CBO: Senate Health Bill Would Stabilize Insurance Markets, Reduce Federal Deficit by $321 Billion

Budget analysts again see millions of Americans going without insurance

The Congressional Budget Office (CBO) has estimated that the Senate’s plan to repeal and replace the Patient Protection and Affordable Care Act (PPACA)—known as the Better Care Reconciliation Act of 2017—will reduce the cumulative federal deficit over the 2017–2026 period by $321 billion, according to an article posted on the FierceHealthcare website. That amount is $202 billion more than the estimated net savings from the bill passed in May by the House of Representatives.

That finding means Senate Republicans are cleared to block a filibuster and pass the bill without Democrats.

By 2026, enacting the legislation would reduce direct spending by $1,022 billion and reduce revenues by $701 billion, for a net reduction of $321 billion in the deficit during that period, according to the CBO.

The largest savings would come from reductions in outlays for Medicaid—spending on the program would decline in 2026 by 26% compared with what the CBO projects under the PPACA—and from changes to the PPACA’s subsidies for non-group health insurance.

With regard to how the bill would affect the stability of the individual insurance market, the CBO said:

“Under this legislation, non-group insurance markets would continue to be stable in most parts of the country. Although substantial uncertainty about the effects of the new law could lead some insurers to withdraw from or not enter the non-group market in some states, several factors would bring about market stability in most states before 2020.”

These factors include:

  • Subsidies to purchase insurance, which would maintain sufficient demand for insurance by people with low health care expenditures
  • The appropriation of funds for cost-sharing subsidies, which would provide certainty about the availability of those funds
  • Additional federal funding provided to states and insurers, which would lower premiums by reducing the costs to insurers of people with high health care expenditures

On the down side, the CBO estimated that, by 2026, 49 million people would be uninsured, compared with 28 million who would lack insurance that year under the PPACA—meaning 21 million fewer people would be without health insurance if the Senate bill passes than if the PPACA continued.

President Donald Trump downplayed the latter finding, tweeting that the CBO’s original estimates for the PPACA were off by 100%.

Source: FierceHealthcare; June 26, 2017.