During the April congressional recess, concerns about the American Health Care Act (AHCA, H.R. 1628) were voiced at town hall meetings. Politico noted that “lawmakers found one common way to generate applause from a hostile crowd: criticize the AHCA.” The Washington Post used the words “friction” and “frustration” to characterize health policy discussions. And USA Today reported that a number of Republicans refused to hold public meetings to avoid defending their position on the AHCA, and counted roughly thirty editorials published by major newspapers calling on members to face their voters during the recess.

Yet, House Republicans may vote on an amended bill to repeal and replace the Affordable Care Act (ACA) as soon as April 26. This piece aims to consolidate major analyses of the potential impact of the AHCA along with the real-world effects of its pursuit.

Policy Implications

The AHCA’s substance and potential policy implications have not significantly changed since its introduction, although, as noted below, amendments are reportedly under discussion that would undermine protections for people with pre-existing conditions. Highlights of the AHCA include:

  • Higher premiums: The Congressional Budget Office (CBO) estimated that, if the AHCA were enacted this year, individual market premiums would increase by 15 to 20 percent next year. That means that, after accounting for baseline premium growth, headlines this fall could herald average premium hikes of 26.5 percent. For older Americans, this average increase would be about 50 percent if issuers were to charge them five times rather than three times more than young adults, as the GOP proposal permits. Milliman estimated that this policy would result in a 60-year-old paying 23 percent more than under current law.

By 2026, CBO projected that average premiums would fall by 10 percent compared to what they would have been—but, adjusting for fewer older enrollees and higher deductibles and cost sharing, Brookings estimated that individual market premiums would be 13 percent higher than the baseline in that year.

Premium increases would be greater in rural and high-cost areas because the AHCA’s premium tax credit would not adjust for local costs (unlike the ACA). This would, according to estimates by the Center on Budget and Policy Priorities, cut the premium tax credit by more than half in eleven states including Alaska, North Carolina, West Virginia, and Tennessee.

  • Higher deductibles: The AHCA would eliminate cost sharing reduction (CSR) subsidies and actuarial value standards. These policies would shift costs from insurers to consumers. For a person with income at 175 percent of the federal poverty level, eliminating CSRs would result in 2.7 times higher out-of-pocket spending in 2026 than under current law, according to CBO (Table 4). For unsubsidized enrollees, the GOP plan would increase average deductibles by an estimated $1,550 if applied to plans this year, according to the Kaiser Family Foundation.
  • Fewer insured Americans: CBO estimated that the number of Americans with health insurance coverage would fall by 24 million people in 2026 under the AHCA. This would mean a reduction of 14 million insured people next year alone—the single largest jump in the number of uninsured in history. CBO’s report (Figure 2) shows how the uninsured rate would increase across all age ranges and income levels; younger Americans, older Americans, lower-income Americans, and higher-income Americans would all experience an increase in their uninsured rates.

Insurance losses under the AHCA reflect a decline in individual market coverage, employer coverage (partly due to the repeal of the employer mandate), and Medicaid. The AHCA would end the ACA’s federally-supported, optional Medicaid expansion. And it would impose a growth rate cap in federal Medicaid spending per enrollee. As such, the bill could reduce benefits for children, seniors, and individuals with disabilities currently enrolled in Medicaid. An estimated 2.8 million people with a substance use disorder, including opioid addiction, could lose coverage as well.

  • Greater tax breaks for high-income people and corporations: According to the Joint Committee on Taxation, the AHCA would provide $144 billion in tax breaks to millionaires over ten years. And based on estimates by the Tax Policy Center, the tax cut for millionaires would average $50,000 per household in 2025. This is in addition to tax breaks for drug and insurance companies among others. Basically, the bill would cut federal funding for health care to pay for tax breaks for corporations and the wealthiest Americans. Both the president and Speaker Paul Ryan (R-WI) acknowledged that enacting the AHCA is as much about tax reform as it is about health reform.

According to press reports, the AHCA will be amended to allow states to waive required coverage of essential health benefits and the prohibition on unlimited premiums for people with pre-existing conditions.

According to press reports, the AHCA will be amended to allow states to waive required coverage of essential health benefits and the prohibition on unlimited premiums for people with pre-existing conditions. Depending on how this amendment is drafted, such deregulation could reduce consumer protections for up to 91 million Americans with employer self-insured coverage and result in unaffordable premiums for up to 12 million people enrolled in the individual market. This would run counter to Speaker Ryan’s commitment just before the recess to “making sure that people with preexisting conditions still get the kind of coverage that they need and that’s affordable coverage.”

Political Implications

The debate and assessment of the AHCA in the past month suggest it has political as well policy implications. Highlights include:

Current Impact

Even if the House “repeal and replace” bill does not become law, Republicans’ continued pursuit of the AHCA has implications for real-world health care. This is because it creates uncertainty for consumers, insurers, and other stakeholders that would persist even if the Trump administration resolved the open executive-action questions.

Even if the House “repeal and replace” bill does not become law, Republicans’ continued pursuit of the AHCA has implications for real-world health care.

The biggest question for the administration relates to CSRs. President Trump recently threatened to put an immediate stop to these payments for reduced cost sharing in order to gain negotiating leverage. Doing so would cause a disruption in coverage this year—as well as premiums that are 19 to 29 percent higher in all subsequent years. Additionally, failure to commit to fully and responsibly running the Marketplace, as signaled by President Trump’s Executive Order as well as comments from both the president and Health and Human Services Secretary Tom Price, could cause actuaries to raise premiums as a buffer against weaker enrollment and uncertain costs.

But even if the administration laid to rest these concerns, the overhang of an ongoing legislative drive to repeal the ACA will continue to cause harm. Highlights include:

  • More uninsured Americans: Gallup recently reported that the uninsured rate for the first quarter of 2017 ticked up. It explained: “The slight rise in the number of uninsured Americans in the first quarter of 2017 could, in part, be attributable to the uncertainty surrounding the long-term future of the Affordable Care Act.”
  • Higher premiums: State deadlines for insurers filing their 2018 rates start on May 1, and decisions are being made now based on information in hand. Experts believe that if the legislative debate continues past these deadlines, consumers will pay more as a result. One insurance executive commented, “When there’s uncertainty, you have to price for the uncertainty.”
  • Issuer exits: At this point last year, only one Marketplace insurer with relatively low enrollment suggested it would withdraw from some markets. As of this posting, three insurers suggested they will do so. This is not because 2016 was a worse year than 2015: in fact, emerging evidence shows that it was a better year. Instead, in the words of the Iowa insurance commissioner, “It’s a business decision based on concern over the lack of decision making in Washington, D.C. and the uncertainty of the market.” As one expert noted, “Actuaries are working away on their spreadsheets right now, and with each passing day the uncertainty and lack of clarity increases the chances of insurers exiting.”

A Bipartisan Path Forward?

It is not clear whether, on its second attempt, the House will pass the AHCA. One member of the Freedom Caucus, Justin Amash (R-MI), said at a town hall meeting on April 10 that he estimated fifty to eighty Republicans would have voted against the AHCA, and suggested: “Let’s start over in a bipartisan way.” Earlier this week, Senator Mitch McConnell (R-KY) declared his skepticism as well: “If the House is able to pass it, we’ll have a big challenge trying to pass it in the Senate as well.” Moreover, as noted by the Chamber of Commerce and others, “The window is quickly closing to properly price individual insurance products for 2018.” As such, it may be time for Speaker Ryan to replace his drive to repeal “ObamaCare” with a deliberative bipartisan process that experts agree will reduce premiums, reduce deductibles, protect people with pre-existing condition, and improve health coverage—in the words of the president, that will be “much less expensive and much better.”