The GOP’s latest attempt to repeal the Affordable Care Act wobbled on Friday as Sen. John McCain (R-Ariz.) said he could not support it. But the bill known as Graham-Cassidy isn’t dead yet. And whatever its fate, the long-held Republican goal it embodies — to fundamentally change how the government funds Medicaid — will survive.
Graham-Cassidy would dramatically redistribute federal funds to states. And, generally, states that expanded Medicaid — like California — stand to lose billions of dollars as that money is doled out to states that didn’t — like Texas.
“For a state like California or a Massachusetts or a New York — exactly the states that might be most motivated to at least try to preserve the ACA coverage gains — those are the states that would face the deepest cuts to their federal resources,” said Aviva Aron-Dine, a senior fellow with the Center on Budget and Policy Priorities.
The bill’s authors said their plan gives states more flexibility to build their own health systems. But health officials in California released a strongly worded analysis on Friday, predicting dire consequences if the measure were to pass.
“Simply stated, this proposal is the most devastating of the three federal health care proposals that we have evaluated this year,” top officials from the state Department of Health Care Services wrote, emphasizing their words in italics.
They cited the significant shift in costs from the federal government to the states, forcing California to pay nearly $4.4 billion more in 2020 to maintain current coverage levels. In 2027, when the federal block grants would end, the state’s additional burden would grow to $53.1 billion, according to the analysis.
All told, from 2020 through 2027, “the impact would total $138.8 billion in federal funding cuts,” the officials wrote.
“If this amendment is adopted and becomes law, California will be faced with tens of billions of dollars in new costs, [which] will require difficult decisions regarding the populations and benefits we choose to cover and how much we pay providers and plans for the services they provide,” the health officials said.
California’s overall uninsured rate dropped by more than half since the ACA’s coverage expansion.
Meanwhile, Texas looks like one of the bill’s big winners. It gets a windfall of more than $35 billion to help replace Obamacare exchanges and other programs, more than any other state. State officials get to decide how they want to spend that money.
But experts in the state said that could present its own set of problems.
“Regardless of the size of the block grant, there’s just no assurance that it would translate into good coverage or coverage that’s [as] affordable as what we have today,” said Stacey Pogue, a senior policy analyst with the Center for Public Policy Priorities in Austin.
Texas has replaced California as the state with the highest number of uninsured people. Pogue said the state doesn’t have the infrastructure in place to expand coverage to more people. It didn’t expand Medicaid, and the state didn’t set up its own Obamacare exchange.
To sell ACA policies, Texas uses healthcare.gov, which will cease to exist if Graham-Cassidy passes.
“There’s no planning and no thought put into how would we create affordable coverage for low-income Texans,” Pogue said. “Texas would be starting from scratch.”
For comparison, it took Massachusetts four years to set up its pre-Obamacare insurance market.
Pogue said the political will needed to expand health insurance to more Texans has been lacking among state lawmakers for years. In order to get the block grant, states would need to create something workable by 2020.
Another issue is how the grants would be calculated. The federal government would pay a fixed amount, up to a cap, for each Medicaid enrollee.
“We have very low per capita costs already, and we [would] get locked into that forever,” said Stacy Wilson, president of the Children’s Hospital Association of Texas. “We are very concerned.”
The Texas Public Policy Foundation, a conservative group, also said it was not happy about the bill. Its concern is that it doesn’t go far enough to repeal Obamacare.
“In the end, this rushed legislation will not lead to the creation of a functioning free market,” said Drew White, a senior policy analyst with the group.
This story is part of a partnership with NPR, local member stations and Kaiser Health News.
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