What CBO Says About the Updated AHCA
Mar 23, 2017 | Committee for a Responsible Federal Budget
The Congressional Budget Office (CBO) just released their updated score
of the American Health Care Act (AHCA) with the inclusion of manager's
amendments being considered by the House Rules Committee. This does not
include any changes still under consideration before the final vote, including
changes to essential health benefits.
||2017-2026 Cost / Savings (-)|
|End Mandate Penalties
|Reduce Spending and Tax Subsidies
|Increase Spending and Tax Subsidies
|Repeal ACA Taxes
Deficit Impact (Conventional Scoring)
Among the key findings and differences from the original bill include:
- The updated AHCA would reduce deficits by $150 billion
through 2026 under conventional scoring; the original bill would have
reduced deficits by $337 billion.
- The updated AHCAfs $150 billion of savings is the result of a $1.62
trillion reduction in the cost of spending and tax subsidies with most of the
funds used to pay for ending the mandate penalties ($210 billion), increasing
spending in other areas while instituting new tax subsidies ($636 billion),
and cutting taxes by $622 billion by repealing most of ACA's tax
hikes beginning retroactively in 2017.
- On net, the updated AHCA would reduce outlays by $1.15 trillion and
revenue by $1 trillion through 2026 (the prior version would have reduced
outlays and revenue by $1.22 trillion and $883 billion, respectively).
- CBOfs estimate of the billfs coverage effects is essentially unchanged
from the prior version. CBO projects the updated AHCA would reduce the number
of Americans with health insurance by 14 million in 2018 and 24 million by
2026. The 24 million reduction is the result of 14 million fewer Medicaid
beneficiaries, 7 million fewer individuals with employer coverage, and 3
million fewer in other coverage areas including the exchanges.
- CBO estimates that, like the prior version of the AHCA, the current
version would cause premiums to rise in the short term by 15 to 20 percent on
average in 2018 and 2019 and then fall by 10 percent relative to current law
- CBO has still not completed an estimate of the macroeconomic effects of
this version of the bill (or prior bill) or a second-decade estimate, though
we estimate that the bill would continue to reduce deficits over the long term
at a lower magnitude than the prior version. In our assessment, the
legislation would likely produce modest increases in economic growth under
The table below breaks down the major elements of the CBO score.
||2017-2026 Cost / Savings(-)|
|Reduce Individual Mandate Penalty to $0
|Reduce Employer Mandate Penalty to $0
End Mandate Penalties
|Repeal ACA Premium and Cost-Sharing Subsidies in 2020
|Reduce ACA Medicaid Match to Base
Medicaid Rate for gExpansionh Beneficiaries, Establish Per-Capita Caps,
& Institute Optional Work Requirements*
Reduce Spending and Tax Subsidies
|Establish Flat Age-Adjusted Health Care Tax Credits in 2020
|Reduce the Medical Expense Deduction Floor from 7.5% to 5.8%
|Establish Patient and State Stability Fund
|Repeal Disproportionate Share Hospital Payment Cuts (Medicare &
|Expand Health Savings Accounts
Increase Spending and Tax Subsidies
|Repeal ACA 3.8% Net Investment Income Tax (NIIT)
|Repeal ACA Health Insurer Tax
|Repeal ACA Medicare Hospital Insurance 0.9% Surtax
|Delay ACA gCadillac Taxh Start Date
(delayed to 2026)
|Repeal Most Other ACA Tax Increases
Repeal ACA Taxes
Source: Congressional Budget Office and Joint
Committee on Taxation. Note: numbers may not add due to rounding. *The work
requirement did not exist in the prior version of the bill.
The biggest changes in the cost estimate of this version of the bill come
from further changes to Medicaid (described in our blog
on the manager's amendments), repealing the ACA's taxes effective for tax year
2017 (instead of 2018) for an additional cost of $48 billion, and reducing the
expense deduction floor even further than the original bill – from 10
percent under current law to 7.5 percent under the original AHCA to 5.8 percent
in the updated AHCA. The medical expense deduction change is considered to be a
placeholder for alternative policies that the Senate could use the $90 billion
price tag to enact, so CBO's estimate includes the deduction's effect on cost
and coverage in spite of the likelihood that it will disappear if the Senate
makes changes to the bill.
CBO's estimate of the coverage change from the AHCA did not change
substantially from the previous version. The charts below shows how much
coverage would change in 2026 as compared to current law under the ACA.
Importantly, CBOfs estimates do not incorporate future changes that could be
made to insurance market rules, either by regulation, further legislation, or
further amendments to this bill that are still being discussed. Such changes
have the potential to increase total insurance coverage relative to the AHCA.
However, increasing coverage would also likely increase the total cost.
Likewise, the coverage estimates will likely change if the Senate changes the