs borne by the consumer (i.e., through copayments, coinsurance, deductibles).  Thus, if a plan has an actuarial value of 60%, the consumer would pay 40% of the medical expenses.  Under the ACA, plans in the non-group and small-group markets must have an actuarial value that is in one of four tiers: 60%, 70%, 80%, or 90%.  Beginning in 2020, the AHCA bill would repeal those requirements, potentially allowing plans to have an actuarial value below 60%.  However, the CBO noted that because insurers still have to comply with the “essential health benefit” requirements of the ACA (untouched in the AHCA) and caps on out-of-pocket costs, insurers may be unable to design plans with actuarial value much less below 60%.  This is important because the 60% may now become the “ceiling of insurer generosity.”  Other ways to lower actuarial value may help insurers design products with lower monthly premiums, especially to incentivize younger individuals to purchase health insurance.  However, cost-sharing can be passed onto patients in the form of higher deductibles, coinsurance, or copayments.  ACG will continue to monitor and engage in these discussions on behalf of your patients, as well as on your behalf as employees and small business owners.

The Senate also confirmed Seema Verma to head the Centers for Medicare and Medicaid Services (CMS) on Monday, March 13th. The party-line vote of 55-43 included 3 Democrats, Joe Donnelly Donnelly (IN), Heidi Heitkamp (ND) and Joe Manchin (WV) in support of her confirmation.

Whitfield L. Knapple, MD, FACG

Chair, ACG National Affairs Committee