CBO: American Health Care Act Will Reduce Deficit By $119 Billion

Budget office projects that premiums would decline by 20 percent by 2026

House Speaker Paul Ryan / Getty Images
May 25, 2017

The final version of the American Health Care Act, which House Republicans passed as their replacement for Obamacare, is now estimated to reduce the deficit by $119 billion from 2017 to 2026, according to the Congressional Budget Office.

The budget office scoring of the original legislation released on March 13 projected that the bill would reduce the deficit by $337 billion from 2017 to 2026, increase the number of uninsured by 14 million people, and reduce premiums by 10 percent by 2026.

The amended legislation would increase the number of individuals with health insurance and would lower premiums.

"In comparison with the estimates for the previous version of the act, under the House-passed act, the number of people with health insurance would, by CBO and [Joint Committee on Taxation]'s estimates, be slightly higher and average premiums for insurance purchased individually—that is, nongroup insurance—would be lower, in part because the insurance, on average, would pay for a smaller proportion of health care costs," the budget office said.

The budget office projects that average premiums will rise in the short term, rising by 20 percent in 2018 and 5 percent in 2019. By 2026, however, average premiums will be 20 percent lower than they are now in states that make moderate changes to market regulations. For states that do not request waivers for essential health benefits or community rating, premiums are expected to decline by 4 percent by 2026.

In 2018, the budget office projects that 14 million more individuals would become uninsured and would increase to 19 million by 2020 and 23 million by 2026. 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 discussed in this document are uncertain," the budget office says. "In particular, states would have a wide range of options—notably, the optional waivers discussed above that would allow them to modify the minimum set of benefits that must be provided by insurance sold in the nongroup and small-group markets and that would permit medical underwriting for people who did not demonstrate continuous coverage."

"Under Obamacare, premiums have more than doubled, and choices have dwindled to the point that many families have no options at all," said Speaker Paul Ryan (R., Wis.). "We are on a rescue mission to bring down the cost of coverage and make sure families have access to affordable care. This CBO report again confirms that the American Health Care Act achieves our mission: lowering premiums and lowering the deficit. It is another positive step toward keeping our promise to repeal and replace Obamacare."