A Republican outline for replacing the Affordable Care Act (ACA) could significantly reduce the number of Americans with health insurance and potentially cost states billions of dollars over five years, according to an analysis prepared for the National Governors Association Saturday.
The 36-page document, a copy of which was obtained by The Washington Post, attempts to evaluate the impact of possible changes included in a Republican leadership plan that outlines the direction Congress could be heading in as it attempts to fulfill President Donald Trump’s promise to repeal and replace Obamacare.
The analysis presented to a closed-door meeting of governors was prepared by Avalere Health, a health-care consulting firm. The document was first described in a report published by Vox. Newly installed Health and Human Services Secretary Tom Price also attended the session. Trump has said the administration will offer its plan soon.
Health-care reform is a major focus of the governors at their annual winter meeting, given likely changes to Medicaid that have potentially large implications for state budgets. Republican governors have been meeting among themselves and with members of Congress, seeking consensus on a way forward, but so far have not found it.
Trump had a working lunch Saturday with Govs. Scott Walker of Wisconsin and Rick Scott of Florida to discuss health-care changes and the states’ role.
A working group of nine states led by Republican governors, including states that did and did not expand Medicaid under the provisions of the ACA, began meeting some time ago. That group was broadened to 12 states, including some of the original nine.
The report presented to the governors analyzed the impact on states should Congress repeal the Medicaid expansion and change funding through per capita caps or block grants. Medicaid costs have been a continual strain on state budgets due to rising medical inflation. Under the ACA, states could expand access to the program with the carrot of the federal government picking up the cost in the initial years. Democratic governors leapt at the opportunity but many Republicans did not.
Still, more than a dozen states led by Republican governors now have expanded Medicaid programs. In past years, many Republican governors favored a block grant with the assurance of more flexibility to make changes in the program that they said would control costs.
Today, there are divisions within the GOP ranks about how to proceed. One opponent of moving to block grants is Michigan Gov. Rick Snyder. “I wouldn’t give one to myself,” he said. “We need to be held accountable.”
There are few details of how Congress might construct a block grant. The Avalere study analyzed possible impacts of a per capita cap on Medicaid spending. It did not offer state-specific impacts of the possible changes outlined in the GOP leadership document but instead offered a generalized analysis.
The report said that caps on Medicaid spending would likely result in state funding gaps and more flexibility for the states to administer the program. The report added that, because states must balance their budgets, reductions in federal funding “may lead to cuts in eligibility, benefits or payment rates.”
The report’s analysis of the individual marketplace examined the effect of shifting from the current system of income-based tax credits to age-based credits. A hypothetical expansion state with 300,000 people using the individual markets could see a 30-percent decline in the number of people insured and 90,000 more people without insurance. States that did not expand Medicaid could see a 50-percent decline in coverage.
“The House plan would alter the individual market and create tradeoffs for governors,” the report said. States would gain flexibility, but there would be less federal funding to subsidize coverage, which could mean additional costs to some individuals. Also, changes in Medicaid funding could force states to shift some people to the individual market, and those individuals would need financial assistance to purchase insurance.
Virginia Gov. Terry McAuliffe (D), the NGA chairman, told reporters the report “was frightening to everyone.” He said the cost projections “clearly were alarming to everybody in the room.” He called both the per capita cap and the block grant numbers “scary.”
McAuliffe said he appreciated the appearance by Price, but noted that the secretary provided no clear timeline for the administration’s proposal. “His point was the present system is unsustainable, we want to offer flexibility, we want to provide the best quality care as efficiently and as low-cost as possible,” McAuliffe said of Price’s remarks. “That was the overriding message. The devil is always in the details.”