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March 14, 2017

The 4 key numbers for hospitals in CBO's analysis of the GOP health bill

Daily Briefing

By Eric Cragun, Senior Director, Health Policy

For full coverage of the Congressional Budget Office's (CBO) score of the American Health Care Act (AHCA), please read our full coverage. Continue reading for key takeaways for providers.

We're closely watching the reaction on Capitol Hill and at the White House to yesterday's CBO score to see what impact it will have on Republican leadership's efforts to pass the American Health Care Act.

The score may lead more rank-and-file Republicans to waver on supporting the bill, which might force changes to the bill before Republicans move forward. We'll pay particular attention to how the score plays out in the Senate, where moderate Republicans already had expressed concerns about the impact of Medicaid cuts on their states.

While the CBO score doesn't change our high-level perspective on the AHCA for providers, I do think it puts helpful estimates around a few key points. And, while reiterating that these are only estimates, four key numbers stand out in the report:

  • 25 percent: reduction in federal funding for Medicaid by 2026. Cutting Medicaid spending by one-fourth is obviously a drastic change, to the tune of $880 billion over the next 10 years. This would put pressure on states to cut some combination of payment rates, eligibility, and benefits. If the bill is passed, providers likely would feel renewed urgency behind managing care for Medicaid recipients in a financially sustainable way.

  • 14 million: increase in the number of uninsured in 2018 alone. The jump in the ranks of the uninsured projected in just the first year after passage of the AHCA particularly stands out. In addition, CBO projects that by 2026, the increase in uninsured individuals would reach 24 million. Uninsured patients would likely tend to be older and lower-income than under current law. Providers would need to revisit their approach to managing uncompensated care and engaging self-pay patients.

  • 65 percent: projected average actuarial value of an individual market health plan in 2026. This would represent a significant drop in actuarial value for coverage. It generally would mean increased out-of-pocket expenses for insured individuals, accelerating the shift to a consumer-driven market. Again, this would require providers to better engage financially exposed consumers.
  • 7 million: reduction in number of individuals with employer-sponsored insurance in 2026. For providers, this would represent a significant shift in payer mix, as patients who might have otherwise had employer-sponsored insurance would transition to the individual market or become uninsured. Beyond the potential increase in self-pay patients, this "retailization" of health insurance could lead to more patients with high deductibles and potentially even narrower networks. These changes could weaken the economics of commercial insurance for providers.

For full analysis of the GOP's efforts to repeal and replace the ACA and the implications for providers, join me for a webconference on March 17. Our last webconference on the politics of health reform filled up in record time, so reserve your spot today.

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