BEYOND THE NUMBERS
Updated July 19th
By potentially reviving a version of a vetoed 2015 bill to repeal most of the Affordable Care Act (ACA) without a replacement, Senate Majority Leader Mitch McConnell may put up for debate legislation that — a Congressional Budget Office (CBO) analysis from today shows — would cost even more people their health coverage, raise premiums in the individual market even higher, and inflict even more damage to insurance markets than prior ACA repeal bills that have failed to gain enough support in the Senate to pass.
The debate over the ACA’s future has brought greater attention to the importance of the ACA Medicaid expansion (and Medicaid in general), ACA subsidies that help low- and moderate-income people pay for coverage, and ACA provisions that keep premiums affordable while protecting people with pre-existing conditions. A “repeal-without-replace” bill simply includes worse versions of many provisions that several Senate Republicans have already rejected. Indeed, today’s CBO report is the fifth such analysis of an ACA repeal bill so far this year to show that at least 20 million people would lose coverage and millions more would face higher costs.
CBO’s analysis found that a repeal-without-replace bill would cause 32 million people to lose coverage, double premiums in the individual market, and cause the individual market to virtually collapse. When Congress voted for the 2015 version of the repeal-without-replace bill, it lacked a comprehensive CBO analysis showing the impact on coverage and costs — in particular, the negative effects on the individual market. But CBO’s analysis of the revived version of the legislation — with nearly identical findings to an analysis of the 2015 bill that it released in January — shows how damaging the bill would be:
Deep coverage losses – with 32 million more uninsured by 2026. Coverage losses would be dramatic in the short term and even larger in the long term: 17 million people would lose coverage in 2018 and 27 million would lose coverage after three years. By 2026, 32 million more people would be uninsured than under the ACA, bringing the total number of uninsured higher than before the ACA.
These losses (on a state-by-state basis here) reflect the elimination of marketplace subsidies and the virtual collapse of the individual market, as outlined below, and the elimination of the Medicaid expansion. A repeal bill would end federal funding for Medicaid expansion abruptly on January 1, 2020, with no phase-out period. And, unlike the 2017 House and Senate health bills, it wouldn’t allow states to continue Medicaid expansion coverage even if they took the highly unrealistic step of boosting their own Medicaid spending by the necessary three- to five-fold increase to offset the loss of federal funding.
- Doubling of premiums. Compared to current law, premiums in the individual market would be roughly 25 percent higher in the first year, 50 percent higher after three years, and twice as high by 2026. That’s because eliminating the marketplace subsidies and the individual mandate that people obtain coverage or pay a penalty would lead many fewer healthy people to enroll, making the pool of enrollees much sicker, on average, and thus costlier to cover. This would drive up premiums and, in turn, cause more healthy people to flee the market.
- Collapse of the individual market. After three years, about half of Americans would live in areas with no individual market insurers as insurers withdrew due to the deteriorating risk pool. By 2026, three-quarters of the population would live in areas without any individual market insurer.
- Large tax cuts for the wealthy and corporations. A repeal-without-replace bill would immediately provide deep tax cuts to the wealthy, pharmaceutical corporations, and insurers, even as 17 million people lost coverage in the first year alone. Those tax cuts would average more than $50,000 per millionaire per year and would average $7 million each for the 400 highest-income households.
Repeal-without-replace would make it virtually impossible to pass a future replacement bill. The Republican repeal plan supposedly aims to create pressure for a replacement bill within two years, when the ACA’s provisions expanding Medicaid and helping families afford individual market insurance would end. But the past six months have shown that Republicans can’t craft a replacement plan that wouldn’t cause millions to lose coverage and millions more to pay higher costs relative to the ACA.
Moreover, a repeal-without-replace bill would make any subsequent replacement much harder by repealing hundreds of billions of dollars in taxes that helped fund the ACA’s coverage expansions. With these taxes repealed, any coverage provisions to replace the ACA’s subsidies and Medicaid expansion, including even the highly inadequate tax credit under the latest version of the Senate bill, would require large new offsets — that is, congressional Republicans would need to raise taxes significantly or find deep new spending cuts elsewhere to undo the damage from the repeal bill.
A repeal-without-replace bill would exacerbate the harm that Republicans are already causing to the individual market. Contrary to Republican claims, recent data show that the individual market would be increasingly stable and profitable for insurers if not for the Trump Administration’s efforts to sabotage the ACA. As CBO found, a repeal-without-replace bill would cause markets to begin unraveling almost immediately, with large premium spikes, insurer withdrawals, and coverage losses even before the repeal provisions took full effect. As CBO explains, they “expect that insurers in some areas would leave the nongroup market in 2018. They would be leaving in anticipation of further reductions in enrollment and higher average health care costs among enrollees who remained after the subsidies for insurance purchased through the marketplaces were eliminated. As a consequence, roughly 10 percent of the population would be living in an area that had no insurer participating in the nongroup market.” That would accelerate and deepen the problems that the individual market is facing due to Administration actions.