Repub­li­can gov­er­nors may de­ter­mine fate of ACA re­peal

Modern Healthcare - - NEWS - By Har­ris Meyer

State­house op­po­si­tion to the House Repub­li­can’s pro­posed cap on Med­i­caid pay­ments and phas­ing out the pro­gram’s ex­pan­sion to low­in­come adults stands in the way of the GOP’s push for quick re­place­ment of the Af­ford­able Care Act.

The Med­i­caid pro­vi­sions of the pro­posed Amer­i­can Health Care Act, which goes to the House Bud­get Com­mit­tee this week, would shrink fed­eral pay­ments to the states sig­nif­i­cantly over time, in­crease the unin­sured rate and boost un­com­pen­sated care costs, an­a­lysts say.

Gov­er­nors, in­clud­ing many Repub­li­cans, fear the loss of fed­eral Med­i­caid dol­lars will open huge gaps in their bud­gets, which by law must be bal­anced. Med­i­caid pay­ments from Wash­ing­ton make up an av­er­age of 54% of all fed­eral fund­ing that states re­ceive.

Those gov­er­nors, along with more mod­er­ate GOP sen­a­tors and con­gress­men, are voic­ing op­po­si­tion or wari­ness about the bill, which will rob many con­stituents of health­care cov­er­age and un­der­mine the fi­nances of lo­cal health­care providers. “Med­i­caid is the make-or-break is­sue for gov­er­nors,” said Deb­o­rah Bachrach, a part­ner at Manatt Health and for­mer Med­i­caid di­rec­tor of New York.

Repub­li­can gov­er­nors who ex­panded Med­i­caid, led by Ohio’s John Ka­sich and Nevada’s Brian San­doval, are push­ing con­gres­sional Repub­li­cans to keep the ex­pan­sion and dial back the fund­ing cuts. Even more­con­ser­va­tive GOP gov­er­nors, such as Wis­con­sin’s Scott Walker, say the bill’s Med­i­caid pro­vi­sions need re­vi­sion and re­port­edly are work­ing on an al­ter­na­tive pro­posal.

Four Repub­li­can sen­a­tors from ex­pan­sion states said last week they did not sup­port a pre­vi­ous ver­sion of the House bill be­cause it didn’t ad­e­quately pro­tect peo­ple who’ve gained cov­er­age through the ex­pan­sion.

But the bill go­ing to the Se­nate may be driven by the most-con­ser­va­tive House Repub­li­cans. The three dozen mem­bers of the Free­dom Cau­cus want to elim­i­nate the fed­eral Med­i­caid ex­pan­sion at year-end, and the White House re­port­edly sup­ports that. How­ever House GOP lead­ers re­jected that move to amend the bill.

If the faster ex­pan­sion cut­off passes the House, it could fur­ther en­dan­ger the bill’s prospects in the Se­nate. “That would be very con­cern­ing to gov­er­nors,” said a source close to the gov­er­nors who spoke on back­ground. “They’ve al­ready put in their bud­gets and that would im­pact them very sig­nif­i­cantly.”

But Bachrach said the de­bate about whether the cut­off date is 2017 or 2019 is be­side the point. “Many gov­er­nors don’t want the en­hanced fund­ing for ex­pan­sion to be re­moved

Repub­li­can gov­er­nors who ex­panded Med­i­caid, led by Ohio’s John Ka­sich (above) and Nevada’s Brian San­doval, are push­ing con­gres­sional Repub­li­cans to keep the ex­pan­sion and dial back the fund­ing cuts.

ever,” she said.

The AHCA would con­vert the fed­eral match in the $552 bil­lion Med­i­caid pro­gram, cur­rently an ope­nended en­ti­tle­ment, into per-capita pay­ments that grow more slowly than Med­i­caid costs. Start­ing in 2020, the bill also would phase out the ACA’s en­hanced fed­eral pay­ments to states

that ex­panded el­i­gi­bil­ity to low­in­come adults, which has ex­tended cov­er­age to more than 11 mil­lion Amer­i­cans in 31 states plus the District of Columbia.

The shift to capped fed­eral con­tri­bu­tions would mark a his­toric change in the half-cen­tury-old safety net pro­gram for poor peo­ple, chil­dren, se­niors and the dis­abled. While states have flex­i­bil­ity in set­ting the fi­nan­cial, age and health cri­te­ria for par­tic­ipa- tion, Med­i­caid has al­ways been struc­tured as an en­ti­tle­ment pro­gram for any­one who meets state cri­te­ria.

The goal of Repub­li­cans in Wash­ing­ton is to re­duce fed­eral spend­ing growth and give states even more flex­i­bil­ity in de­sign­ing their pro­grams. They fore­see the capped con­tri­bu­tions pro­duc­ing big Med­i­caid sav­ings, which they would use to pay for the flat, age-based tax cred­its of­fered to peo­ple who pur­chase in­di­vid­ual plans.

In 2020, the GOP bill ends the ACA’s in­come-based pre­mium tax cred­its, which were used by about 85% of the 11 mil­lion peo­ple who pur­chased plans on the ex­changes.

The AHCA’s im­pact on state bud­gets could be se­vere un­less Med­i­caid pro­grams were sharply scaled back. To­tal Med­i­caid spend­ing is pro­jected to rise at an av­er­age an­nual rate of 5% over the next decade, in part due to the ACA cov­er­age ex­pan­sion. Per­capita spend­ing growth is pro­jected to av­er­age 3.6% a year through 2023.

Un­der the pro­posed per-capita grant model, start­ing in 2020 states would re­ceive a fixed amount of fed­eral money for each of five ben­e­fi­ciary groups. The caps would grow at the rate of the med­i­cal com­po­nent of the Con­sumer Price In­dex, which lags at least 0.2 per­cent­age points be­hind ac­tual Med­i­caid per-capita cost in­creases each year, ac­cord­ing to Ed­win Park, vice pres­i­dent for health pol­icy at the Cen­ter on Bud­get and Pol­icy Pri­or­i­ties.

States would have to de­cide who to cover, what ben­e­fits to of­fer, and how much to pay providers while staying within those capped amounts.

The Amer­i­can Hospi­tal As­so­ci­a­tion, the Catholic Health As­so­ci­a­tion, Amer­ica’s Es­sen­tial Hos­pi­tals, the Chil­dren’s Hospi­tal As­so­ci­a­tion and the As­so­ci­a­tion for Com­mu­nity Af­fil­i­ated Plans im­me­di­ately came out against the House GOP bill in its cur­rent form, cit­ing con­cerns about the Med­i­caid changes. They worry it will lead to sharply re­duced fund­ing, forc­ing cuts in el­i­gi­bil­ity, ben­e­fits and pay­ment rates.

Stan­dard & Poor’s pro­jected 4 mil­lion to 6 mil­lion peo­ple cur­rently en­rolled in Med­i­caid would lose cov­er­age un­der the bill. “The over­all payer mix for providers would weaken as the num­ber of peo­ple with­out in­surance would most likely rise as would the hospi­tal sec­tor’s level of bad debt and char­ity care expenses,” the bond rat­ing agency said.

Fed­eral pay­ments would fall even more for states that end their Med­i­caid ex­pan­sions be­cause the higher fed­eral con­tri­bu­tions for the ex­pan­sion pop­u­la­tion would no longer be part of the state’s base­line spend­ing level. Seven states have laws re­quir­ing them to end their ex­pan­sion pro­grams if fed­eral pay­ments are re­duced.

Ex­perts pre­dict most states would ter­mi­nate their ex­pan­sions be­cause of the ad­di­tional costs they’d have to shoul­der. “Phas­ing down the fed­eral con­tri­bu­tion was the pri­mary ar­gu­ment for not ex­pand­ing Med­i­caid,” said Michael Leav­itt, a for­mer Repub­li­can gov­er­nor of Utah and HHS sec­re­tary un­der Ge­orge W. Bush. “Gov­er­nors said we’ve seen this movie be­fore.”

The House bill tries to soften the im­pact of the cuts by let­ting states that ex­pand Med­i­caid by 2019 keep the en­hanced fed­eral fund­ing for peo­ple who al­ready were en­rolled and stay en­rolled. But for new en­rollees, states would only re­ceive their tra­di­tional match­ing pay­ments from the fed­eral gov­ern­ment; those av­er­age about 63% across the coun­try ver­sus the 90% match un­der the ACA.

To help states that didn’t ex­pand Med­i­caid pro­vide care for the unin­sured, the House bill would re­scind the ACA’s cuts in Med­i­caid dis­pro­por­tion­ate-share hospi­tal pay­ments sched­uled for 2018 and 2019. Those DSH cuts would be re­pealed for all states start­ing in 2020. In ad­di­tion, the House bill would of­fer $10 bil­lion in fund­ing from 2018 to 2022 for non-ex­pan­sion states to in­crease pay­ments to safety-net providers.

States will need time to ex­am­ine what the per-capita model would mean for their state. But they may not get that time.

House GOP lead­ers hope to have a floor vote on the ACA re­peal bill this week or next. And Se­nate Ma­jor­ity Leader Mitch McCon­nell said he wants the Se­nate to vote on it, per­haps with­out any hear­ings, be­fore Congress breaks for Easter April 7.

AP PHOTO

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