CBO: American Health Care Act Will Reduce Deficit By $337 Billion

Budget office projects legislation would lower premiums 10 percent by 2026

U.S. Secretary of Health and Human Services Tom Price delivers remarks at the beginning of a meeting with Vice President Mike Pence and representatives of conservative political organizations to discuss the American Health Care Act

HHS Secretary Tom Price delivers remarks at the beginning of a meeting with Vice President Mike Pence and representatives of conservative political organizations to discuss the American Health Care Act / Getty Images

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The American Health Care Act, the Republican replacement to the Affordable Care Act, is estimated to reduce the deficit by $337 billion from 2017 to 2026, according to the Congressional Budget Office's scoring of the legislation.

During this time, the budget office also projects that spending will be reduced by $1.2 trillion and government revenues will be reduced by $0.9 trillion.

The legislation's greatest savings come from reducing spending on Medicaid and eliminating the Affordable Care Act's subsidies.

The budget office says that the new legislation would lower average premiums enough to attract healthy people to stabilize the market, which was one of the reasons why many insurers began to exit the Obamacare exchanges.

"Even though the new tax credits would be structured differently from the current subsidies under current law, the other changes would, in the agencies' view, lower average premiums enough to attract a sufficient number of relatively healthy people to stabilize the market," the budget office said.

The budget office projects that average premiums will rise in the short term, rising by 15 to 20 percent in 2018 and 2019. However, by 2026, average premiums will be 10 percent lower than they are now.

In 2018, the budget office projects that 14 million more individuals would become uninsured due to the legislation's repeal of the individual mandate. These include individuals who may have only bought Obamacare insurance to avoid paying the penalty or those who would avoid purchasing insurance due to higher premiums.

Following 2018, due to changes to the Medicaid program, the budget office projects that by 2026 an estimated 52 million would become uninsured, compared with 28 million that would be uninsured if Obamacare remained in place.

The budget office admits there is uncertainty surrounding these estimates, which has been a popular criticism of the agency in the past.

"The ways in which federal agencies, states, insurers, employers individuals, doctors, hospitals, and other affected parties would respond to the changes made by the legislation are all difficult to predict, so the estimates in this report are uncertain," the budget office says.

"This report confirms that the American Health Care Act will lower premiums and improve access to quality, affordable care," said Speaker of the House Paul Ryan (R., Wis.). "CBO also finds that this legislation will provide massive tax relief, dramatically reduce the deficit, and make the most fundamental entitlement reform in more than a generation."

"I recognize and appreciate concerns about making sure people have access to coverage," Ryan said. "When people have more choices, costs go down. That's what this report shows. And, as we have long said, there will be a stable transition so that no one has the rug pulled out from under them."

Ali Meyer

Ali Meyer   Email Ali | Full Bio | RSS
Ali Meyer is a staff writer with the Washington Free Beacon covering economic issues that expose government waste, fraud, and abuse. Prior to the Free Beacon, she was a multimedia reporter with CNSNews.com where her work appeared on outlets such as Drudge Report and Fox News. She also interned with the Heritage Foundation and Pacific Research Institute. Her Twitter handle is @DJAliMeyer, and her email address is meyer@freebeacon.com.

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