Memo to GOP: Red states also among losers in health bill

WASHINGTON (AP) — Memo to Republican senators: Many of the states President Donald Trump won last year would lose significant federal financing under the last-ditch Republican health care bill headed for a possible showdown in the Senate this week.

Among states expected to lose are Arizona, Florida, Kentucky, and Ohio, where cuts could swell the number of uninsured people. That has political implications for Republicans girding for congressional midterm elections next year, as well as for the next presidential race in 2020. That year is when the biggest spending reductions from the legislation by GOP Sens. Lindsey Graham and Bill Cassidy would start taking effect.

Consider the following: Of the 30 states Trump carried in his surprise victory, 16 would lose federal health care money under the bill to dismantle Barack Obama's Affordable Care Act, according to Kaiser Family Foundation estimates reviewed by The Associated Press.

Among the losers are not just Democratic strongholds like California and New York, but also a sizable number of Republican-leaning states. That includes Indiana and Arkansas, as well as swing states like Florida, Pennsylvania, and Ohio, which proved critical to Trump's victory. The glow from repealing "Obamacare" could vanish in a political backlash.

With the rush to pass legislation before the expiration of special budget rules allowing a simple majority vote in the Senate, many Republicans are worried about their states. The Congressional Budget Office will only have time to produce a partial analysis before the expected vote.

"The process is such that people can't be sure if the dollars are right and if the formulas make sense," said GOP economist Douglas Holtz-Eakin, a top adviser to Arizona Republican Sen. John McCain in his 2008 presidential campaign. "Not understanding the implications, I think, has people really nervous."

In principle, Holtz-Eakin said he agrees with the bill's authors, Graham of South Carolina and Cassidy of Louisiana, that federal health care spending is unsustainable and that the Obama-era law gives government too much control. But he says he'd be surprised if the bill can pass.

"At some level, the Graham-Cassidy bill picks one of the biggest formula fights in history," Holtz-Eakin said.

The legislation has two major components that affect health care spending:

First, it would take money currently being used to finance the coverage expansion under Obama's law, and create one big pot, pared down somewhat. The money would be redistributed to states, which could spend it to design their own insurance programs for low-income people. The pot would include money currently being spent on tax credits for subsidized private insurance, as well as financing for expanded Medicaid.

The second part, seen as more far-reaching, would cap overall federal spending on the Medicaid program for low-income people, which currently covers more than 70 million Americans, including many newborns, adults in low-wage jobs, disabled people, and many elderly nursing home residents.

Last week's analysis from the nonpartisan Kaiser Family Foundation found that the combined effect of the changes would lead to 35 states plus Washington, D.C., losing nearly $160 billion in federal financing from 2020-2026.

Trump administration officials say the bill still offers plenty of money, and governors would find efficient ways to serve as many people, if not more. Additional tweaks are possible as the White House and Senate leaders try to corral votes.

"Governors will be given the opportunity to allocate the program the way that makes most sense for their constituents and their residents," White House legislative director Marc Short said Sunday on NBC. Officials say studies like Kaiser's don't fully account for the bill's market stabilization features.

But doctors and hospitals are worried that the cuts would reverse recent progress that has reduced the nation's uninsured rate to a historic low of about 9 percent.

The finding that the Graham-Cassidy bill could inflict collateral damage on red states as well as reliably Democratic ones seems somewhat counter-intuitive. It's because the cuts affect not just states that expanded Medicaid under the Obama health law, but also some states where the ACA's private insurance markets have worked fairly well, said Kaiser's Gary Claxton, an expert on private insurance.

One example is Florida, estimated by Kaiser to lose $9.7 billion from 2020-2026. The state did not expand Medicaid, but has a robust insurance market. Florida features a competitive Senate race in 2018 for the seat currently held by Democrat Bill Nelson, a supporter of the Obama health law.

"It's a very large amount of redistribution for our political system to do this quickly, when you don't even have an official estimate," said Claxton.

AP's review of the Kaiser estimates found other states with 2018 Senate races where cuts could play a role. In states with seats being defended by Democrats, the list includes Indiana, North Dakota, Ohio, Pennsylvania, and West Virginia. In seats being defended by Republicans, it includes Arizona, Nebraska and Nevada.

States with 2018 Senate races that would get more money under the bill are Mississippi, Tennessee, Texas and Utah. Those seats are currently held by Republicans.