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CBO report unleashes a storm

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By: FMA CEO, Tim Stapleton

The push by U.S. House Republicans and the Trump administration to repeal and replace the Affordable Care Act has absolutely dominated health care news this week. There is much to unpack on the national front, but first, I’d like to bring you up to date on the FMA’s state legislative initiatives during Session.

Today, our priority legislation that would prohibit HMOs and insurers from retroactively denying claims they previously approved passed the Senate Health Policy Committee, chaired by Sen. Dana Young. The bill, SB 102 sponsored by Sen. Greg Steube, has passed two committees by overwhelming margins. Its last stop is the Senate Rules Committee, and then the bill will head to the Senate floor.

The FMA’s MOC legislation, HB 723 sponsored by Rep. Julio Gonzalez, M.D., is scheduled to be heard tomorrow in the House Health Quality Subcommittee. It is worth noting that the American Board of Medical Specialties has hired a lobbying firm to oppose the bill.

The House Health Quality Subcommittee is also scheduled to hear HB 1037, which would allow optometrists to perform surgery. The FMA strongly opposes this legislation, and FMA Council on Legislation Chair Doug Murphy, M.D., will provide testimony against the bill at the committee meting.

While your FMA team is focused on passing a pro-physician agenda in Tallahassee, national health care reform is an 800-lb. gorilla that cannot be ignored.

Late Monday, the Congressional Budget Office (CBO) released its score of the U.S. House bill to replace the ACA. The CBO report provided estimates of what effect the American Health Care Act (AHCA) would have on federal spending, the health insurance market, and the number of Americans with health care coverage. Response was swift and intense.

Here are some key findings from the CBO report:

The CBO and the Joint Committee on Taxation (JCT) estimate that enacting the legislation would reduce federal deficits by $337 billion over the 2017-2026 period. The estimate indicates that the largest savings are attributed to “reductions in outlays for Medicaid and from elimination of ACA subsidies for non-group health insurance, and the largest costs come from repealing tax provisions, including an increase in the Hospital Insurance payroll tax rate for high-income taxpayers, a surtax on those taxpayers’ net investment income, and annual fees imposed on health insurers — and from the establishment of a new tax credit for health insurance.”

As for the effect on health insurance coverage, the CBO and JCT estimate that under the legislation, “in 2018, 14 million more people would be uninsured” compared to current law, primarily from “repealing the penalties associated with the individual mandate.” The CBO and the JCT further estimate that “the increase in the number of uninsured people relative to the number under current law would rise to 21 million in 2020 and then to 24 million in 2026.”

Regarding health care premiums, the CBO and the JCT estimate the bill “would tend to increase average premiums in the non-group market prior to 2020 and lower average premiums thereafter, relative to projections under current law.” They added that in 2018 and 2019, “average premiums for single policyholders in the non-group market would be 15 percent to 20 percent higher than under current law, mainly because the individual mandate penalties would be eliminated, inducing fewer comparatively healthy people to sign up.” However, by 2026, the CBO and the JCT estimate that “average premiums for single policyholders in the non-group market under the legislation would be roughly 10 percent lower than under current law.”

Following is a top line summary from the AMA, and the AMA’s statement in response.

Coverage estimates

  • 14 million fewer people would have health insurance coverage in 2018.
  • 24 million fewer people would have health insurance coverage in 2026.
  • 52 million people would be uninsured in 2026 compared with 28 million under current law.
  • 14 million fewer people would be enrolled in Medicaid in 2026.
  • 9 million fewer would be enrolled in the individual market in 2020 than under current law. That number would fall by 2026 to two million less than under current law.
  • 2 million people would lose employer coverage compared to current projections for 2020.
  • 7 million people would lose employer coverage by 2026.


There would be an $880 billion reduction in Medicaid spending over the 2017-2026 period (rollback expansion and lower payments to states through per capita caps).

The CBO noted that “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.”

Subsidies for low and moderate-income individuals/families

There would be $637 billion in savings by eliminating ACA subsidies, offset by $361 billion in spending for new tax credits, thus a $312 billion net reduction in subsidies. Note that new tax credits are only age adjusted, so the impact of subsidy reduction would be heightened for low-income individuals.

In general, tax credits for lower-income people would be less under AHCA than current law, while they would be higher for upper-income Americans, especially those with incomes about 400 percent of the Federal Poverty Level.


Premiums would rise for the first two years and then decline afterward to levels below those expected under current law. A key element is attracting more young people into risk pools.

Premiums are also expected to decrease due to elimination of the actuarial value equivalent requirement.

Older individuals would pay more for premiums.

While older people would receive a larger tax credit, premiums would be up to five times higher than those for younger individuals. Currently, they are three times higher.

Impact on the deficit

The report projects a $337 billion reduction in deficit spending over 10 years.

Click here to read the “AMA Statement on CBO Estimates of Health Reform Bill.”

To be continued. This week’s articles plunge further into AHCA and the rise of physician burnout.

Disclaimer: The information on this web site is general information, and not designed to be and should not be relied on as your sole source of information when analyzing.
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