Commentary: Cassidy-Graham Would Create Huge Funding Inequities Across States
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In pitching their bill to repeal the Affordable Care Act (ACA) as an effort to "equalize" treatment among states, Senators
Those four states account for 37 percent of the funding for the Medicaid expansion and marketplace subsidies because they account for 32 percent of the people enrolled in the expansion or receiving subsidies and because they have higher-than-average health care costs.
It's Cassidy-Graham that would create huge inequities and turn federal support for health coverage into a zero-sum game. Under the ACA, states that haven't adopted the Medicaid expansion could decide at any time to do so (as
Cassidy-Graham's notion of equity has two big problems:
1. It Confuses Equal Dollar Funding Across States With Equitable Treatment of Vulnerable People in Different States
Equalizing funding based on the number of state residents with incomes between 50 and 138 percent of the poverty line, as Cassidy-Graham purports to do, doesn't lead to equitable outcomes. That's because states differ widely in living costs, medical care costs, competition among insurers and health care providers, extent of job-based coverage, urban or rural status, and policies over how to provide coverage and in what amount (including the decision whether to expand Medicaid). And states hit hard by the opioid epidemic face higher health care costs as a result.
Senators Cassidy and Graham repeatedly claim their bill would allow states to respond to "the unique health care needs of the patients in each state."(2) Actually, the current system does just that. It allows states to respond to residents' needs by raising federal Medicaid funding and marketplace subsidies when need rises, as in a recession or natural disaster. Cassidy-Graham's block grant, with its fixed and arbitrary state allotments that would end after 2026, would not.
2. It Uses "Equity" as an Excuse for Cuts
Cassidy-Graham would cut funding by
Cassidy and Graham claim the block grant would give states "flexibility," allowing them either to maintain the coverage available under the ACA or try alternative approaches.(3) But for most states, any "flexibility" under Cassidy-Graham would be unwelcome flexibility to cut coverage. Every expansion state would see a cut in 2026 due to the block grant and per capita cap.(4) Meanwhile, all but four non-expansion states (
States couldn't use the block grant to continue the Medicaid expansion because Cassidy-Graham repeals the statutory authority for expansion.(6) Instead, states would have to figure out how to continue coverage for the expansion population -- and continue marketplace subsidies -- with less money. They likely couldn't raise their own spending enough to offset the lost federal funds, so large coverage losses are likely. And by prohibiting states from using Medicaid -- which is more efficient and less expensive than private coverage -- to maintain the Medicaid expansion, Cassidy-Graham would raise per beneficiary costs.
Moreover, since the block grant wouldn't grow to reflect increased need, states would likely end up capping enrollment for any coverage program they created.
Cassidy-Graham does provide a great deal of flexibility to most non-expansion states. They'd get more federal funding, with no strings and little accountability, and they wouldn't have to use it to provide coverage at all. Many of the states that would see big funding increases have large numbers of poor residents in a "coverage gap," with incomes too high for Medicaid but too low to qualify for marketplace subsidies, because the state didn't expand Medicaid. To the extent they now get less money per low-income individual than expansion states, it's because the state chose not to expand. There's no reason to believe these states would use newly available block grant funds to cover uninsured adults they could have covered through Medicaid under current law when they could instead use the funds to replace other state spending or for other health-related purposes. Moreover, all states would think twice before creating new programs they might not be able to sustain after 2026, when the block grant would disappear.
Footnotes:
1. "Graham-Cassidy-Heller-Johnson: Frequently Asked Questions," https://www.cassidy.senate.gov/imo/media/doc/GCH%20FAQs%20Final.pdf.
2. "
3. "Senators Introduce Graham-Cassidy-Heller-Johnson,"
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