ACA Mandate Clobbers ACA Subsidy: CBO

Killing the Affordable Care Act individual mandate would probably increase the number of Americans without health coverage by 13 million by 2027, according to the Congressional Budget Office.

Saving the ACA cost-sharing reduction (CSR) subsidy program would do little or nothing to compensate for the loss of the ACA mandate, CBO analysts predict.

Keith Hall, the CBO director, summarized those conclusions in a letter he sent Wednesday to Sen. Patty Murray, D-Wash. A copy of the letter is available here.

The CBO is a congressional office that helps members of Congress understand how legislative proposals, and existing statutes, might affect federal spending and the federal budget deficit.

Murray, the highest-ranking Democrat on the Senate Health, Education, Labor and Pensions Committee has been working with Sen. Lamar Alexander, R-Tenn., on developing the Bipartisan Health Care Stabilization Act of 2017, a bipartisan bill that seeks to stabilize the individual major medical market while Congress debates bigger changes to the current ACA individual market rules and programs.

The Cost-Sharing Reduction Subsidy

One key part of the Alexander-Murray bill would restore funding for the cost-sharing reduction subsidy program.

Drafters of the ACA created two major subsidy programs to help people buy medical coverage through the ACA public health insurance exchange system. One program, for exchange plan users with income from 138% of the federal poverty level (or, in some states, 100% of the federal poverty level) to 400% of the federal poverty level, provides "advance premium tax credit" (APTC) subsidies.

In most of the country, the APTC subsidy would help a family of four with annual income ranging from about $34,000 to about $98,000.

For most people who use the APTC subsidy, the subsidy has the effect of reducing what people actually pay out-of-pocket each month for coverage.

The other subsidy, the cost-sharing reduction (CSR) subsidy, helps people with income from 138% of the federal poverty level (or 100% of the federal poverty level) to 250% of the federal poverty level pay health plan deductibles, co-payments and coinsurance amounts.

Republicans in Congression have questioned from the beginning whether the U.S. Department of Health and Human Services had proper congressional authorization to make the CSR payments. The new administration of President Donald Trump continued making the payments for much of the year, but he cut off the subsidy payment stream for 2017 coverage in October.

CBO Effects Analysis

CBO analysts predicted in August that, if other ACA rules and programs stay the same, the loss of the cost-sharing reduction subsidy would have little effect on the number of people with individual major medical health coverage, because most CSR subsidy users would get enough extra APTC subsidy help to compensate for the loss of the CSR subsidy.

The ACA individual mandate, which is deeply unpopular with many Republicans, now requires many people to have what the government classifies as solid major medical coverage for much of the year or else pay a penalty at tax time.

Earlier this month, Hall writes, the CBO predicted that eliminating the ACA individual mandate would increase the number of Americans without health coverage by 4 million over the currently predicted "baseline" level in 2019, and by 13 million in 2027.

The CBO baseline projections provided in August run from 2017 through 2026.

The August version of the projections show that, under the current ACA rules, with the CSR subsidies still in place, the United States would have about 27 million uninsured people in 2019, and about 28 million uninsured people in 2026.

If most current ACA rules and the ACA CSR subsidy stay in place, but the individual mandate goes away, the country could have 31 million uninsured people in 2019 and 41 million uninsured people in 2026, according to calculations based on the CBO baseline projections and the new impact analyses.

—Read Republicans Push New Deal on ACA Subsidy Payments, Ending Mandates on ThinkAdvisor.

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