Capitol Correspondence - 03.19.17

CBO Predicts 24 Million Fewer People Covered, $880B in Medicaid Cuts Under GOP ACA Repeal Plan

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On March 13, the Congressional Budget Office (CBO) released its report on the American Health Care Act (AHCA), the budget reconciliation bill that seeks to start the process of repeal and replacement of the Affordable Care Act (ACA). The report contains an even higher estimate of the number of people who would be without health coverage than recent predictions from other sources. (See WICs article, “Brookings Estimates that 15 Million Will Lose Coverage Under ACA Repeal,” March 11, 2017). The CBO is a nonpartisan agency that provides independent analyses of budgetary and economic issued to support the Congressional budget process. 
Some excerpts from the CBO report that are of particular interest to ANCOR members are:
  • Page 2: 14 million would lose health insurance coverage in 2018, then up to 21 million in 2020 and 24 million by 2026.
  • Page 8: Major Changes to Medicaid. CBO estimates that several major provisions affecting Medicaid would decrease direct spending by $880 billion over the 2017-2026 period. That reduction would stem primarily from lower enrollment throughout the period, culminating in 14 million fewer Medicaid enrollees by 2026, a reduction of about 17 percent relative to the number under current law. Some of that decline would be among people who are currently eligible for Medicaid benefits, and some would be among people who CBO projects would be made eligible as a result of state actions in the future under current law (that is, from additional states adopting the optional expansion of eligibility authorized by the ACA). Some decline in spending and enrollment would begin immediately, but most of the changes would begin in 2020, when the legislation would terminate the enhanced federal matching rate for new enrollees under the ACA’s expansion of Medicaid and would place a per capita-based cap on the federal government’s payments to states for medical assistance provided through Medicaid. By 2026, Medicaid spending would be about 25 percent less than what CBO projects under current law.
  • Page 10: The limit on federal reimbursement would reduce outlays because (after the changes to the Medicaid expansion population have been accounted for) Medicaid spending would grow on a per-enrollee basis at a faster rate than the CPI-M, according to CBO’s projections: at an average annual rate of 4.4 percent for Medicaid and 3.7 percent for the CPI-M over the 11 2017-2026 period. With less federal reimbursement for Medicaid, states would need to decide whether to commit more of their own resources to finance the program at current-law levels or whether to reduce spending by cutting payments to health care providers and health plans, eliminating optional services, restricting eligibility for enrollment, or (to the extent feasible) arriving at more efficient methods for delivering services. CBO anticipates that states would adopt a mix of those approaches, which would result in additional savings to the federal government. 
  • Page 23 (Community First Choice): Repeal of Medicaid Provisions. Under current law, states can elect the Community First Choice option, allowing them to receive a 6 percentage-point increase in their federal 24 matching rate for some services provided by home and community-based attendants to certain Medicaid recipients. The legislation would terminate the increase in the federal matching funds beginning in calendar year 2020, which would decrease direct spending by about $12 billion over the next 10 years.