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House Budget Reconciliation Bill Moving Forward?

On March 6, 2017, House leadership introduced the American Health Care Act (AHCA), a budget reconciliation bill to modify portions of the existing Affordable Care Act (ACA). This budget reconciliation bill may only address items that affect the federal budget. All other provisions requiring modification will require legislative action, literally “an act of Congress” or regulatory action.

Committee approval of all provisions on March 8 by the House Ways and Means Committee and the House Energy and Commerce Committee moves us down the timeline toward a potential new health care law. The next stop is review by the House Budget Committee.

Subsequent with the Budget Committee review, the Congressional Budget Office (CBO) scores the bill. The CBO is an independent group that provides Congress with analyses for economic and budget decisions. To have ample support and move forward, a bill must not add to the federal deficit. There will also be greater support if it can be shown that at least as many Americans will have access to health coverage and of at least as high quality.

Monday’s analysis by the CBO shows that the projected effects of the implementation of the AHCA :


Items Decreasing Federal Budget Estimated Amount   Items Increasing Federal Budget Estimated Amount
Federal outlays for Medicaid $880 billion New tax credit for health insurance $361 billion
Elimination of ACA subsidies for individual health coverage $673 billion Revenues lost from elimination of individual and employer mandate penalties $210 billion
Decrease in enrollment in employer-sponsored coverage increasing taxable wages $ 70 billion Implementation of Patient and State Stability Fund grant program $ 80 billion
Repeal of small business tax credit $  6 billion Increase in payments to hospitals serving a disproportionate share of low –income patients $ 43 billion
Total Decrease to the Budget $1.2 trillion   Total Increase to the Budget $  .9 trillion
  1. Effect on federal budget
    1. Reduces the federal deficit by a net $337 billion between 2017-2026
  2. Effect on uninsured population
    1. The number of uninsured individuals under the current law is $26 million with a project reaching 28 million by the year 2026 if no changes are made.
    2. The estimate of uninsured individuals resulting from the passage of AHCA is 31 million in 2017, 41 million in 2018, 43 million in 2019, and 52 million in 2026.
  3. Market Stability
    1. New tax credits and other changes would “lower average premiums enough to attract a sufficient number of relatively healthy people to stabilize the market.”
    2. The combination of subsidies to purchase individual health coverage and the new rules regulating the market will result in a relatively stable individual market, i.e. enough carriers participating in the marketplace and stable and reducing premiums.
    3. Penalties imposed on individuals not maintaining continuous coverage will result in $1 million more people enrolling in coverage in 2018 to avoid the 30% penalty but then 2 million fewer people purchasing in subsequent years to avoid the penalty or documentation requirement – these would most likely be those that are healthier.
  4. Effect on Premiums
    1. Premiums in the individual market would increase by 15-20% in 2017 and 2018 due to the elimination of the individual mandate penalty, which they believe will cause healthy people to leave the marketplace, but not the requirement that health plans include all the coverage requirements.
    2. Premiums would decrease starting in 2020 as a result of the grants to states from the Patient and State Stability Fund, the elimination of the essential health benefit plan requirements, and higher enrollment of younger individuals – by 2026, rates would be 10% lower than current 2017 rates (this effect will be different for different age groups, i.e. additional increase to some older individuals and additional decrease to some younger individuals).
    3. “Grants would exert substantial downward pressure on premiums in the non-group market in 2020 and later years and would help encourage participation in the market by insurers.”
  5.  Variability
    1. Many of the projections above assume certain responses by the states, insurers, employers, individuals, hospitals and physicians.
    2. This report provides average estimates “in the middle of potential outcomes.”


Overall, the CBO finds more positives than negatives with the AHCA.  The question remains as to whether it’s enough to outweigh the potential of an increase in people going without health insurance coverage.

Some items to watch and consider:

  • What will the House Budget Committees findings show when they review on Thursday?
  • Will the House Rules Committee find any issue or move the bill forward?
  • Does House leadership consider changes to try and address some of the concerns about the uninsured?
  • What are the subsequent legislative and regulatory actions will they use to augment these actions?

One thing to remember is that this is the first part of the “repeal/replace” strategy. Congress and the Administration intend on introducing additional regulations and other legislative actions to build on these provisions and address new items that cannot be part of this budget reconciliation.

We have prepared this legislative chronology for you to follow along with the House proposed legislative timeline for the AHCA. As we move down the timeline, we will continue to provide updates as events develop.