Republicans Introduce the Graham-Cassidy Health Care Bill

Republicans Introduce the Graham-Cassidy Health Care Bill

Facing a deadline of September 30th, Republican Senators Lindsey Graham of South Carolina and Bill Cassidy of Louisiana have offered another attempt to repeal the Affordable Care Act (ACA). The Republicans need 50 votes to pass the bill but some members of the party, such as Senator Rand Paul, have reservations about the bill, saying that it is “Obamacare lite” [1]. Legislators are also hesitant to vote on a bill that cannot be reviewed by the nonpartisan Congressional Budget Office by the deadline.

The proposed legislation eliminates and alters many major aspects of the ACA. Under the ACA, states are encouraged to expand Medicaid, a government-funded program that helps defray the health care costs of low-income individuals, to people earning up to 138 percent of the federal poverty level [2]. For a household of four, 138 percent of the federal poverty level would amount to a yearly income of $33,948 [3]. Under the Graham-Cassidy bill, federal funding for Medicaid expansion would be reallocated to the states in the form of a block grant, a lump sum that can be spent at the discretion of the states [2].Medicaid expansion funding would be completely eliminated by 2027 [2].

The Graham-Cassidy bill would radically alter the distribution of funding to individual states. Under current law, the federal government matches state Medicaid spending at a rate determined by statute [4]. This rate is determined by a formula that is based on a state’s per capita income.  The formula is designed so that the federal government pays a larger share of Medicaid costs in poorer states. The federal share (FMAP) varies by state, with some receiving between 50% to 74% of program costs in 2017 [5]. Federal spending increases with the rise in the cost of enrollee care, with no limit on total federal contributions [4]. Alternately, under a block grant system like the one proposed through the Graham-Cassidy bill, federal Medicaid spending would rise at a specified growth rate, regardless of the rise in Medicaid spending in a state [8]. 31 states, including Washington D.C., have expanded Medicaid under the ACA and will see reductions in federal spending, while other states will see increases [6]. The median change in federal funds under the block grant program relative to current law is -11% for Medicaid expansion states. This results in a total of $180 billion in reduced funding over 2020-2026, versus a median increase of 12% (a total of $73 billion) in states that have not expanded Medicaid [9].

A contentious aspect of the ACA, the individual and employer mandate, would end under the Graham-Cassidy bill. The ACA requires all Americans to have health insurance or pay fines if they refuse. Additionally, employers with 50 or more employees are required to provide their employees with health insurance. The rationale behind the mandate is that if it is a choice to be covered, the cost for those who are insured increases dramatically because the burden of cost would fall upon the sick [7].

The ACA provides insurers with cost-sharing subsidies in order to cover out-of-pocket costs for low-income patients [2]. Such subsidies would expire in 2020 under the Graham-Cassidy bill, but states could decide to use a portion of the block grants under the proposed bill to continue the use of subsidies [2]. Tax credits intended to defray premium costs for low- and middle-income Americans would end in 2020 as well, but states can choose to continue funding the tax credits using the block grants [6]. Additionally, under the ACA insurance companies are prohibited from charging older Americans more than three times younger individuals. In contrast, under the Graham-Cassidy bill states can apply for waivers allowing insurers charge different premiums based upon the policyholder’s age [2].  

Arguably the most controversial aspect of the proposed Graham-Cassidy bill is the change to essential health benefits. Under the ACA, insurers are required to provide coverage for 10 essential health benefits, some of which include maternity care, mental health services, and prescription medications [2]. However, the Graham-Cassidy bill allows states to apply for waivers to change what qualifies as essential health benefits, potentially affecting those with pre-existing conditions [2].

All 50 state Medicaid directors as well as the American Medical Association, the American Psychiatric Association, the Federation of American Hospitals, the American Academy of Pediatrics, The American Public Health Association, and many other organizations have voiced their concerns over the proposed legislation [9]. Senator Graham, the bill’s cosponsor, defends the bill as a “state-centric” approach as opposed to “Washington-knows-best health care” [11]. Senate Majority Leader Mitch McConnell says he intends to put the bill up for a vote the last week of September.

References:

  1. Greenwood Max, “Paul, Cassidy tweet back and forth on Obamacare repeal bill,” The Hill, Sep 15 2017.  http://thehill.com/policy/healthcare/350906-paul-and-cassidy-go-back-and-forth-on-twitter-about-obamacare-repeal-bill

  2. Frostenson Sarah, “Graham-Cassidy health care bill: what you need to know,” Politico, Sep 19 2017. http://www.politico.com/interactives/2017/graham-cassidy-health-care-bill-what-you-need-to-know/

  3. “2017 Federal Poverty Level,” ACA Information, https://obamacare.net/2017-federal-poverty-level/

  4. Katch Hannah, “Medicaid per capita would disproportionately harm some states,” Center on Budget Policy and Priorities, June 15 2017. https://www.cbpp.org/research/health/medicaid-per-capita-cap-would-disproportionately-harm-some-states

  5. Rudowitz Robin, “Medicaid Financing: The Basics,” Kaiser Family Foundation, Dec 22 2016.  “https://www.kff.org/report-section/medicaid-financing-the-basics-issue-brief/

  6. Khan et al., “Inside Graham-Cassidy , the last minute push by senate republicans to resuscitate Obamacare repeal,” ABC News, Sep 19 2017. “http://abcnews.go.com/Politics/inside-graham-cassidy-minute-push-senate-republicans-resuscitate/story?id=49949759

  7. Gruber Jonathan, “Why we need the individual mandate,” Center for American Progress, April 8 2010. https://www.americanprogress.org/issues/healthcare/reports/2010/04/08/7720/why-we-need-the-individual-mandate/

  8. Jacobson et al., “What could a medicaid per capita cap mean for low-income people on Medicare?,” Kaiser Family Foundation, Mar 14 2017. http://www.kff.org/medicare/issue-brief/what-could-a-medicaid-per-capita-cap-mean-for-low-income-people-on-medicare/

  9. Claxton et al., “State by state estimates,” Kaiser Family Foundation, Sep 21 2017. http://www.kff.org/health-reform/issue-brief/state-by-state-estimates-of-changes-in-federal-spending-on-health-care-under-the-graham-cassidy-bill/

  10. Hamblin James, “Doctors: No,” The Atlantic, Sep 21 2017, https://www.theatlantic.com/health/archive/2017/09/do-no-harm/540333/

  11. Klein Ezra, “Graham Cassidy could’ve been the Republicans best Obamacare replacement,” Vox, Sep 20 2017. https://www.vox.com/policy-and-politics/2017/9/20/16333384/graham-cassidy-obamacare-health-care

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