What states would lose under Graham-Cassidy ACA repeal

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 - Bill Cassidy
U.S. Sen. Bill Cassidy, MD, R-Louisiana

If the Graham-Cassidy proposal is passed by the Senate, most states would lose funding compared to what they be paid under the Affordable Care Act (ACA) in 2020, as the ACA’s insurance subsidies and Medicaid expansion funding would be turned into a fixed block grant. Over a 20-year period, healthcare funding to states will be reduced by $4 trillion, according to Avalere Health.

In the absence of a full Congressional Budget Office analysis of the bill—which can’t be completed in time for the the Sept. 30 deadline for it to pass the Senate with only 50 votes—several consulting and research organizations have offered their own estimates of its impact. Reports from Avalere, the Kaiser Family Foundation and the Commonwealth Fund differed on the exact dollar amounts, but generally agreed the legislation would drastically reduce federal healthcare funding to states, particularly those which chose to expand Medicaid under the ACA.

In 2020, the Graham-Cassidy would repeal the ACA’s Medicaid expansion, tax credits for premiums, cost-sharing reduction subsidies to insurers, along with the individual and employer mandates and the Basic Health Program for low-income residents who don’t always qualify for Medicaid. In its place, states would receive a fixed amount—the block grant—funded through 2026.

“In general, states that have expanded Medicaid under the ACA and/or have had substantial enrollment in the health insurance marketplaces would see reductions in federal spending for coverage expansions, while other states would see increases,” Kaiser Family Foundation researcher Rachel Garfield, PhD, MHS, and her coauthors wrote.

The Kaiser report estimated 35 states plus the District of Columbia would lose funding between 2020 and 2026, with the cumulative reduction in federal funds amounting to $160 billion. California would be the biggest loser in terms of dollar amount, having reduced by nearly $56 billion compared to current law, with New York seeing the biggest decrease in terms of percentage, with reductions amounting to a 35 percent cut in funding.

On the other side of the coin, nonexpansion states would largely benefit from Graham-Cassidy through 2026. Texas would see the largest increase in funding in terms of dollars (a $34 billion boost in funding), while Mississippi would experience the largest gain in terms of percentage (a 148 percent increase).

The state-by-state estimates may put pressure on Republican senators considered swing votes on the bill. Alaska, for example, could lose $275 million in federal funding, according to Kaiser’s estimate. Alaska Sen. Lisa Murkowski is one of the crucial undecided votes, as she opposed the Senate’s last attempts to repeal and replace the ACA. Being a Republican representative of a state which would lose money under the bill doesn’t always correlate to a “no” vote, however. Louisiana, represented by one of the bill’s namesakes, Sen. Bill Cassidy, MD, was estimated to lose $667 million.

Nearly all states would be losing funding compared to current law beginning in 2027. The Graham-Cassidy plan only guarantees the block grant through 2026, meaning some action by Congress would be required or the funding would cease entirely. If Congress doesn’t continue the funding, states would lose $240 billion in federal funds in 2027 alone, according to the Kaiser analysis. Nonexpansion states would see reductions as well: Texas, for example, would lose $9 billion compared to current law if the block grant expires.

Avalere’s report, funded by the liberal-leaning Center for American Progress, went past the 10-year window used by Kaiser and typically used in CBO reports, which is where it estimated the largest negative impacts to state funding would be found under Graham-Cassidy. The massive $4 trillion estimated reduction in federal healthcare funding to states between 2020 and 2036 would hit every state, ranging from a $4 billion estimated reduction for Wyoming and South Dakota to a $800 billion reduction for California.

“A combination of slower Medicaid per-capita cap growth rates and the sunsetting of block grant funding would lead to substantial reductions in federal funds going to states through 2036,” said Chris Sloan, senior manager at Avalere.

The Avalere and Kaiser reports didn’t estimate the impact of Graham-Cassidy on insurance coverage, with Kaiser saying the magnitude of the coverage loss would be “dependent on actions by each of the fifty states that is difficult to predict in advance.”

The Commonwealth Fund, however, did provide an estimate based on provisions of the bill which have been previously examined by the CBO. The most immediate impact on coverage would be felt due to the individual and employer mandates, which the CBO estimated in January would result in up to 18 million fewer people being insured in the year after the law goes into effect.

With the block grant sunsetting after 2026, the Commonwealth Fund estimated at least 32 million more people will be uninsured. This is well above the estimated coverage loss for earlier repeal-and-replace bills. The American Health Care Act which passed the House in May would have led to 23 million fewer people having health coverage, according to the CBO, while the coverage loss for the Senate’s Better Care Reconciliation Act was pegged at 22 million.