This post has been updated.
But “the direction of the effect is clear,” the report said, because of the “large reductions” in federal Medicaid funding, a decrease in government subsidies for people who buy coverage on their own, and the repeal of penalties for people who flout insurance requirements under the Affordable Care Act.
Moments after the partial estimate was released, Sen. Susan Collins (R-Maine) announced she would not support the bill, dooming its prospects given the earlier opposition of at least two other Republicans.
The CBO’s forecast, more cursory than its usual work because the complex bill was introduced less than two weeks ago, estimated the effects of a retooled version that one of its primary sponsors, Sen. Bill Cassidy (R-La.), had frenetically updated over the weekend and released on Monday morning.
Spending on Medicaid would be lowered by $1 trillion by 2026, the CBO projected, because the legislation would both end an expansion of Medicaid under the ACA and convert the traditional part of the program for low-income Americans from an entitlement to a new system with a per-person spending limit.
Cassidy and the other main sponsor, Sen. Lindsey O. Graham (R-S.C.), injected changes designed to appeal simultaneously to the most moderate and conservative holdouts within their caucus — an uncertain strategy to eke out enough votes by a looming deadline.
Revisions aimed at wooing reluctant GOP moderates would soften the financial blow on states that have most expanded access to health insurance under the Affordable Care Act. The changes also would require states to certify that health plans cover adequate care for newborns and people with mental health disorders.
Other late additions would add up to a pile of extra money for Alaska in particular, with the aim of swaying Sen. Lisa Murkowski (R), a moderate who has openly and repeatedly questioned how the plan would affect her state.
For conservatives who rail against what they call government-controlled health-care, the bill’s latest version would make it easier for states to unfetter themselves from ACA coverage rules without first seeking a federal waiver. Instead, states could simply tell government health officials if they wanted to let companies selling health plans to individuals cover fewer benefits, charge more to older customers or impose higher out-of-pocket costs.
While certain adjustments to the 148-page bill have clear ideological audiences, some revisions contain confusing and contradictory language that on Monday left even the most knowledgeable health-policy specialists split on what their effect would be. Chief among these is the plan’s impact for people with preexisting medical conditions.
The legislation’s original version prompted criticism by Murkowski, Collins and a slew of health advocacy groups that states could have allowed insurers to bypass an ACA rule forbidding health plans to charge higher prices based on medical history.
The bill’s update no longer suggests states could let health plans go back to the pre-ACA days in which they could charge higher rates, based on customers’ medical history. But a separate clause says states may let insurers vary prices for any reasons other than customers’ gender or genetic make-up, and still another says that, if a state adopts insurance standards different from those in Cassidy-Graham, the state rules take precedence.
And yet another section would let states go back to carving up insurer risk pools, so insurers could possibly clump together sick customers and charge them more.
“This is all contradictory and convoluted,” said Larry Levitt, senior vice president of the Kaiser Family Foundation, a health-policy organization that last week analyzed the original bill’s financial impact on each state. “It could conceivably be read different ways.”
Despite such substantial changes, the underpinnings of the bill remained intact. Their plan would abolish many fundamentals of the 2010 ACA: federal subsidies for the vast majority of roughly 10 million Americans who have bought health plans through the law’s marketplaces, as well as requirements that most people carry health insurance and that large employers offer it.
Under Cassidy-Graham, the government would give states block grants for insurance coverage and much more freedom to write their own rules.
The bill also would curtail the ACA’s expansion of Medicaid in 31 states plus the District of Columbia. For the traditional part of Medicaid, the plan would end its half-century tradition as an entitlement system, in which the government pays each state a fixed share of its costs, and impose a per-person cap on the program’s funding. Independent analyses in the past week have shown that move would cut federal funding by billions of dollars by 2026.
Several analyses, including one by an independent actuary within the Health and Human Services Department, have showed that the block grants and Medicaid changes would create a stark checkerboard of winner and loser states, with parts of the country with the largest insurance gains under the ACA tending to lose the most. Stung by those forecasts, the bill’s sponsors changed the way money would be spread out under block grants to somewhat compress the gaps.
Within that narrower funding range, South Dakota would see the largest increase at 88 percent and Oregon the greatest decrease at 17 percent.
Still, Pennsylvania’s insurance commissioner testified Monday before the Senate Finance Committee — which convened the bill’s only hearing — that the cut in federal funding would be “staggering.”
“This forces governors across the country to make impossible decisions: Who should receive health care?” Teresa Miller said.
The bill’s sponsors and Senate Majority Leader Mitch McConnell (R-Ky.) are facing an imminent deadline because special budget rules that would allow the chamber to pass the bill with a simply majority — and no Demcratic votes — ends on Saturday.
The latest version notably retains more funding for states represented by key holdout senators. The bill originally directed one-fourth of a $6 billion contingency fund to states with the lowest-density population — Alaska among them. New parts of the plan would give $500 million to states such as like Alaska that already have federal waivers to implement the ACA with more flexibility.
Another addition would give extra money to low-density states where health-care costs are at least 20 percent higher than average. “ This one is pretty clearly designed to benefit Alaska. Full stop,” said Chris Sloane, a senior manager at Avalere Health, a consulting firm that analyzed the bill’s impact on states last week.
Juliet Eilperin contributed to this report.