Backgrounder: CBO Analysis of Republican Repeal Agenda

May 27, 2011

Douglas Elmendorf, Director of the nonpartisan Congressional Budget Office confirmed the significant value of the Affordable Care Act and likewise, the detrimental results that would come of Republican efforts to defund implementation of the law in a letter to Henry A. Waxman, Ranking Member of the Committee on Energy and Commerce, Sander Levin, Ranking Member of the Committee on Ways and Means, George Miller, Ranking Member on the Committee on Education and Workforce, and Chris Van Hollen, Ranking Member on the Budget Committee.

The CBO Confirms that the Republican agenda to repeal, defund, and otherwise undo provisions in the Affordable Care Act would have a range of negative effects on Americans' health care and pocketbooks:

Many Americans Would Once Again Be Without Coverage

Among other consequences, CBO and [Joint Committee on Taxation] expect that such a ban would reduce the number of people with health insurance coverage compared with what would occur if the health care laws are fully implemented. (Pg. 2)

By reducing or preventing enforcement of the mandate to obtain insurance coverage, support for states to expand their Medicaid programs, the availability of new insurance exchanges, and the use of tax subsidies for insurance purchased through those exchanges, a permanent prohibition on the use of discretionary funding would reduce the number of people with health insurance coverage compared with what would occur if the health care laws are fully implemented. (Pg. 4)

Although some individuals and families would probably comply with the requirement to obtain health insurance who would not have obtained it in the absence of the mandate, the number of individuals and families with health insurance would be lower than under current law, and significantly fewer would receive coverage through the exchanges. (Pg. 7)

Seniors Would Have to Kiss Medicare Advantage plans, Part D Prescription Drug Coverage Goodbye

...a prohibition on the use of funds could preclude CMS from engaging in the rate-setting process and signing contracts with the private insurers that offer MA and Part D plans. As contracts expired on December 31, 2012, there would probably be nothing to replace them and therefore no MA and Part D plans for Medicare beneficiaries. (Pg. 6)

While Full Repeal Increases the Deficit by $210 Billion, Simply Defunding Implementation Could Also Increase the Deficit

A permanent prohibition on the use of discretionary funding to implement PPACA and the Reconciliation Act would have some effects that would reduce the federal deficit and others that would increase the federal deficit. (Pg. 4)

Full Repeal Could Cause Significant Revenue Loss

According to JCT, a permanent prohibition on the use of appropriated funding for implementation would result in a significant loss of revenues. (Pg. 2)

Doctors Could be Prevented from Getting Annual Payment Updates

...payments to doctors would nonetheless be affected because other changes made by the law will affect the calculation of the conversion factor that is the basis for Medicare’s payments to physicians. Therefore, a ban on the use of discretionary funding for implementation could prevent CMS from modifying payment rates on an annual basis. (Pg. 4)

Improvements to Health Care Quality, Delivery of Care, and Reductions in Waste, Fraud and Abuse Would End Before they Began

The health care laws made numerous other changes to Medicare, including modifying payment rates and policies for specific providers, changing cost-sharing requirements for beneficiaries, and setting policies to reduce waste, fraud, and abuse. The laws also mandated demonstrations and pilot projects designed to improve the quality and efficiency of care. A permanent prohibition on the use of appropriated funding could prevent CMS from implementing many of these changes and initiatives—reducing spending in some cases and increasing it in others. (Pg. 7)

Doors Would be Opened to Tax Fraud

The main provision in effect in 2011 that reduces tax liability is a tax credit for the purchase of employees’ health insurance by certain small businesses. Taxpayers who might be eligible to claim the small business tax credit will probably claim it on their return, and would continue to claim it in future years if no changes were made to returns or instructions. Over time, some taxpayers might take a more aggressive position, claiming eligibility for the credit even if they did not meet all of the eligibility requirements if they believe that the IRS would be unable to enforce any limitations on the provision. (Pg. 11)