US: CBO’s Assessment of The American Health Care Act - Scotiabank

Mary Webb, Research Analyst at Scotiabank, explains that the Congressional Budget Office (CBO) estimates that the Republicans’ proposed American Health Care Act (AHCA), relative to the existing path under Obama’s Affordable Care Act (ACA), will trim the fiscal 2017 (FY17)1 deficit by $0.8 billion, then widen the FY18 and FY19 shortfalls by $24 billion and $33 billion, respectively, before narrowing annual deficits by increasing amounts through FY26.

Key Quotes

“From FY17 to FY26, the AHCA is expected to cut direct federal spending by  $1.2 trillion and revenues by $0.9 trillion, shrinking the cumulative deficit by $337 billion.”

“The number of uninsured Americans under age 65 is expected to climb under the AHCA by 14 million in calendar 2018, and by 24 million by 2024. By 2026, with 28 million uninsured already expected under the ACA, the total number of uninsured would rise to 52 million, representing 18.6% of the U.S. population under 65, up from the existing 9.5% share. The Office of Management and Budget, reportedly using CBO methodology, estimates a 26 million rise in the number of uninsured by 2026 with the AHCA—17 million from Medicaid, 6 million from the nongroup market, and 3 million from employer-based plans.” 

“The CBO’s report highlights the complexity of the proposed changes and the difficulties in accurately modelling their impact. The probability of unintended consequences is high; elevated uncertainty and transition costs for all stakeholders will be material; required attention to health reform will likely crowd out growth-enhancing initiatives such as tax reform and infrastructure; and State governments will face substantive policy overhauls.”