Congressional Budget Office review of American Health Care Act draws concern from industry insiders

The CBO said 23 million more people would be uninsured by 2026, with older and sicker Americans being hit hardest.
By Jeff Lagasse
01:00 PM
CBO score for AHCA

The Congressional Budget Office's evaluation of the American Health Care Act, the GOP-sponsored healthcare overhaul recently passed by the House, has drawn concern from industry insiders worried that both patients and the healthcare industry would suffer if the bill passes the Senate in its current form.

The CBO said Wednesday that the AHCA would reduce federal deficits by $119 billion over the coming decade, but at the expense of 23 million more uninsured Americans by 2026.

Shawn Yates, director of product management for Ontario Systems, which publishes software to help hospitals manage the receivables process, is particularly concerned about the cut in Medicare funding. The plan would cut Medicaid funding by about $834 billion.

[Also: Numbers of uninsured would increase by 23M under AHCA, CBO says]

Yates said those Medicare cuts would effectively push the program to a per capita basis, which he said would drive people into the ranks of the uninsured, as evidenced by states who have already taken a similar approach.

"The administration is reinvesting that money on the military, tax cuts for corporations and other groups," said Yates. "It's the classic trickle-down economics theory that we've seen in the past. We'll see if it works this time."

Of course, the CBO estimates are based on the effects of the bill if is passes through the Senate relatively unaltered, which Yates said is unlikely, given the higher chamber has historically been more responsive to public opinion.

"The house kind of acted in this vacuum, with the Freedom Caucus, the conservative Republicans and the Democrats," said Yates. "The Senate to me seems to be more cognizant of their constituents, and I think what you're going to see is some of the more popular provisions of the Affordable Care Act will be kept."

One of the provisions of the ACA likely to survive, said Yates, is coverage for pre-existing conditions, although there may be some caveats to that. A person would hypothetically be required to maintain continuous coverage, or face being charged with higher rates.

The health exchanges, said Yates, will likely disappear. What they'll be replaced with is anybody's guess.

"So the way the exchanges work is that you have the healthy insured people in with the sicker people, and it creates a balance to where insurers can at least break even or make a little money, and the exchanges can survive," said Yates. "You take away their revenue source and then you just have the sicker population, and the insurance companies just can't survive."

On Wednesday, Nancy LeaMond, executive vice president of the AARP, released a statement highly critical of the AHCA, saying provisions such as an age tax and weakened protections for those with pre-existing conditions would disproportionately target older and sicker Americans.

She said the bill would hurt older Americans by decreasing the solvency of Medicare, hiking costs, and giving tax breaks to large drug companies and health insurance companies.

According to the CBO, premiums for a 64-year-old earning $25,500 a year would increase by $14,400 by 2026.

"After facing a massive premium increase as we age, the bill weakens Medicare funding, opening the door to turning Medicare into a voucher program that shifts costs for prescriptions and insurance to seniors, at the same time as it gives big drug and insurance companies and other special interests a sweetheart deal," said LeaMond.

Yates said the bill could very well become deadlocked in the Senate, although that would create its own fallout: Congress can still defund cost sharing and make cuts to Medicaid. Either way, he said, the ACA is unlikely to survive more than couple of years.

Hospitals, he said, "will have to evaluate what's the revenue reduction they can expect over the next five years. You have to beef up your financial system processes, and a lot of that is already happening. They're going to have to find a way to do more with less. This is absolutely critical to what they do. There won't be investments in tons of new technology -- more of a focus on population health initiatives."

"The bet from the administration that I can see is, 'We're going to cut all this and reinvest it on the economy, and more people will have insurance,'" said Yates. "But we've been down that path before. We'll have to see."

Twitter: @JELagasse