The White House and Senate leaders are now in an intensive final push to repeal the Affordable Care Act by September 30. After that, under Senate rules, they will need 60 votes, which they acknowledge is an impossibility. Senator Graham said in a statement on Thursday that the legislation was gaining “momentum and support” because it would send “money and power back to the states, and closer to patients, to deliver quality health care.”
The legislation would turn over more than $1 trillion that would have been spent on the law known as Obamacare over the next seven years — everything from the funds for the expansion of Medicaid to the subsidies to help people buy private insurance — to states as “block grants” with very few strings attached. They would then use the money to set up their own health care programs. Congress would have to reauthorize the money after 2026 or it would go away.
“The decisions about individual mandates, mandated benefits, and all the other decisions the ACA moved to Washington are best made at the state level by governors who understand the unique needs of their states,” said Gov. Asa Hutchinson of Arkansas, a Republican. Arkansas expanded Medicaid under Obamacare, and would lose roughly $6 billion under the bill, but Governor Hutchinson supports the legislation nonetheless.
“Graham-Cassidy is putting federal spending on a budget,” he said. “That is the fiscal discipline the federal government and states both need to ensure the sustainability of Medicaid and other state health care programs.”
Like previous Republican proposals, the bill would also cancel the federal government’s commitment to the open-ended funding of the traditional Medicaid program, capping an entitlement for the poor and disabled that now covers one in five Americans. States could choose to take some of that Medicaid money in a block grant too.
State Winners and Losers
One of the most striking things about the bill is how it redistributes federal money among states. Some states that have invested a lot in expanding coverage under Obamacare (many of them Democratic) would lose big to others (mostly Republican) that have fiercely resisted going along with the law and are hostile to federal spending in general.
The biggest spoils would go to Texas, which refused to expand Medicaid under the Affordable Care Act and had the nation’s highest uninsured rate last year at 16.6 percent. The health data firm Avalere estimated that Texas would receive an additional $35 billion by 2026 under the bill’s formula. California, which has expanded coverage to an additional 3.7 million under the A.C.A. would get $78 billion less through 2026 than under current law, and New York would see $45 billion less, Avalere found.
In Mississippi, which Avalere calculated would reap an extra $6 billion through 2026, some public health officials were skeptical that the state would even want the money.
Mississippi has one of the nation’s sickest populations and has historically resisted federal funding for social welfare programs. After the Affordable Care Act became law, Gov. Phil Bryant, a Republican, rejected not only the chance to expand Medicaid but also his own state insurance commissioner’s attempt to create a state-based insurance marketplace with federal funds offered under the law.
“Year after year we have fought to get our policy makers to take money from the feds,” said Roy Mitchell, executive director of the Mississippi Health Advocacy Program. “I could just see another scenario like that with this bill. These states that would see more money are just rife with ideologues that do not want to see this specific population get any kind of opportunity for affordable coverage. That’s my stark reality.”
In an emailed statement on Wednesday, Governor Bryant said his priority if the Senate bill passed would be “to implement a system of health care that best fit the specific needs of Mississippi’s most vulnerable citizens, and did not endanger coverage for those with pre-existing conditions.”
In Iowa, state officials have already filed a formal application to opt out of the Obamacare insurance market next year. The insurance commissioner, Doug Ommen, said he liked the idea of a health care block grant even though under the bill’s formula, Iowa stood to lose some federal funding. The proposal he submitted to the Trump administration would use the federal money that helps cover lower-income people’s deductibles to instead provide more premium subsidies and help insurers cover their most expensive customers’ costs. It could be an early example of something states might try to do under the Senate bill, if the money was sufficient.
“I think we would make it work here,” Mr. Ommen said of the bill. “We are a proponent of flexibility.”
In Alabama, another winner under the Senate bill, Jim Carnes, policy director at Arise Citizens’ Policy Project, an advocacy group, described the bill as “a bait and switch” for the state.
“The early gains from the redistribution will take a nose-dive 10 years out and we will lose billions,” he said. “No state is a winner in the end.”
The bill would make the most sweeping changes to Medicaid since the program’s inception in 1965. It goes farther than previous Senate proposals, and a bill passed by the House in May, by eliminating the expansion of Medicaid set up by the Affordable Care Act, which has extended the program’s coverage to 11 million more lower-income people, and putting the money into block grants starting in 2020.
The states could use that money for a variety of health care expenses, including creating high-risk pools to cover particularly expensive patients, to create a health care exchange run by the state, or to subsidize the cost of premiums or out of pocket costs for people with private insurance.
In all, Medicaid now covers 74 million Americans, most of them poor but also middle class people with disabilities and in nursing homes. The federal government shares the cost of Medicaid with states, and has traditionally paid between 50 and 75 percent of the costs, with poor states receiving more money. The commitment was open-ended; the government covered its share no matter the cost, or how many people enrolled. The federal government picked up the entire cost of the Medicaid expansion at first, with that share ultimately tapering to 90 percent.
Like previous Republican proposals, Graham-Cassidy would cap traditional Medicaid spending on a per-person basis, based on a complex formula.
That provision worries many hospital systems. “These funding reductions are unsustainable for many Ohio hospitals,” said John Palmer, a spokesman for the Ohio Hospital Association, adding that nearly 20 percent of hospitals in the state already spend more than they take in.
It’s hard to overstate the potential effects. Medicaid now provides medical care to four out of 10 American children, and covers the costs of nearly half of all births in the United States, as well as care for two-thirds of people in nursing homes and also for 10 million children and adults with physical or mental disabilities.
“It would unleash massive health care debates in every state capital,” said Mr. Levitt, at Kaiser. “All these tough decisions would no longer be on Congress’ plate but on the plates of governors.”
The proposal is much more aggressive than some of the other Republican plans in rolling back the Affordable Care Act’s consumer protections, say health care lawyers and other experts who have studied the bill. It would allow states to stop requiring insurers to cover “essential” health care needs like hospitalization, prescription drugs, maternity care and mental health treatment.
Senator Bill Cassidy of Louisiana, a co-author of the legislation, has insisted that it would continue to provide vital protections to people with chronic illnesses so they would be able to find health insurance. But lawyers say the bill would allow states an almost unfettered ability to permit insurance companies to charge someone with, say, cancer or diabetes much higher rates — or to exclude certain expensive conditions like pregnancy or addiction from the plans they offer.
Though it is unclear how many would do so, states would be able to waive the existing rules much more easily because the bill would only require a state to explain how it intended to cover people with pre-existing conditions. “It’s not at all required that their explanation or plan meets any kind of standard,” said Richard J. Zall, a partner at the law firm Proskauer.
Moreover, unlike previous proposals, the bill would pave the way for insurers to adjust their prices every time someone renewed a policy, based on the individual’s changing health status. People could sign up for a plan and see the price skyrocket if they developed a potentially serious condition like cancer, said Karen Pollitz, a senior fellow at the Kaiser foundation.
Even the way people bought insurance would change in states that relied on the current federal insurance marketplace, which allows people to buy subsidized plans through HealthCare.gov. It would be dismantled in 2020. “The federal exchanges go away,” said Timothy S. Jost, an emeritus professor at Washington and Lee University law school who opposes to the bill.
Instead of setting up their own website so people can shop for a plan, the state could use the money to set up high-risk insurance pools for people with expensive chronic conditions or pay hospitals and doctors directly for care.
But even with the best of intentions, the time frame is very short for states to come up with an alternative plan, he said. “The biggest problem is how are states are going to do this in two years,” Mr. Jost said.
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