WASHINGTON (CN) – While the White House scrambles to defend the Republican health care bill in the wake of a damaging report by the Congressional Budget Office, experts shed light Tuesday on the grim outlook.
Dee Mahan, the director of Medicaid initiatives at Families USA, focused on the problems that can arise from shifting to a formula in the Republican plan from the guaranteed match under the Patient Protection and Affordable Care Act.
When states shift their Medicaid costs according to their needs under Obamacare, the federal government matches their spending, reimbursing between 50 percent and 75 percent of what they spend on beneficiaries.
But the new health care bill calls for a per-capita allotment for state Medicaid spending, said Mahon, whose Washington-based nonprofit advocates for affordable, high-quality health care. Rather than matching state spending, the federal government will give states a fixed amount for each Medicaid enrollee.
Mahon said that capped amount will not change regardless of fluctuations in health care costs. This could be problematic for states that see see a spike in older and sicker populations over time as demographics change. “There’s no adjustment for that” under the Republican plan, Mahan said.
Mahan pointed to an HIV crisis in Indiana as an illustration of how the proposed bill could stymie efforts to deal with public health crises.
In 2015, the state had to spend more on diagnosis, treatment and prevention because of an HIV outbreak in Scott County linked to residents sharing needles for prescription opioid use.
Mahan said the state was comfortable with the uptick in spending because it knew the federal government would match the spending. She noted, however, that states would be on their own to fund such initiatives under the proposed bill. This means states will end up spending more, Mahan added.
The Congressional Budget Office’s highly anticipated report on the Republican plan Monday included the shocking figure that 24 million Americans could lose health coverage by 2026.
But Health and Human Services Secretary Tom Price said the nonpartisan auditors got it wrong. “We believe that the plan that we’re putting in place is going to insure more individuals than currently are insured,” Price said.
Against the bright line of $337 billion in possible savings for the federal government over 10 years under the Republican plan, the CBO found that a significant chunk of those savings will come from $880 billion in federal spending cuts to Medicaid.
The CBO says insurance premiums could drop 10 percent, but that 14 million Americans will be squeezed out of Medicaid as a result.
White House budget director Mick Mulvaney was quick to counter this finding Monday afternoon at a press conference outside the White House.
“The CBO score assumes that if you are on Medicaid today, you will chose to be off Medicaid when the mandate goes away,” he said.
“Does that make sense to anybody,” Mulvaney added. “The plan doesn’t get rid of the Medicaid expansion.”
Mahan from Families USA meanwhile noted that the proposed per-capita cap structure would let the federal government freeze inflation adjustments to the Medicaid program to free up money for other spending – for example, funding an infrastructure program.
But this only shifts costs to the states, which would have to compensate for the loss in federal money somehow. The most expensive care is often for seniors and people with disabilities who need long-term care. States feeling the crunch could look to such programs first when trying to make cuts.
Mahan said cuts could also downgrade the quality of nursing home care and prevent low-income people from being able to access high-cost cancer treatment.
Because of the federal matching guarantee in place now, states must ensure that residents get a certain level of services. Those restrictions go away with the new bill.
“We are concerned that states will target services for those individuals for cuts because that is where states can get the most savings,” Mahan said in an email.
Another “easy target for cuts,” Mahan said, are home and community-based services, which allow for long-term care in more familiar settings, outside of institutions.
“States could also limit access to prescription drugs, by limiting the number of prescriptions that could be filled in a month, or setting treatment protocols that make it harder for people to get approval for high cost therapies,” Mahan said.
Proponents of a per-capita allotment say it helps reduce the federal deficit and gives states more flexibility with Medicaid spending, allowing them to determine eligibility requirements and what services the state will cover. That is flexibility that many states want, and it could reduce the federal deficit.
A year before the CBO released its report about the Republican health care bill, research company Avalere issued a February 2016 report that said switching to a per-capita allotment could reduce federal Medicaid spending by $110 billion over five years.
Avalere modeled the impact of a per-capita cap system on states, looking at how federal funding would have changed between 2001-08.
Not every state saw spending reductions, however, under the model. Federal funding would have increased in 24 states, while 26 states and the District of Columbia would have seen funding reductions below 30 percent.
Despite Republican assurances that the health care proposal will not eliminate the Medicaid expansion or kick people off their coverage, experts say some key provisions will gradually eliminate the expansion and will drive down enrollment.
Under Obamacare, the federal government fully funded the first three years of Medicaid expansion, which extended the program to more than 11 million Americans with incomes under 138 percent of the federal poverty level.
The federal government pulled that back slightly after the first three years, covering 90 percent of the cost for expansion enrollees in the 31 states and the District of Columbia, which took advantage of the expansion.
Though the new bill would end new enrollment in the expansion program at the beginning of 2020, it will continue to cover 90 percent of the costs for those who are already enrolled.
Anyone who lets their coverage lapse for more than a month, however, will lose the expansion coverage. Instead of the 90 percent that Obamacare covers now, those people would be subject to whatever the per-capita rate is.
“That sounds like it’s a compromise, but actually because of the way Medicaid works, more than half of people have a gap in Medicaid within two years of signing up,” said Dr. Benjamin Sommers, a physician and professor of health policy and economics at Harvard University.
Lapses in coverage are not uncommon for Medicaid recipients, and have led to the so-called churn effect.
“People move in and out as their circumstances change,” Sommers said in a phone interview. That movement is often driven by changes in income.
“If you’re working, and you’re currently on Medicaid, and you have the option of picking up some extra shifts, or you have the option of taking some part-time work on top of what you’re doing, that would boost your income for a couple of months, but put you above the Medicaid cutoff,” Sommers said.
People can get back on Medicaid when their income drops again under the current system, but the Republican proposal would send a signal to people not to take on extra income.
“Once you’ve done it and lost your coverage for a month, you know, you won’t be able to get it back,” Sommers said.
“So this is paradoxically creating incentives for people to not try new opportunities that might lead to temporary disruptions in their Medicaid because they wouldn’t have that safety net in place later on.”
Sommers also called out features of the new bill that he said could drive down Medicaid enrollment. Rather than requiring annual Medicaid renewal, the Republican proposal will require it every six months.
“You’re just doubling the opportunity,” Sommers said, “for people to have something go wrong – they moved, they didn’t get the mail that told them to renew, they filled out a form incorrectly – all sorts of reasons.”
People can sometimes lose their coverage and not even know it until they show up for an appointment.
“Under the Republican bill that would basically mean they could never again qualify for the Affordable Care Act funding that has made Medicaid expansion possible,” he said.