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GOP Health Bill's Changes Go Far Beyond Preexisting Conditions

Sen. Bill Cassidy (R-La.) speaks as Sen. Dean Heller (R-N.V.) and Sen. Lindsey Graham (R-S.C.) listen during a news conference. (Alex Wong/Getty Images)

Julie Rovner

Kaiser Health News

The latest GOP effort to "repeal and replace" the Affordable Care Act is getting a lot of attention, even if its passage seems unlikely. But there is far more to the measure than its changes to rules regarding preexisting health conditions.

In fact, the bill proposed by Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.) would disrupt the existing health system more than any of the measures considered so far this year, according to supporters and critics.

For backers of the bill, that disruption is a good thing. But others are appalled. As insurance industry analyst Robert Laszewski put it in a note to clients this week, "Would you rather lose your Republican Senate seat because you couldn't pass an Obamacare repeal-and-replace plan or because you blew up the health insurance system?"

Some of those alterations have generated little discussion but would have major impacts. Here are four unheralded changes:

-- The Bill Caps Federal Funding To Medicaid

Much focus has been placed on the bill's funding formula, which would take money from states that expanded the Medicaid program for the poor. Less notice has been paid to the fact that this bill, like some other GOP options over the summer, would, for the first time, cap overall federal Medicaid funding. The federal government has provided an open-ended funding match since the program's creation in 1965 -- meaning the federal government has provided its share of whatever states spend to care for low-income children, pregnant women, seniors and people with disabilities. More than 70 million people are covered by Medicaid, including those added as a result of the ACA.

Republicans have been pushing unsuccessfully to limit the federal government's funding of Medicaid to states since the 1980s.

State Medicaid directors -- including both Republicans and Democrats -- are alarmed at the idea that something of such magnitude could be done with so little debate or consideration. "Graham-Cassidy would completely restructure the Medicaid program's financing, which by itself is three percent of the nation's Gross Domestic Product and 25 percent of the average state budget," said a statement from the group.

The Congressional Budget Office estimated in June that an earlier version of the cap would reduce federal Medicaid spending 35 percent by 2036. As a result, said CBO, states would "need to ... decide whether to commit more of their own resources, cut payments to health care providers and health plans, eliminate optional services, restrict eligibility for enrollment, or adopt some combination of those approaches."

"There won't be enough money to do what's authorized under current law," said Jessica Schubel of the left-leaning think tank the Center on Budget and Policy Priorities.

-- The Bill Gives Unprecedented Power To The Secretary Of Health And Human Services

Republicans complained bitterly about the power delegated by Congress to the secretary of Health and Human Services in the ACA. But conservative analyst Chris Jacobs pointed out that the Graham-Cassidy bill gives the HHS secretary more power still.

The bill creates a dizzyingly complex formula for the funds now being spent on the ACA, which is intended to draw money away from wealthier states (that mostly expanded Medicaid under the health law) toward poorer ones (that mostly did not). But there is a huge loophole, noted Jacobs. The bill gives the HHS secretary authority to change the formula on his or her own.

"That's a trillion-dollar loophole that leaves HHS bureaucrats with the ultimate say over how much money states will receive," Jacobs wrote.

And, he said, it's the opposite of "federalism," or giving states more authority, which the bill's sponsors claim to be advancing.

"Draining the swamp shouldn't involve distributing money from Washington out to states, whether under a simple formula or executive discretion," he wrote. "It should involve eliminating Washington's role in doling out money entirely."

-- The Bill Cuts Off All ACA Funding After 2026

The bill would lump together all funds being spent under the health law to help people pay premiums, out-of-pocket health costs and expand Medicaid to non-disabled adults and redistribute those funds to the states in the form of block grants. States could then use that money for almost anything health-related.

What few people have noticed, however, is that those block grants end abruptly after 2026. Originally, many thought this was because of congressional budget rules that limit new programs to no more than 10 years.

In fact, those rules only say that a program cannot add to the deficit after 10 years. The block grant is paid for by ongoing taxes generated from the ACA, so there is no budget requirement to end the block grant.

The reason seems to be a desire to require Congress to come back and revisit the program. A spokesman for Cassidy said the program "just has to be reauthorized in 2026 just like the CHIP program." CHIP is the Children's Health Insurance Program, also created in a budget bill in 1997. Congress was supposed to reauthorize that program by the end of September, although it looks as if lawmakers will miss that deadline, despite bipartisan support.

Others, however, worry that cutting the money off after 2026 means Congress could no longer use the current funding mechanism. Instead, lawmakers would have to come up with massive cuts to other programs or new tax increases if they wanted to continue providing the money for health care.

-- The Bill Could Roil The Individual Insurance Market In Some States By Banning Abortion Coverage In Private Health Plans.

In keeping a promise to anti-abortion lawmakers, the bill would prohibit all private insurance plans receiving any federal funds from providing abortion coverage.

As part of a delicate compromise that got the ACA enacted in 2010, states were given the option to ban abortion coverage in plans on their health exchanges. Half of them did.

But some states, notably California, New York and Oregon require plans they regulate to offer coverage of elective abortions.

The problem is that the deadline for insurers to opt into coverage under the ACA is next Wednesday. If Congress were to pass the bill after that, it is unclear what would happen to those plans. In California, the requirement for abortion coverage is based on the state's Constitution, so it would be possible that no plans could be offered to people who are eligible for federal help.

"There aren't clear answers" to what would happen if the bill becomes law in its current form and takes effect in January, said Debra Ness, president of the National Partnership for Women and Families, a reproductive rights advocacy group. "I think it's going to create chaos."

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.



 
 
 
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