I have spent the bulk of 2017 writing about the different Republican plans to repeal the Affordable Care Act.
Graham-Cassidy, in my view, is the most radical of them all.
While other Republican plans essentially create a poorly funded version of the Affordable Care Act, Graham-Cassidy blows it up. The bill offered by Republican Sens. Lindsey Graham and Bill Cassidy takes money from states that did a good job getting residents covered under Obamacare and gives it to states that did not. It eliminates an expansion of the Medicaid program that covers millions of Americans in favor of block grants. States aren’t required to use the money to get people covered or to help subsidize low- and middle-income earners, as Obamacare does now.
Plus, the bill includes other drastic changes that appeared in some previous bills. Insurers in the private marketplace would be allowed to discriminate against people with preexisting conditions, for example. And it would eliminate the individual mandate as other bills would have, but this time there is no replacement. Most analysts agree that would inject chaos into the individual market.
Taken together, these components add up to a sweeping proposal sure to upend the American health care system. Because the Senate hasn’t seen an independent analysis yet from the Congressional Budget Office, I can’t even say for sure how sweeping, and neither can any of the Republicans who have come out in support of it.
I’m not the only one drawing this conclusion. The credit agency Fitch Ratings recently described Graham-Cassidy as “more disruptive” than the other Republican repeal bills. Edwin Park, a policy analyst at the Center on Budget and Policy Priorities, says that Graham-Cassidy is “more radical in the sense that you’re are eliminating wholesale the marketplace subsidies and the Medicaid expansion.”
Robert Laszewski, a health consultant who is generally critical of the Affordable Care Act, says that “passage of this bill would create enormous market uncertainty.”
The Graham-Cassidy bill has, so far, received far less attention than the last bill the Senate considered in July or one the House took up in May. But the reality is that this quiet bill would be far more disruptive.
Other GOP bills shrank Obamacare programs. Graham-Cassidy eliminates them entirely.
Other key Republican health plans introduced this year actually have kept a good deal of the Affordable Care Act intact, except with dramatically less funding.
Take, for example, the Better Care Reconciliation Act, which the House passed in May. That bill certainly included deep cuts to the health law’s coverage programs, which is why the Congressional Budget Office estimated it would cause 22 million Americans to lose coverage.
But it also kept some key Obamacare programs. It envisioned a future for the marketplaces, where some Americans receive subsidies to purchase health coverage. Granted, those subsidies were much smaller than those that exist in current law, and they would only cover skimpier health plans. But they still existed under the BCRA, in a nod to how entrenched that program has become in the American health care system.
The BCRA also sharply reduced funding for the Medicaid expansion. Right now, the federal government covers 90 percent of the cost of this program. BCRA would have reduced that funding down to a lower match (each state would have a different match rate, and they vary between 50 to 70 percent).
The future that Graham-Cassidy envisions is much, much different. This bill would not give states the option to continue the Medicaid expansion at a lower match rate. It would not mandate that middle-income Americans receive financial help to purchase insurance coverage. Those programs would end in 2020.
Instead, Graham-Cassidy would lump together all the money spent on these two programs across the country — about $1.8 trillion according to the Congressional Budget Office. It would dial back that spending significantly, like other plans: cutting it by $239 billion between 2020 and 2026.
Then, going much further than other Republican plans, it would use a new and complex formula to redistribute money from states that expanded Medicaid to those that do not participate in the program. States would be able to use this new lump sum for all sorts of things.
“A state could say, I’m going to take all this money to pay doctors for uncompensated care and not provide any health coverage,” Park says. “You can spend the money on a whole host of other services that have nothing to do with expanding insurance coverage.”
The list of the options, which begins on page 8, says states can use the money to:
- Establish a program to “help high risk individuals in the purchase of health benefits coverage”
- “Stabilizing premiums and promoting state health insurance market participation”
- Pay health providers for “the provision of health care services”
- Create a fund to cover “out-of-pocket costs such as co-payments, coinsurance, and deductibles of individuals enrolled in the individual market”
- Create programs “to help individuals purchase health benefits coverage”
“There is no mandate, no requirement for any financial assistance to purchase health insurance,” Park says. And this means it’s essentially up to states to decide, in two years, what sort of health care system they want to run. There is no template to follow. As Kaiser Family Foundation’s Larry Levitt notes, this becomes disruptive because “we have no idea what states would do.”
Under Graham-Cassidy, EVERY state would have to create a new health insurance program by 2020. We have no idea what states will do.
— Larry Levitt (@larry_levitt) September 19, 2017
Graham-Cassidy introduces an entirely novel funding mechanism for distributing this funding: moving money from states that have worked aggressively to expand coverage to those that have made little effort at all. It creates a funding formula that is meant to give states “more equal” health care funding, tethered to the size of their population.
Perversely, this punishes the states that have expanded coverage the most, either by expanding Medicaid or getting a lot of people signed up for the marketplace (and thus have higher marketplace subsidies flowing into their state).
This, again, is something we do not see in the other Republican bills. No other bills contemplated simply taking money from Ohio, which expanded Medicaid, and sending it to Virginia, which didn’t.
Look, for example, at what happens in Florida, a state that hasn’t expanded Medicaid but has worked diligently to get its residents enrolled in marketplace coverage. Florida has signed more of its Obamacare-eligible residents up for coverage than any other state. It has the biggest marketplace in the country, and its residents received $5.8 billion in Obamacare tax credits in 2016.
What reward does Florida get in Graham-Cassidy for expanding coverage so dramatically? A $2.6 billion budget cut. And again, this happens specifically because Florida has signed so many people up for Obamacare coverage and thus its residents receive a generous amount of health law tax credits.
The idea of expressly cutting funding for states that have done the best at getting their residents coverage doesn’t show up in any other health care plan except Graham-Cassidy.
Lastly, Graham-Cassidy makes the unexpected decision to classify this new pot of funding as temporary rather than permanent, and have it sunset in 2027. Cassidy’s office argues this is necessitated by Senate budget rules, but analysts who have looked at the bill say that isn’t the case at all. “In reality, however, nothing in those rules prevents the bill from permanently funding its block grant,” Park writes with his colleague Matt Broaddus.
The Medicaid spending in this bill, for example, is funded as a permanent program rather than a temporary one. This isn’t a choice you see made in other Republican repeal bills.
The result is a massive cliff in 2027, where this lump-sum health program disappears entirely, amounting to a $299 billion cut in just one year.
Graham-Cassidy would lead to a dysfunctional individual market
Like other Republican repeal bills, Graham-Cassidy repeals the individual mandate to purchase coverage.
Unlike other Republican repeal bills, it does not include a policy to replace the individual mandate. This could wreak havoc on private insurance markets.
The individual mandate is meant to encourage healthier people with lower expected medical spending to enroll in health coverage. Get rid of it, and experts generally agree you’ll see a sicker population signing up for coverage because they expect to really need it. This problem would be exacerbated by entirely wiping out the subsidies for middle-income Americans to purchase coverage, which were meant to be another way to entice healthy people into signing up.
Other Republican bills recognized they needed to replace the individual mandate with something to encourage enrollment among the healthy. The American Health Care Act in the House had a surcharge for those who have a break in coverage. BCRA had a six-month waiting period for anyone who has a break in coverage but then wanted to re-enter the market.
Graham-Cassidy has … nothing. The individual mandate and subsidies would disappear, but the mandate to cover everybody would stick around. Any health economist will tell you that this is a dysfunctional market: Premiums would spike as only the sickest people enroll, ultimately leading to a death spiral.
The fact that there is no stopgap in this bill — no recognition that you need ways to encourage healthy people to sign up for coverage — suggests this isn’t a serious attempt at structuring a health insurance marketplace. Still, Republican senators are taking the legislation quite seriously.
Graham-Cassidy does offer states a way out of this problem. It allows them to waive out of the Obamacare ban on preexisting conditions. This would give insurance plans the ability to charge sick people higher premiums, possibly excluding them from coverage altogether. That builds a market that functions well for healthy people but is terrible for sicker and lower-income Americans.
Graham-Cassidy isn’t moving forward because it’s centrist. It’s getting traction because it’s the last option left.
The senators who back this bill have sold it as a compromise plan. They say it is a way to return power to states, giving local governments more control over how they spend federal dollars.
“Instead of a Washington-knows-best approach like Obamacare, our legislation empowers those closest to the health care needs of their communities to provide solutions,” Graham said in a statement. “Our bill takes money and power out of Washington and gives it back to patients and states.”
Except … it doesn’t do that. The Graham-Cassidy plan hurts patients by squeezing and upending the health care system, which helps explain why 16 major patient groups came out against the proposal on Monday.
“Affordable, adequate care is vital to the patients we represent,” that group, which includes the American Heart Association and the March of Dimes, said in a statement. “This legislation fails to provide Americans with what they need to maintain their health.”
Graham-Cassidy isn’t gaining momentum because it solves any of the problems that Republican legislators had with previous bills. If anything, it is gaining momentum despite the fact it makes these problems — deep cuts to Medicaid, unpredictability in the insurance market — worse.
The Graham-Cassidy bill is moving forward with sparse process or consideration. Some senators have dismissed the necessity of a score from the Congressional Budget Office, which would show who this bill covers and how much it costs.
“CBO is CBO and they’re saying they need weeks,” Sen. Ron Johnson (R-WI) told CNN Tuesday. “I just reject that notion. And I think we can pretty well decide based on the information we have.”
This bill isn’t about building a health care system that works better or returns power to states. It’s about moving forward because it is the last bill on the table and there is apparently still a strong drive among Republican senators to pass a bill before their September 30 deadline.
Or, as Sen. Pat Roberts of Kansas told Vox recently, “You need a car to get into, and this is the only car there is.”