Medicare actuary: 13 million would lose coverage, premiums go up under AHCA

The Republican health care bill would cause 13 million Americans to lose coverage and steeply increase Obamacare enrollees’ out-of-pocket costs, a new analysis from the Medicare actuary projects.

The report differs significantly from the Congressional Budget Office analysis, which estimates that 23 million Americans would lose coverage under the American Health Care Act.

Both analyses agree that a world in which the AHCA passes is a world in which millions fewer Americans have health insurance coverage. They differ because they make very different assumptions about how states would react to the bill.

The Medicare actuary estimates that over the next decade, 13 million Americans would lose coverage under the AHCA. Of these people, 8 million would be Medicaid enrollees and 1.4 million would be people who buy coverage on the individual market. (The Medicare actuary is an independent office within the Center for Medicare and Medicaid Services, meaning its analysis does not reflect the views of the Trump administration.)

The report is clear that people who lose Medicaid would not be likely to end up with coverage elsewhere: “For those Medicaid enrollees who would lose coverage under the AHCA, most are assumed to ultimately be uninsured, though a small fraction would choose to purchase individual insurance.”

The Medicare actuary also expects that 3.3 million fewer people will get insurance at work if the AHCA passes, as the law would create incentives for big companies to drop coverage and move people to the individual market.

Similar to the CBO report, the Medicare actuary estimates that the AHCA would hit older Americans especially hard. Individual market enrollment of people between ages 50 and 59 would fall by more than half.

The amount of money the country spends on health care would decline, as fewer people would have health insurance. The amount Americans spend out of pocket, however, would rise significantly.

The Medicare actuary estimates that households would spend an estimated $21 billion more on health care over the next decade, as more people become uninsured and have to pay health care bills on their own. Some of this would also result from the individual market plans becoming less generous, meaning higher deductibles and copays for those enrollees.

This would amount to a 61 percent increase in overall out-of-pocket costs for Americans who buy their own health coverage.

Part of that would be spent on higher insurance premiums. Although base premiums in the individual market would decline by an estimated 13 percent by 2026, what people pay out of pocket would go up 5 percent because the AHCA provides significantly less financial help to Americans who purchase their own coverage.

Much of the difference between the CBO analysis and the Medicare actuary report comes down to how they think about Medicaid. CBO estimates that 14 million Americans would lose Medicaid under the AHCA, whereas the Medicare actuary pegs the number at 8 million.

One big part of the AHCA, for example, is changing how Medicaid funding works. Right now, the federal government has an open-ended commitment to pay a certain percentage of Medicaid bills, regardless of how high they get. The AHCA would change that. It would give states a lump sum per person and leave local officials to decide how best to spend that money.

This change — completely separate from ending the Medicaid expansion — would significantly cut state Medicaid budgets. But the Medicare actuary thinks this would not affect enrollment in the program. It seems to assume that state Medicaid programs would function the same, even with less funding.

“There is no estimated impact on Medicaid enrollment because of the presence of per capita allotments,” the report concludes.

Most other observers, including CBO, estimate the Medicaid funding cuts would lead to fewer people having Medicaid coverage. The program couldn’t weather the size of the cuts in the Republican bill simply by becoming more efficient.

“Some of that decline would be among people who are currently eligible for Medicaid benefits” and not just the expansion population, the CBO concluded in its most recent report. CBO expects that, facing this new funding formula, states would “restrict eligibility for enrollment” in the program.