Report: Affordable Care Act Repeal Could Increase Rates, Leave 18 Million Without Coverage After First Year

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Last week, both the House and Senate took the first steps toward dismantling the Affordable Care Act. This morning, a review by the nonpartisan Congressional Budget Office concluded that one approach to repealing this law would result in millions of additional uninsured Americans and higher rates for those with insurance.

Today’s CBO report [PDF] looks at the potential impact on coverage and insurance premiums if Congress — as it has tried to do previously — repeals aspects of the ACA while leaving others in place.

More precisely, it investigates the possible ramifications of the 2015 repeal bill that made it all the way to President Obama before being vetoed in Jan. 2016.

This legislation sought to undo much of the Affordable Care Act in two stages. First, it would have eliminated the “individual mandate” — the requirement that most Americans must have some sort of health insurance or pay a penalty. Also gone in this first stage would be the “employer mandate” — the requirement that employers of a certain size must offer a certain level of health coverage to their workers.

The second stage of this repeal legislation would have, after two years, eliminated the expansion of Medicaid to provide coverage additional lower-income Americans. The bill also sought to eliminate subsidies for health insurance purchased through the marketplaces set up by the Affordable Care Act.

That vetoed bill did allow a number of smaller, but popular, provisions of ACA to remain in place, like protections for pre-existing conditions, and limitations on justifiable reasons for varying premium amounts.

According to the CBO’s analysis, the immediate effect of this form of repeal would be limited, as Americans who have coverage would be locked into their current plans and premiums through at least the end of the year.

That said, the report still estimates that by the end of that first year post-repeal, 18 million additional people will be without insurance. The largest chunk of those (approximately 10 million) would be individuals choosing to go without insurance.

Even though insurance marketplaces would still exist, the CBO predicts that this initial decline in people seeking coverage will result in insurers exiting some of these marketplaces.

“They would be leaving in anticipation of further reductions in enrollment and higher average health care costs among enrollees who remained after the subsidies for insurance purchased through the marketplaces were eliminated,” explains the report. “As a consequence, roughly 10 percent of the population would be living in an area that had no insurer participating in the nongroup [individual] market.”

Eliminating the Medicaid expansion and the subsidies two years into the repeal plan would lead to additional Americans being without coverage. Within the first year of this later stage, the CBO estimates that 27 million individuals will lack insurance they would have had under the current law. At the end of the first decade after repeal, the report figures that some 32 million Americans will not have health coverage who would have been covered under the ACA.

In total, by 2026 the CBO estimates that 59 million Americans under the age of 65 will be without insurance, compared with an estimate of 28 million if ACA were to continue.

The CBO’s conclusions seem to bolster the stance of those who argue that you can’t get rid of the employee or individual mandates that people dislike and still keep the protections and marketplaces that people like.

These two facets of the ACA “work in conjunction… to increase participation in the market and encourage enrollment among people of different ages and health statuses,” notes the report.

Eliminating the mandates would reduce enrollment, as would eliminating subsidies, says the CBO, resulting in higher premiums.

“Not only would enrollment decline, but the people who would be most likely to remain enrolled would tend to be less healthy (and therefore more willing to pay higher premiums),” explains the report. “Thus, average health care costs among the people retaining coverage would be higher, and insurers would have to raise premiums in the nongroup market to cover those higher costs.”

How much would rates increase? The CBO estimates that in the first year following repeal, premiums in the individual market would be roughly 20-25% higher than they would be under ACA. After insurers lose access to millions of additional consumers through elimination of subsidies and rolled-back Medicaid expansion, the CBO expects those premiums to be around 50% higher, and to double by 2026.

The CBO notes that these estimates are all based solely on the conditions put forth in the 2015 legislation.

Last week’s legislative actions are, at this point, merely procedural; an effort by the GOP to expedite the repeal process by including it as part of a budget resolution. The current Congress has not yet provided specifics on how it will attempt to dismantle the ACA, which parts would remain, or what the timeline will be like.

Similarly, while President-elect Trump has promised to have a replacement plan, he has thus far withheld many details. This weekend, he declared his plan would provide “insurance for everyone” but provided no specifics on the exact mechanism for doing so, other than to say, “It will be in a much simplified form. Much less expensive and much better.”