Just when we thought that the Senate was ready to move on to a bipartisan effort to stabilize health insurance markets, Senate Republicans have decided to take one more run at passing a strictly partisan measure to repeal and replace Obamacare over Democratic opposition.
Considering the vast affect it would have, the Graham-Cassidy bill has received very little attention until the last week, and remains a mystery to most Americans. Here are six things you should know about it:
1) It passes the buck on health care reform from the national to the state governments
Since Republican senators have been unable to decide what role the national government should play in making health care affordable and accessible for low- and moderate-income Americans, they are poised to adopt a bill that would simply dump the whole problem on the states.
2) It does nothing to stabilize health insurance markets in the short term
Graham-Cassidy would continue the Affordable Care Act’s Medicaid expansions, premium tax credits and cost-sharing reductions for 2018 and 2019, but without the assistance that governors, insurance commissioners and other stakeholders and experts have been saying in bipartisan Senate committee hearings for the past two weeks is necessary to keep markets stable.
The bill would not, for example, provide funding for the billions of dollars insurers must spend under the law to reduce the amount low-income enrollees must spend for deductibles and other cost-sharing. It would repeal immediately the individual mandate but, unlike earlier Republican bills, would provide nothing in its place to encourage healthy people to maintain continuous coverage. Premiums could be expected to skyrocket as insurers attempt to deal with the continuing uncertainty.
3) It would slash funding for states that have made the Affordable Care Act work while increasing funds for states that have refused to do so
Beginning in 2020, Graham-Cassidy would dramatically change the nature and availability of federal funding for health care. It would end, as of that date, the ACA’s Medicaid expansions, premium tax credits and cost-sharing reduction payments, offering each state a block grant to use to provide coverage however it chooses.
While the block grants will initially relate to the amount the federal government is spending now on coverage in each state, over the period from 2020 to 2026, funding among the states would be radically reallocated.
The formula is complicated, but it will basically reapportion funding based on the proportion of each state’s population with incomes between 50% and 138% of the federal poverty level of the country’s total population in this income range. The effect of this will be to radically — and absurdly — reallocate funding from states (predominantly Democratic, such as California and New York) that have expanded coverage for their lower-income citizens through the opportunities afforded by the ACA to states such as Texas and Oklahoma (predominantly Republican) that have steadfastly resisted those opportunities.
4) It will require states to make big changes on an unrealistic time frame
Graham-Cassidy’s funding reallocation will pose a problem for both winners and losers. States that have expanded coverage will be forced to cut back dramatically — there will simply not be enough funding for them to maintain current coverage levels, and the gap between the cost of coverage and federal funds available will grow each year. As states are doing this, other provisions of Graham-Cassidy will be limiting federal funding for traditional Medicaid, further burdening the states.
States that until now have shown little interest in covering their uninsured, on the other hand, will suddenly receive a flood of federal cash that they will have to figure out how to spend. The federal exchange will be gone as of 2020, so each state will have to set up its own program for distributing the money. Each will have to adopt legislation and regulations and set up new agencies within a two-year period.
Each state legislature will face the same struggle that Congress has gone through for the past year in deciding how to do this, and some states will likely not make the deadline. Even the favored states may see their uninsured population mushroom.
5) It undermines the protections the Affordable Care Act has afforded people with pre-existing conditions
Graham-Cassidy would also allow states to get rid of the ACA’s requirements that all insurers cover certain benefits — such as maternity or mental health services — and abandon its prohibition against insurers charging higher premiums to people with pre-existing conditions.
The bill says that states will have to claim that they will maintain access to “adequate and affordable” health care for people with pre-existing conditions, but it is hard to imagine how they will do this if they allow insurers to drop benefits that people with pre-existing conditions need or allow insurers to charge them unaffordable rates. And there is no enforcement mechanism for states that do not live up to their claims.
6) In 2027, the program falls off a cliff
Finally, Graham-Cassidy block grant funding for all states ends in 2027. Congress may extend the program at that point, but there are no promises. Uncertainty for consumers and insurers will simply continue.
Graham-Cassidy proposes a poorly thought out, poorly understood radical experiment with America’s health care. It can only be hoped that a handful of Republican Senators who have all summer long insisted on reasonable, bipartisan, legislation to improve, not destroy, our health-care system will stand their ground.