On March 6, House Republicans revealed its bill to partially repeal and replace the Affordable Care Act (ACA). The bill, called the American Health Care Act (AHCA), would repeal most of the ACA’s taxes and fees, phase out the ACA’s expansion of the Medicaid program, cap federal funding of Medicaid and replace the ACA’s income-based premium tax credits with age-based ones meant to help Americans buy coverage.
In a series of analyses, The Joint Committee on Taxation (JCT) concluded that the bill would reduce taxes by about $600 billion through 2026. A joint Congressional Budget Office (CBO) and JCT analysis concluded that the bill would result in a rise in the uninsured of 24 million people by 2026 relative to the ACA. The CBO and JCT report also estimated that federal Medicaid outlays would drop by $880 billion between 2017 and 2026. The report estimated the bill would decrease federal deficits by $337 billion between 2017 and 2026 (see figure 1).
It does not touch popular ACA provisions with bipartisan support, such as allowing children to stay on their parents’ plans until age 26 or the ban on underwriting for pre-existing conditions. Drug prices, a priority for President Trump, are not addressed (see figure 2 for a summary of the AHCA’s key provisions).
Despite swift passage by the House Ways and Means Committee and the House Energy and Commerce Committee just three days after its March 6 introduction, the bill still could change substantially. Within days of the AHCA’s release, the American Medical Association, the American Hospital Association, AARP and other organizations issued critical statements about it.
Insurers may support provisions that could make the exchanges more attractive for them, including allowing them to charge older enrollees five times what they charge younger ones—instead of three times—bringing premiums more in line with differences in the cost of care. Branded pharmaceutical companies and makers of nonretail medical devices may welcome AHCA’s rollback of taxes, although some may be concerned about a likely reduction in coverage.
Build resilience. While the bill may change significantly, uncertainty and risk will mark the next few years. Organizations able to quickly interpret and react will be better able to survive and thrive.
Start scenario planning. Payers, healthcare providers, employers and pharmaceutical and life sciences companies should start modeling adoption curves, ideally based on behavioral, economic microsimulation methods, to understand specific impacts to their business. A slow reduction in Medicaid funding, caused by caps on federal spending and the phaseout of the program’s expansion, could increase uncompensated care and affect margins for providers. Providers will be impacted by the transition of premium subsidies to an age-based system, which in addition to a 5:1 age-rating band, may make it difficult for older, lower-income enrollees to afford coverage.
Identify opportunities. The rollback of taxes on branded pharmaceuticals, medical devices and health insurers could improve margins. Employers will be exempt from the “Cadillac” tax on high premiums until at least 2025. With fewer taxes, some companies may be able to make investments that would not otherwise have been possible. Payers may continue to find opportunity in the growing Medicare Advantage market. New entrants could find doors opening as healthcare organizations seek help making their operations more efficient and consumers seek cheaper ways to obtain care.
Karla Anderson is a Partner at PwC. Peter Claude is Partner at PwC. Sandra Hunt is a Principal at the PwC Health Research Institute. Sundar Sabramanian is a Partner at PwC Strategy, part of the PwC network.
The views expressed by this author are their own and are not the views of The Hill.