Even though congressional forecasters predicted millions of Americans would lose health insurance next year and others would see their premiums rise under a House Republican bill, industry analysts anticipated the legislation would end up a political and policy winner because of its hundreds of billions of dollars in budget savings.
The Congressional Budget Office and the Joint Committee on Taxation estimate that 14 million Americans would lose health insurance in 2018 under the bill to repeal and replace the Affordable Care Act — a figure that is expected to grow to 24 million by 2026 — is unlikely to dramatically alter the legislation's trajectory out of the House, said Cowen & Co. analyst Eric Assaraf.
Evercore ISI analyst Terry Haines said he continued to believe the House would clear some version of the Republican bill, known as the American Health Care Act, by its mid-April recess.
Action by the House under that timeline is "crucial" because any delays could negatively impact political timing of the Republicans' tax reform agenda, creating a "domino effect," Haines said.
While the March 13 CBO/JCT analysis had the potential to create a legislative delay for the AHCA, which passed two key House committees March 9, the congressional analysts' prediction of $337 billion over 10 years in federal cost savings bodes well for getting the bill through the chamber, Haines said.
He anticipated the CBO/JCT report will "keep the House efforts moving forward" on the bill, even while Republican leaders struggle to get a majority of their members on board.
As many as 40 House Republicans — most of them from the Freedom Caucus, a group representing some of the most conservative members of Congress — and several of the party's senators have expressed doubts about the bill, with some, like Rand Paul of Kentucky, declaring it had no chance of being enacted in its present form.
Sen. Tom Cotton, R-Ark., also said the three-pronged process to repeal and replace the ACA was nothing more than political spin, calling the third step — which is conceived as a series of yet-to-be-written bills — "some mythical legislation in the future" to garner the Democratic support needed to get to the 60-vote threshold in the Senate.
"If we had those Democratic votes, we wouldn't need three steps," Cotton told conservative radio host Hugh Hewitt March 14.
But Evercore's Haines said he believed there was a 70% chance that some form of the bill would be enacted by the end of June, despite the current opposition from Republicans.
"The House Republican majority will see this CBO/JCT score as a political and policy winner and will shrug off the near-term estimates of increased uninsureds as a byproduct of ending the requirement that everyone be insured," he said.
But the overall rise in the number of uninsured predicted by the congressional analysts, which was higher than was generally expected, and the finding that more than half of that increase by 2026 is due to Medicaid cuts "cannot be so easily written off as due to individual choice," Haines said. So there is some short-term headline risk for the ACA repeal-and-replace effort, he said.
Of the 14 million people losing insurance in 2018 under the Republican bill, 6 million would come from the nongroup market, about 5 million from Medicaid and 2 million from employment-based coverage, the congressional analysts said.
The Republicans' plan would cut $880 billion from Medicaid spending, resulting in 14 million fewer people enrolling in that program by 2026.
While 9 million fewer people would obtain coverage through the nongroup market in 2020, that number would fall to 2 million in 2026. But that's because more Americans would need to seek insurance from the individual market after no longer being able to obtain it through work, the CBO/JCT analysts said. They predicted about 7 million people would lose employment-based coverage by 2026.
The key test for the Republican bill will be how the CBO/JCT analysis plays out in the halls of Congress, the media and among constituents over the coming weeks, Haines said.
He anticipated the bill would become more conservative as it moves through the House, but more centrist as it is considered in the Senate.
"The GOP is walking the tightrope of appeasing the conservative and moderate factions of their party," Cowen's Assaraf said.
He predicted the addition of an "auto-enrollment" provision by the time the bill reaches the Senate to improve the coverage numbers.