Sep 19, 2017
The Graham-Cassidy proposal to repeal and replace the Affordable
Care Act (ACA) is reviving the federal health reform debate and could come up
for a vote in the Senate in the next two weeks before the budget reconciliation
authority expires on September 30. The Graham-Cassidy proposal goes beyond the
American Health Care Act (AHCA) passed by the House in May and the Better Care
Reconciliation Act (BCRA) that failed in the Senate in July. The Graham-Cassidy
proposal revamps and cuts Medicaid, redistributes federal funds across states,
and eliminates coverage for millions of poor Americans as described below:
1.
Ends federal funding for current ACA coverage and partially
replaces that funding with a block grant that expires after 2026. The
proposal ends both the authority to cover childless adults and funding for the
ACA Medicaid expansion that covers 15 million adults. Under Graham-Cassidy, a
new block grant, the “Market-Based Health Care Grant Program,” combines federal
funds for the ACA Medicaid expansion, premium and cost sharing subsidies in the
Marketplace, and states’ Basic Health Plans for 2020-2026. Capped nationally,
the block grant would be lower than ACA spending under current law and would
end after 2026. States would need to replace federal dollars or roll back
coverage. Neither the AHCA nor the BCRA included expiration dates for
ACA-related federal funds or eliminated the ability for states to cover
childless adults through Medicaid.
2. Massively
redistributes federal funding from Medicaid expansion states to non-expansion
states through the block grant program penalizing states that broadened
coverage. In 2020, block grant funds would be distributed based on federal
spending in states for ACA Medicaid and Marketplace coverage. By 2026, funding
would go to states according to the states’ portion of the population with
incomes between 50% and 138% of poverty; the new allocation is phased in over
the 2021-2025 period. The Secretary has the authority to make other adjustments
to the allocation. This allocation would result in a large redistribution of
ACA funding by 2026, away from states that adopted the Medicaid expansion and
redirecting funding to states that did not. No funding is provided beyond 2026.
3. Prohibits
Medicaid coverage for childless adults and allows states to use limited block
grant funds to purchase private coverage for traditional Medicaid
populations. States can use funds under the block grant to provide tax credits
and/or cost-sharing reductions for individual market coverage, make direct
payments to providers, or provide coverage for traditional Medicaid populations
through private insurance. The proposal limits the amount of block grant funds
that a state could use for traditional Medicaid populations to 15% of its
allotment (or 20% under a special waiver). These limits would shift coverage
and funds for many low-income adults from Medicaid to individual market
coverage. Under current law, 60% of federal ACA coverage funding is currently
for the Medicaid expansion (covering parents and childless adults). Medicaid
coverage is typically more comprehensive, less expensive and has more financial
protections compared to private insurance. The proposal also allows states to
roll back individual market protections related to premium pricing, including
allowing premium rating based on health status, and benefits currently in the
ACA.
4. Caps
and redistributes federal funds to states for the traditional Medicaid program
for more than 60 million low-income children, parents, people with disabilities
and the elderly. Similar to the BCRA and AHCA, the proposal
establishes a Medicaid per enrollee cap as the default for federal financing
based on a complicated formula tied to different inflation rates. As a result,
federal Medicaid financing would grow more slowly than estimates under current
law. In addition to overall spending limits, similar to the BCRA, the proposal
would give the HHS Secretary discretion to further redistribute capped federal
funds across states by making adjustments to states with high or low per
enrollee spending.
5. Eliminates
federal funding for states to cover Medicaid family planning at Planned
Parenthood clinics for one year. Additional funding
restrictions include limits on states’ ability to use provider tax revenue to
finance Medicaid as well as the termination of the enhanced match for the
Community First Choice attendant care program for seniors and people with
disabilities. Enrollment barriers include the option for states to condition
Medicaid eligibility on a work requirement and to conduct more frequent
redeterminations.
Much is
at stake for low-income Americans and states in the Graham-Cassidy proposal.
The recent debate over the AHCA and the BCRA has shown the difficulty of making
major changes that affect coverage for over 70 million Americans and reduce
federal funding for Medicaid. Medicaid has broad support and majorities across
political parties say Medicaid is working well. More than half of the states
have a strong stake in continuing the ACA Medicaid expansion as it has provided
coverage to millions of low-income residents, reduced the uninsured and
produced net fiscal benefits to states. Graham-Cassidy prohibits states from
using Medicaid to provide coverage to childless adults. With regard to Medicaid
financing changes, caps on federal funding could shift costs to states and
result in less fiscal flexibility for states. States with challenging
demographics (like an aging population), high health care needs (like those
hardest hit by the opioid epidemic), high cost markets or states that operate
efficient programs may have the hardest time responding to federal caps on
Medicaid spending. Faced with substantially reduced federal funding, states
would face difficult choices: raise revenue, reduce spending in other areas, or
cut Medicaid provider payments, optional benefits, and/or optional coverage
groups.
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