![handle is hein.congrec/cbo3832 and id is 1 raw text is:
~SEPTEMBER 2017
Preliminary Analysis of Legislation That Would
Replace Subsidies for Health Care With Block Grants
At the request of the Chairman of the Senate Budget
Committee, the Congressional Budget Office and the
staff of the Joint Committee on Taxation (JCT) have
analyzed the direct spending and revenue effects of leg-
islation sponsored by Senators Graham, Cassidy, Heller,
and Johnson that would replace certain federal subsidies
for health care with block grants to states. Specifically,
the agencies analyzed H.R. 1628, an amendment in
the nature of a substitute [LYN17744], posted on
September 25, 2017, on Senator Cassidy's website.1
In the short time available, rather than provide the point
estimates that are typical in such analyses, the agencies
have been able to assess only whether any reductions in
the deficit stemming from the legislation as a whole (and
from its two titles individually) would exceed certain
thresholds and to qualitatively assess its effects on health
insurance coverage and market stability.
Over the 2017-2026 period, CBO and JCT estimate,
the legislation would reduce the on-budget deficit by at
least $133 billion, the projected savings from the House-
passed reconciliation bill. (The effects on the deficit were
estimated relative to CBO's March 2016 baseline, as has
been done for all legislation related to the 2017 budget
resolution.) Those savings would occur mainly because,
under the legislation, outlays from new block grants
between 2020 and 2026 would be smaller than the
reduction in net federal subsidies for health insurance.
Funding would shift away from states that expanded
eligibility for Medicaid under the Affordable Care Act
(ACA) and toward states that did not.
The number of people with comprehensive health
insurance that covers high-cost medical events would be
1. At this time, CBO and JCT have not analyzed other versions of
this legislation, such as those labeled LYN17709 and LYN17752,
which have also been posted on Senator Cassidy's website.
reduced by millions compared with the baseline projec-
tions for each year during the decade, CBO and JCT
estimate. That number could vary widely depending
on how states implemented the legislation, although
the direction of the effect is clear. The reduction in the
number of insured people relative to the number under
current law would result from three main causes. First,
enrollment in Medicaid would be substantially lower
because of large reductions in federal funding for that
program. Second, enrollment in nongroup coverage
would be lower because of reductions in subsidies for it.
Third, enrollment in all types of health insurance would
be lower because penalties for not having insurance
would be repealed. Those losses in coverage would be
partly offset by enrollment in new programs established
by states using the block grants and by somewhat higher
enrollment in employment-based insurance. Many of
the new programs would probably cover people with
characteristics similar to those of people made eligible for
Medicaid by the ACA.
The decrease in the number of insured people would
be particularly large starting in 2020, when the legisla-
tion would make major changes to federal funding for
Medicaid and the nongroup market. CBO and JCT
expect that market disruptions and other implemen-
tation problems would accompany the transition to
the block grants created by the legislation-despite the
availability of funding specifically designated to assist
with that transition-given the short time for planning
and making changes between now and then.
CBO and JCT would need at least several weeks to pro-
vide point estimates of the effects on the deficit, health
insurance coverage, and premiums. During that time,
the agencies would gather and analyze more information
about states' potential uses of the block grants and the
extent to which states might modify rules governing the
nongroup market.](ViewImageLocal?handle=hein.congrec/cbo3832&div=1&collection=&method=preview&ext=.png&size=3)
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