A dealbreaker in July may not be a dealbreaker in September.
The political prospects for the bill, offered by Sens. Bill Cassidy (R-La.) and Lindsey O. Graham (R-S.C.), seemed to be improving by the hour Monday. A key Republican governor, Arizona’s Doug Ducey, signaled support for the legislation, and some moderate senators whose votes are crucial have either signed onto the bill or at least haven’t ruled it out yet. Ducey opposed the Senate leadership’s Better Care Reconciliation Act — which was defeated in July — and his opposition heavily influenced the decision by Sen. John McCain (R-Ariz.) not to back that measure.
Worries over steep Medicaid cuts and how many people could potentially lose protections or their health coverage altogether drove the GOP effort into a ditch at the end of July, when BCRA failed by seven votes.
It’s hard to see how the Cassidy-Graham plan resolves those concerns. In many cases, it could make them even more acute. The Congressional Budget Office has said it will release a “preliminary assessment” of the measure next week, which will provide some information on its effects on the budget. But the CBO said it would be “at least several weeks” before it can estimate whether people would lose insurance and whether premiums would spike.
The measure would actually cut federal health-care spending even more than BCRA, and aim the cuts more directly at states that expanded Medicaid under the Affordable Care Act. It was the governors and senators from those states who were most deeply worried about Medicaid cuts to begin with.
In fact, compared with both the House and Senate health-care bills, the Graham-Cassidy measure would more drastically remold the ACA by giving states virtually unlimited control over federal dollars currently being spent on marketplace subsidies and Medicaid expansion. It would also allow states to opt out of virtually all of the ACA’s insurer regulations by obtaining waivers.
It would work roughly like this: Starting in 2021, the federal government would lump together all the money it spends on subsidies distributed through the ACA marketplaces and expanded Medicaid programs covering poor, childless adults living at up to 133 percent of the federal poverty level.
This approach would generally result in less money for states that expanded Medicaid under the ACA and more money for states that didn’t. That’s because Graham-Cassidy would redistribute the money allotted to the 30 states that opted to expand Medicaid under the ACA and spread it out among all 50 states.
The government would redistribute all that money to states through what’s known as a block grant. These block grants would be based on a formula that, among other factors, takes into account the state’s share of low-income adults — an approach that would generally result in less money for states that expanded Medicaid and more money for states that didn’t.
So Texas, for example, would see an increase in its federal health-care funding, while states such as Alaska or Arizona (which both expanded Medicaid) would see a decrease. That could make it harder for Cassidy to convince senators from those states — Alaska Sen. Lisa Murkowski and McCain, who is being treated for brain cancer, namely — to support his bill.
Cassidy’s own state, Louisiana is among the states that stand to lose the most funding under this approach. Others include California, Connecticut, Delaware, Hawaii, Kentucky, Maryland, Massachusetts, Minnesota, Montana, New Hampshire, New Jersey, New York, North Dakota, Oregon, Rhode Island, Vermont and Washington, whose Medicaid expansion dollars would be cut anywhere from 35 to 60 percent.
By 2026, the federal government would be spending 17 percent less on subsidies and Medicaid expansion overall than under current projections, according to an analysis by the Center for Budget and Policy Priorities.
Then, in 2027, states would face a big fiscal cliff, when the Cassidy bill would halt all that spending. That’s a major step further than BCRA, which would have retained the marketplace subsidies (despite reducing them somewhat) and allowed states to keep Medicaid expansion (albeit paying for these enrollees at the normal matching rate and not the ACA’s expanded matching rate).
The Graham-Cassidy bill does pretty closely mirror BCRA in how it treats the regular Medicaid program. It would convert that program to a per capita system based on the number of enrollees in a state instead of the open-ended funding approach the federal government currently takes.
Under the measure, regular Medicaid funding (not including expansion) would be 8 percent lower by 2026; it would have been 9 percent lower that year under BCRA.
But there’s another way the Cassidy bill goes further than previous Obamacare rollback measures: It would allow states to opt out of the law’s “essential health benefits,” the baseline services insurers must cover. That means there will no longer be a rock-solid prohibition on charging higher premiums to people with preexisting medical conditions, although states would need federal waivers.
The second version of BCRA — which Senate Majority Leader Mitch McConnell rolled out in mid-July with an amendment from Sen. Ted Cruz (R-Tex.) — would have allowed insurers to opt out of those regulations but only if they also sold a fully ACA-compliant plan on the marketplaces.
The bottom line is this: The Cassidy bill will appeal to most conservatives in the House and the Senate, who can make the case to their base that they’re unshackling states from federal mandates and giving them huge leeway to construct a health-care approach that works best for them.
But if the moderate Republicans go along with this latest approach, they’d have to ignore the type of hefty Medicaid cuts they had previously opposed.