On Wednesday, May 24, 2017, the Congressional Budget Office (CBO) released its much anticipated updated score on the House's legislation to repeal and replace various provisions in the Affordable Care Act (ACA). The bill — known as the Affordable Health Care Act (AHCA) — passed the House on May 4, 2017, and will next move to the Senate.
The CBO updated its AHCA score of March 23, 2017, to assess the effects of the bill's recent amendments to budget and coverage levels for various populations. The new House version of the AHCA holds important implications for U.S. employers. The CBO found that:
- 23 million more people than today would have no health care coverage by 2026 (only 1 million fewer than the CBO estimate of the original AHCA bill). Three million of those would lose insurance from employer plans (the loss was 7 million under the first AHCA version). The difference in employer coverage occurs because of new amendments that would allow states to alter certain market reforms, including essential health benefits and insurers' ability to vary rates based on health status. Employers in so-called "waiver" states, seeing an unfavorable health insurance market for individuals, would be more likely to continue coverage or offer coverage to their employees.
- Premiums in waiver states would decrease more than in non-waiver states. However, the savings come from scantier policies and much higher out-of-pocket costs. Waivers might destabilize individual health coverage markets in these states, and create more hardship for various populations, such as those with pre-existing conditions and those with low incomes.
- The nation saves $119 billion over 10 years with this bill vs. $150 billion from the first iteration. However, as with the original bill, the revised AHCA leaves the controversial "Cadillac tax" on high-end insurance policies as the principal source of revenue, although with a much later effective date of 2025. As before, the AHCA would seek to balance the budget by cutting federal outlays in health care, including to Medicaid and tax credits.
CBO score a tool to assess effects of AHCA
The Senate may use the CBO score as a catalyst to frame the ACA repeal-and-replace debate.
Lawmakers must contend with budget reconciliation as the AHCA bill moves to the Senate, where the dynamic between parties differs markedly from that in the House. Some Republican senators have come out strongly against the bill in its current form. The chamber as a whole may attempt to draft its own version of an ACA replacement without using the AHCA as a baseline.
To pass items in the bill that may be considered under reconciliation rules, Republicans can't lose more than two senators if the Democrats stay unified against the legislation. As in the House, tweaking the bill to make it more moderate risks the votes of conservative members — and vice versa.
If the Senate revises the House legislation, it must go to conference to resolve differences. After that, the bill goes back to both chambers for an up or down vote. The complex process of legislating, particularly through reconciliation, is just beginning.
ACA still holds sway
Employers must remember that all this legislative turmoil changes nothing at this point. The Affordable Care Act remains the law of the land, including its employer shared responsibility provisions.
The budget reconciliation process that began in the House can — and probably will — change in the Senate. As Congress wrestles with this issue, Paychex will be monitoring it closely and providing updates.