Graham-Cassidy health care bill would cut funding to 34 states, report shows

WASHINGTON - The latest Senate Republican drive to dismantle the Affordable Care Act would sharply reduce federal spending on health insurance and cause 34 states to lose such funding, according to an analysis that details the checkerboard of winners and losers the plan would create.

The analysis by Avalere Health, a Washington-based health policy consulting firm, forecasts that federal money devoted to Medicaid and private insurance subsidies would shrink by $215 billion between 2020, when the plan would begin, and 2026, the last year money is provided in the so-called Graham-Cassidy bill. Among states, the analysis shows, the greatest erosion of aid would occur in those that have had the greatest insurance gains under the ACA by expanding their Medicaid programs.

States with relatively low medical costs, skimpy Medicaid benefits and no program expansion would win out. Texas would gain more than any state - $35 billion from 2020 through 2026.

On the other hand, states with higher-priced medicine and generous benefits for their low-income residents - such as California and New York - would lose billions of dollars.

But it is not only the largest states that would win or lose. Virginia, which has always had tight Medicaid benefits and eligibility rules, would gain $3 billion, while Maryland, a Medicaid expansion state with more Medicaid benefits, would lose $13 billion.

This redistribution of federal money would be the biggest effect of the new Senate Republican plan, Avalere officials said as they released the report Wednesday morning.

The analysis is part of a wave of predictions on the impact of the starkly conservative measure, sponsored by GOP Sens. Lindsey Graham, S.C., and Bill Cassidy, La. The bill has given Republicans' yearslong quest to abolish much of the ACA a surprising new chance two months after a dramatic failure of other Senate legislation had made any effort appear moribund.

The Graham-Cassidy measure would kill central features of the 2010 law, including its insurance subsidies, coverage requirements for individual Americans and large businesses, and health benefit requirements for plans sold in ACA marketplaces. Instead, in a devolution of unprecedented scale, a smaller amount of health care money would be redistributed around the country as block grants for much of the coming decade, with states having great freedom on how to spend it.

The plan also would transform the federal role in Medicaid for traditional recipients, ending the program's half-century tradition as an open-ended entitlement in which the government gives each state a fixed share of whatever its costs for the program are. Instead, federal aid would be converted to a per-person cap - a method that does not adjust as easily over time to expensive improvements in medical care or to possible economic downturns in which low-income people flock to the program.

The analyses of the impact of such massive changes - a liberal think tank produced a forecast earlier in the week, and two more by another health-policy group and a major trade association are expected by Friday - have assumed outsized significance because the Senate GOP is trying to speed toward a vote before the expiration of special budget rules on Sept. 30 that would allow them to pass the bill with a simple majority and no Democratic votes. This quick deadline means that much of the debate is occurring before Congress' nonpartisan budget scorekeepers have time to issue an official forecast of the legislation's impact. Their score is expected next week.

The Avalere predictions also help to explain the worries of a bipartisan group of 10 governors, who urged the Senate's leaders on Tuesday "not to consider" the Graham-Cassidy bill. All four GOP governors who signed onto the letter to the Senate's majority and minority leaders - including John Kasich, Ohio, and Brian Sandoval, Nev., plus the one independent, Bill Walker, Alaska - come from states that expanded their Medicaid programs under the ACA and would lose the most under the measure's reshuffling of federal money.

In a separate sign of some state officials' worry about the prospect of losing aid, Louisiana Health Secretary Rebekah Gee sent a letter to Cassidy saying the bill "singles out Louisiana for disproportional cuts to our Federal funding." She also noted "the specter" of a state waiver process that could eliminate protections for individuals with pre-existing medical conditions or complex and costly illnesses.

"This would be a detrimental step backward for Louisiana," wrote Gee, who posted her letter on Twitter on Tuesday. Avalere's analysis estimates that Louisiana would lose $8 billion from 2020 to 2026 under the bill.

The political fault lines between winners and losers became even more vivid late on Tuesday, when 15 Republican governors signed their own letter endorsing the bill. Led by Wisconsin's Scott Walker, who had a role in designing the legislation, this group includes five governors from states that chose to broaden Medicaid benefits to low-income adults earning up to 138 percent of the federal poverty level.

Among governors critical of the Graham-Cassidy plan, a major concern are the steep cuts that would occur in federal Medicaid allocations. Not only would a per capita cap be imposed on states, but restrictions would limit how they could spend the money on their expanded Medicaid populations.

The fact that the bill would bar states from taxing health care providers to fund their Medicaid programs poses a problem for several governors as well.

The boldness of the plan - and the extent to which it would free states from the ACA's rules - has startled even some Republicans in recent days. "It's not about health policy any more," said one former senior GOP congressional staffer. "This is about, in the Senate particularly, they need a vote. They were getting their rear ends hammered by the president and their base. It's about, 'Are we winners or losers?' "

The forecast Avalere issued on Wednesday does not include any predictions on its effect on the number of Americans with health insurance. The firm's staff are now trying to produce rough coverage estimates. The forecast due next week from the Congressional Budget Office also may not include that information, even though the CBO typically calculates the impact on coverage along with budgetary consequences of health care legislation.

But the coverage effect is tricky to assess because each state would gain the ability to establish its own rules to replace federal regulations created under the ACA. The ACA regulations most at risk are those limiting the premium differential that insurers can charge older customers compared to younger ones, requiring specific health benefits and blocking insurers from charging more for people with pre-existing conditions.

The Avalere report also notes that the bill would lead to a "fiscal cliff" when funding ends in 2027, leaving it to a future Congress to decide whether to extend the legislation.