Revised Senate bill does little to quell concerns about Medicaid cuts
Although the revised version of the Better Care Reconciliation Act would add tens of millions of dollars in funding to shore up the individual market, the fact that it still has major cuts hitting nearly every part of the Medicaid population puts its passage in doubt. A half-dozen Republicans in Medicaid expansion states have complained about the proposed cuts, and leadership can afford to lose only two votes.
“I opposed the previous draft because it did not ensure access to affordable health care in West Virginia, did not do enough to combat the opioid epidemic that is devastating my state, cut traditional Medicaid too deeply and harmed rural healthcare providers,” Sen. Shelley Moore Capito (R-W.Va) said in a statement. “I look forward to reviewing the revised Senate healthcare legislation and forthcoming (Congressional Budget Office) report to determine the impact on West Virginians but continue to have serious concerns about the Medicaid provisions.”
The bill aims to create a per-capita cap system for Medicaid, designed to reduce federal spending. Different caps would be set for different populations through 2024, with some federal spending matching the rate of medical inflation, and some pegged at medical inflation plus one percentage point. In 2025, the cap would be pegged to standard inflation, which is substantially lower than medical inflation. While some of the historic spend- ing patterns are in line with or slightly below the first phase of caps, no group of Medicaid patients’ costs grow as slowly as standard inflation.
The bill would phase out Medicaid expansion by 2023, the same timeline as the original version.
Reacting to the revised legislation, America’s Essential Hospitals President and CEO Dr. Bruce Siegel said in a statement that it “leaves untouched the most destructive provisions of the original bill: those that would gut the Medicaid program and strip affordable coverage from millions of low-income working Americans.”
Also under the bill, hospitals no longer could make presumptive Medicaid eligibility determinations after 2020. It would, how- ever, make disproportionate share hospital payments in non-expansion states more generous. These states would be spared from DSH reductions and states that are below-average per capita in DSH payments would rise to the national average.
Siegel dismissed this, saying it “pales in comparison to the hundreds of billions of dollars this bill would drain from Medicaid by ending expansion and imposing spending caps.”
Sen. John McCain (R-Ariz.) was disappointed the revision keeps the same phaseout timeline for the Medicaid expansion and said that if the bill gets to the floor, he would offer amendments to address the issue.
Majority Leader Mitch McConnell (R-Ky.) and other bill drafters added tens of billions in funding for high-risk pools or reinsurance, as Republicans have heard voter anger about the cost of individual plans.
The bill would keep taxes on the wealthy and insurer CEO compensation, which are projected to bring in $232 billion over a decade. It also would add more than $130 billion in spending, primarily for states to use for highrisk pools or reinsurance programs. There is $182 billion in the bill for that kind of aid.
Of the pool of money, Alaska is guaranteed to receive at least $150 million in 2018 and $230 million in 2019. Alaska has the highest insurance costs in the country; the state could lose the extra federal funding if their premiums fall significantly.
States would have to start matching
Majority Leader Mitch McConnell and other bill drafters added tens of billions in funding for high-risk pools and reinsurance.
the funds in 2022, at 7%, and that match would climb by seven percentage points each year until reaching 35% in 2026.
The money is not limited to high-risk pool subsidies or reinsurance. The bill also would allow states to spend the money for cost-sharing, which lowers copays and deductibles for the people with the lowest incomes. That federal funding is paid only through 2020. Cost-sharing funding, which has been one of the most constant requests by the insurance industry, was $7 billion this year. In 2016, reinsurance payments totaled $4 billion.
“Reinsurance works,” said Caroline Pearson, senior vice president at consultancy Avalere Health. But she said Avalere analysts don’t believe this pool of money could counteract the destabilizing effects of other legislative proposals, including reducing subsidy eligibility, ending cost-sharing and ending the individual mandate.
The revised bill would add $70 billion to stabilize the insurance marketplace in states where insurers sell plans that wouldn’t follow Affordable Care Act regulations, such as not discriminating in pricing by health status, selling to everyone and covering essential health benefits. Those states would likely suffer from adverse selection if noncompliant plans are far cheaper than those on the exchange.
Another $2 billion would help those state governments cover the cost of regulating insurance.