The Committee for a Responsible Federal Budget, a nonpartisan policy group, estimated the impact of amendments made to the American Health Care Act, which was approved by the House last week without a cost analysis from the Congressional Budget Office.
The CRFB analysis builds on the last estimate of the bill provided by the CBO, which projected that the AHCA would reduce the federal deficit by $150 billion over the next decade. CRFB conducted its analysis ahead of the vote and the proposal to add $8 billion more in funding for high-risk pools, otherwise known as the Upton amendment.
The analysis instead focuses on the costs of three other changes made to the bill: the Palmer amendment, the manager's amendment and the MacArthur amendment. Here is an overview of the three amendments and how much they would cost in relation to the AHCA.
1. The Palmer amendment adds $15 billion to the 10-year estimated cost of the AHCA. The amendment would create the Federal Invisible Risk Sharing Program, which is a fund paid to insurers to help subsidize the cost of covering sick patients in the individual market. The amendment allots $15 billion to fund the program from 2018 through 2026.
2. The manager's amendment would save $50 billion under the AHCA. In addition to a number of other provisions, the amendment added $15 billion for maternity and newborn care, according to CRFB. However, it delayed the repeal of the Medicare Hospital Insurance surtax, which the CRFB estimates will save $65 billion. The net effect is $50 billion in savings, according to CRFB.
3. The MacArthur amendment would add anywhere from $30 billion to $300 billion in costs based on how many states file for waivers and how many more people enroll in health insurance. The amendment added an option for states to seek federal waivers to opt out of the ACA's essential health benefits requirements and community rating rule, which prohibits payers from charging different premiums based on age, gender or health status. If states filed for waivers, it could increase premiums for sick people, but it would also likely reduce premiums for others as payers would be able to offer more bare-bones health plans. This would likely incentivize more people to enroll, according to CRFB. However, if more people enroll in insurance, more people will be eligible for tax credits, according to the analysis, which could ultimately add significant costs to the bill if enough people enroll.
The CRFB estimated if states file waivers and 1 million more people enroll in insurance, it would cost about $30 billion over 10 years. If just 1 million more people enroll, all three amendments together would save $5 billion, meaning the AHCA would reduce the federal deficit by $155 billion, when combined with the CBO's previous estimate. Even when adding the $8 billion for the Upton amendment, the AHCA would still save $147 billion.
However, if more than 1 million people enroll, potential savings are reduced or even reversed, according to the CRFB. The policy group estimated a stepwise increase in costs if more people enroll in health insurance, so that if 2 million more Americans enroll, it would cost $60 billion over 10 years; if 5 million more people enroll, it would cost $150 billion; and if 10 million more Americans enroll, it would cost $300 billion. If 10 million more Americans gained insurance coverage under the AHCA's waivers, however, the CRFB estimated the total cost of the amendments to be $265 billion, which would completely reverse the $150 billion in overall savings projected by the CBO. The bill would then add $115 billion to the federal deficit, not accounting for the $8 billion allotted for high-risk pools under the Upton amendment.
Read the full analysis here.
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