WASHINGTON (CN) – The GOP’s last-ditch effort to repeal and replace former President Barack Obama’s health care law could cut federal funding to states by $215 billion through 2026, and by $4 trillion over 20 years, according to a new study.
Analysis conducted by Avalere shows that the latest health care proposal from Republican Sens. Lindsey Graham, R-S.C., and Bill Cassidy, R-La., would increase funding for 16 states through 2026, while all other states and the District of Columbia would see funding cuts. Seven of those states would see more than $10 billion in cuts, the study said.
A spokeswoman for Senate Majority Leader Mitch McConnell, R-Ky., said Wednesday that McConnell plans to “consider Graham/Cassidy on the floor next week.”
The analysis from Avalere came the day after Sen. Lamar Alexander, R-Tenn., said that bipartisan negotiations on a bill to stabilize the Patient Protection and Affordable Care Act’s insurance exchanges had collapsed.
While Alexander and Sen. Patty Murray, D-Wash., had led two weeks of hearings in the Senate Committee on Health, Education, Labor and Pensions on ways to reduce uncertainty in the markets, Graham and Cassidy launched their plan, which would provide states with block grants to fund health insurance programs.
Under the Affordable Care Act, federal funding is allocated based on a percentage of what states spend.
Although the bill would satisfy a Republican desire to give states more flexibility to design their insurance markets – which Alexander stressed repeatedly during the recent bipartisan hearings – it would provide less funding to subsidize health care coverage for lower-income Americans, according to Avalere.
The new proposal would repeal the ACA’s premium tax credits, the Medicaid expansion, the individual and employer mandates and the cost sharing reduction payments, which compensate insurers for offering discounted plans to lower-income Americans that reduce their out-of-pocket costs.
Avalere senior vice president Elizabeth Carpenter said in a statement that switching to a block grant system would hit states that expanded Medicaid under the ACA particularly hard.
“The largest impact of the proposed bill would be the reallocation of federal dollars between states,” Carpenter said. “Medicaid expansion states and states that have enrolled a high number of people in insurance affordability programs would be most adversely impacted.”
Elliott Fishman, senior director of health policy at the nonpartisan Families USA, a nonprofit that advocates for high-quality affordable health care for all, said he is not surprised by Avalere’s analysis.
Fishman, a former Medicaid official, said the Graham-Cassidy plan would eliminate the Medicaid expansion without a phase-down of the program, and contains the same cuts to the core Medicaid program as a previous proposal that failed in the Senate 57-43 on July 26.
He also believes the Graham-Cassidy cuts to Medicaid are not getting enough attention. “I’m concerned about that,” he said in a phone interview.
Fishman said he fears that states will be put in a position to cut vital Medicaid benefits for vulnerable people.
“I’m just concerned that there’s no room to cut without hurting people in nursing homes, people with significant health problems – with disabilities,” Fishman said. “So I can’t see anything good coming out of those cuts.”
According to Avalere’s analysis, the proposal, which Sens. Dean Heller, R-Nev., and Ron Johnson, R-Wis., helped craft, creates a “funding cliff” after 2026, when the appropriated block grant funding would expire.
“The ability of the Congress to appropriate additional funding is uncertain and could be constrained by the need to offset the cost,” the analysis says.
By 2027, 39 states and the District of Columbia would see larger declines in funding, with 18 of them seeing more than $10 billion in cuts.
According to Avalere senior manager Chris Sloan, the plan could hit middle-income Americans hardest.
“The bill creates a financial incentive for states to direct coverage to very low-income residents near or below the poverty line, potentially at the expense of lower-middle-income individuals who currently receive exchange subsidies,” Sloan said in a statement.
Fishman said it’s hard to tell how states will react. His concerns, he said, extend beyond states having to choose between middle income Americans – who still need help covering the cost of their health insurance – and helping high-cost patients and making coverage attractive for lower-cost patients.
“They won’t have enough money to balance both of those goals,” he said. “So saying that we’re going to make a big cut, fund a big tax cut, and wish states good luck is not a solution to anything ,” he said.
Republicans have a narrow window to push through their Hail Mary effort to repeal and replace the ACA. The rule that requires only a simple majority vote using budget reconciliation expires at the end of the month.
After that, Republicans would need 60 votes, which means they would need help from Democrats, who are staunchly opposed to efforts to repeal and replace the ACA.
It remains unclear whether Senate Majority Leader Mitch McConnell has the votes he needs. So far, only Sen. Rand Paul, R-Ken., has said he won’t vote for the bill, saying it doesn’t go far enough to repeal the ACA.
McConnell can only lose one more senator, which would allow Vice President Mike Pence to cast a tie-breaking vote.
Republican Sens. Susan Collins of Maine and Lisa Murkowski of Alaska, who consistently opposed the GOP’s first repeal effort, have expressed concerns about the bill.
So too has Sen. John McCain, R-Ariz., who has said he supports the content of the bill but opposes the process being used to try to pass it.
McCain had cast the pivotal no vote on so-called skinny repeal in July, which killed the Senate’s first effort to repeal and replace the ACA.