Vice President Pence recently spoke at the National Governors Association meeting in Providence, R.I., and made several questionable claims about the Senate GOP health-care proposal, the Better Care Reconciliation Act (BCRA).
When he gave his speech, on Friday, the new version of the Republicans’ health proposal was released but had not been analyzed by the Congressional Budget Office, a nonpartisan agency that studies the budget impact of legislation. But analysis by an independent health-care consulting firm found that the revised version, which still contains steep reductions to Medicaid that the first version did, would greatly restrict state options for their Medicaid program. We dug into some of Pence’s talking points below.
“I know Governor Kasich isn’t with us, but I suspect that he’s very troubled to know that in Ohio alone, nearly 60,000 disabled citizens are stuck on waiting lists, leaving them without the care they need for months or even years.”
This is false. In fact, if Ohio Gov. John Kasich were there, he would have disagreed.
Under Medicaid, there are wait lists for optional services for specific populations, such as people with intellectual and developmental disabilities or chronic illnesses. States can offer these services so that certain people can get care at home or in their own community, rather than in an institution. Pence is referring to the roughly 60,000 people waiting for enrollment in these home- and community-based services.
Pence’s staff pointed to an opinion article in the Wall Street Journal that argued that Medicaid expansion “diverts resources from the program’s traditional targets. . . . Sure enough, in 2015 Ohio redesigned its disability determination system to remove some 34,000 people from the safety-net rolls. Nearly 60,000 disabled Ohioans are on waiting lists that last for months or years to receive supplemental state services. A temporary enrollment freeze might lead Ohio to prioritize resources for the truly needy.”
But there’s no evidence the wait lists are tied to Medicaid expansion. We previously gave four Pinocchios to a similar claim.
Nearly all of the Medicaid expansion under the Affordable Care Act, or Obamacare, was paid for by the federal government, so it’s different from the state waivers that pay for the optional services when people get off the wait list. The expansion and wait list populations are separate, and expansion doesn’t necessarily affect the wait list population.
Whether people move off the wait list depends on many factors, such as how urgent their needs are, how long they’ll need services and whether the states have money to pay for them. Many times, a slot opens up only if someone receiving services moves out of the state or dies.
After Pence’s speech, Kasich spokesman John Keeling told the Columbus Dispatch: “To be clear, there is zero connection between those asking for support services and Medicaid expansion. In fact, after we expanded, the governor signed into law the largest investment in the system for the developmentally disabled in the history of the program — $286 million. To say Medicaid expansion had a negative impact on the (developmental disabilities) system is false, as it is just the opposite of what actually happened.”
“And when it comes to receiving this funding, your states will have two options — a per capita cap or a block grant. The per capita cap gives each state the money you need to cover Medicaid’s traditional beneficiaries, who need the most assistance. And with the block grant option, you’ll be able to determine how to best use your Medicaid dollars. And you can provide for your most vulnerable in ways that’s best for your state.”
The amended version of BCRA contains steep reductions in Medicaid funding similar to the original version. Currently, federal reimbursement for Medicaid medical services is open-ended. But under the Senate proposal, federal reimbursements would shift to a fixed funding structure. There would be a per capita cap on federal reimbursements, and states would have the option for a block grant to pay for certain adults to receive medical services.
The Congressional Budget Office found that the per capita caps would not give states any more substantial flexibility. In fact, the most expensive 5 percent of Medicaid enrollees account for about half of Medicaid spending, according to a 2015 analysis by the Government Accountability Office. The least expensive 50 percent of Medicaid enrollees accounted for less than 8 percent of Medicaid spending. This means a small number of people heavily depend on the program for their medical needs, and would be affected the most if a state has a fixed amount of federal money to spend on each person.
“States that choose the block grant would have broad flexibility to design state-specific programs for certain adult populations, including unprecedented freedom to tailor benefits, eligibility, and delivery systems while also streamlining burdensome reporting requirements,” according to Pence’s staff. The CBO also notes that the block grant option would give states flexibility in making changes to their Medicaid program. States would set their own eligibility criteria; impose premiums, deductibles, cost-sharing and other similar changes; have flexibility to keep and reinvest their money; and more.
However, block grants do not fluctuate automatically based on the number of people enrolled in Medicaid. They also “would disconnect the level of funding from the number of Medicaid beneficiaries and the cost of providing care,” according to the Commonwealth Fund’s November 2016 analysis of proposals for per capita caps and block grants. Moreover, block grants under the Senate bill is for medical assistance to non-disabled adults, excluding the newly eligible adults under Medicaid expansion in Obamacare, so it’s not exactly the “most vulnerable” population, like Pence says.
“The bill actually rolls back restrictions on waivers, giving states the ability to stabilize your insurance markets after they’ve been virtually destroyed in recent years. And when it comes to Medicaid, not only does the Senate’s healthcare bill expand state flexibility, it ensures that every state in America has the resources you need to take care of your most vulnerable.”
This is misleading. Experts say the measure would put pressure on states to make changes to their Medicaid programs that they otherwise would not have made. We addressed this in depth here.
At least seven expansion states have “trigger” laws under their expansion legislation. These laws require states to reduce or eliminate eligibility or benefits if enhanced federal funding is reduced.
Other states may make a combination of decisions to make up for the reduced federal reimbursements. They may narrow eligibility criteria, increase cost sharing for enrollees, reduce provider payment rates (which could lead to fewer providers giving care), or limit the types of benefits that are covered, according to an analysis that Avalere Health presented at the National Governors Association.
States also may raise taxes or reduce spending in other parts of the state budget. Most states are required by state law to maintain a balanced budget, so some states would re-prioritize their spending.
Under the current version of BCRA, states might face other challenges beyond direct funding changes, such as an increased number of people without health insurance coverage, increased uncompensated care for providers, and reduced state economic activity because of lower revenues, Avalere Health found.
Pence said the bill would give states stability to manage their insurance markets. This is a reference to the State Stability and Innovation Program in BCRA, which provides $182 billion in federal funding over nine years for states to help stabilize their insurance markets in the face of large cuts under the bill. It’s worth noting that this would only be a partial offset to the reductions in Medicaid spending that states otherwise would have had under current law.
“Under the Senate healthcare bill, federal Medicaid spending will be $300 billion to $500 billion higher over the next decade relative to current amounts.”
This figure represents a cumulative total of raw dollars spent over 10 years, above the amount spent in 2017. This is rather unusual budget accounting. It leaves an exaggerated impression of the level of spending and skews the budget impact out of context.
In 2017, the federal government spent $393 billion on Medicaid. If no change is made to the current law, that spending is expected to be $624 billion by 2026. The CBO’s analysis of the original BCRA showed spending would still increase, but at a much slower rate than under current law. By 2026, Medicaid spending would grow to $464 billion instead — a difference of $160 billion in 2026. This means a reduction of $772 billion from current policies over 10 years (2017 to 2026).
These changes would be comparable under the revised version of BCRA, according to Avalere Health. Moreover, these graphics show further federal funding reductions by 2036:
“When Obamacare passed, we were promised that families would save up to $2,500 in premiums, but the average Obamacare plan today costs nearly $3,000 more than the average plan did in 2013. And while costs are skyrocketing, choices are plummeting.”
President Barack Obama, when campaigning in 2008, did misleadingly say that his plan would reduce premiums for families by $2,500. This promise came with a big asterisk that he did not always make clear: He was not saying premiums would fall by $2,500 or save up to $2,500 in premiums, but that health-care costs per family would be that much lower than anticipated. In other words, if overall costs — not just premiums — were expected to rise by $5,000 by 2012, they would only rise by $2,500. We gave him Pinocchios for this misleading claim at the time.
Under Obamacare, health costs for employer-provided plans have grown much slower than expected. The average family premium is now almost $3,600 lower than if premium growth had kept pace with the rate in the decade before Obamacare was passed, according to the Kaiser Family Foundation.
We fact-checked Pence’s $3,000 claim before. We found that he is citing an HHS report that claimed Obamacare premiums have increased 105 percent from 2013 to 2017. But this is an apples-to-oranges calculation, and it does not take into account the impact of premium tax credits, which shield 84 percent of people in the exchanges from premium hikes.
On average, eight out of 10 marketplace enrollees receive government premium subsidies, and they are protected from a premium increase (and may even see a decrease) if they stay with a low-cost plan. The White House, meanwhile, previously said that it is not accounting for the cost after subsidies because two out of 10 enrollees do not receive any subsidy, and therefore face the full impact of the premium hikes. Of course, the whole point of Obamacare was to provide subsidies to the majority of people on the exchanges.
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