On March 13, 2017, the Congressional Budget Office (“CBO”), a non-partisan federal agency, released a report on the effect of the American Health Care Act (“AHCA”). The report estimates that the AHCA would reduce the federal deficit by $337 billion from 2017-2026. The reduction savings would result from changes to Medicaid and the elimination of Affordable Care Act (“ACA”) subsidies. The report also notes that by 2018, approximately 14 million people would remain uninsured due to both the repeal of the individual mandate and the rising cost in health insurance.
The following additional effects are noted:
- Individual Premium Cost
- From 2018-2019 – increase by 15-20%
- Beginning 2020 – decrease
- By 2026 – 10% lower than current premium cost
- Variance in Premium Cost
- By 2020 – cost for older individuals would be higher than younger individuals because the AHCA permits insurers to charge up to five times more for coverage of older individuals
The CBO cautioned it cannot predict how affected parties would react to the AHCA, but noted that estimated federal deficit reduction would result from the following factors:
- Elimination of the individual and employer mandates:
- Changes to Medicaid expansion and funding obligations;
- Individual credits to purchase insurance;
- Federal grants to states to be used to reduce premium costs;
- Removing minimum value standards; and
- Requirement to have continuous coverage or face a 30% surcharge.
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