The revised Republican health-care bill that senators unveiled Monday would partly even out wide gaps between states that would win and lose financially, providing more generous funding to states of some reluctant GOP lawmakers, but would give states less freedom to unwind federal health insurance rules.
The new version of the Cassidy-Graham legislation eliminates what had been one of the measure’s most controversial features, which would have enabled states to get federal permission to let insurers charge higher prices to customers with preexisting medical conditions. In addition, states now would not be able to allow health plans to impose annual or lifetime limits on coverage, as the original bill would have done.
Yet for the health-care standards that the bill would let states ignore if they wanted, the latest legislative language no longer would require states to get formal permission from the government through a waiver process. Instead, states would simply have to explain to federal officials what they intend to do. The standards that could be sidelined include the benefits that health plans sold to individuals and small businesses must cover and limits on how much more plans may charge older customers than younger ones.
While still giving states block grants for their programs and much more freedom to create their own rules than under the Affordable Care Act, this second draft of the plan would be less punitive financially than the first one for states that have most significantly expanded their residents’ access to insurance under the 2010 law. At the same time, the figures provide no indication that the bill’s chief sponsors have abandoned their plan to make steep cuts to Medicaid through a per-capita cap. Such a move would end up cutting federal funding by billions of dollars by 2026.
The plan update emerged late Sunday after its primary sponsors, GOP Sens. Bill Cassidy (La.) and Lindsey O. Graham (S.C.), worked through the weekend on changes designed to both bolster support on the right and win over a handful of centrists who have been balking.
The latest version would steer more money to states with key senators in a few ways.
One provision would direct $500 million in funding to states like Alaska — whose senior senator, Lisa Murkowski (R), is viewed as a crucial potential holdout — that have been granted waivers under a specific part of the ACA. Section 1332 aims to give states more flexibility in implementing the law, in order to set up a reinsurance program to help lower premiums on a state’s individual insurance market. With this provision included, Alaska will get to keep the federal funds it has been slated to receive.
Another part of the revised bill would give one-fourth of a $6 billion contingency fund to states with the lowest-density population — Alaska among them.
Separately, the law provides $750 million for states that expanded Medicaid after Dec. 31, 2015. That language means additional financial assistance for Montana and Cassidy’s home state of Louisiana.
Another addition to the plan, perhaps intended to appeal to another skeptical Republican, Maine Sen. Susan Collins, would require states to demonstrate that their health-care rules meet several federal standards, including parity for mental health care, reconstructive surgery after mastectomies and minimal hospital stays for newborns, among others.
To even out the checkerboards of winners and losers among states, the bill’s new version substantially revises the formula that would determine the allotment of money through block grants starting in 2020. Among other changes, the revision would spread the change over a decade, rather than the original half-dozen years.
Two of the states that now would fare the worst, Oregon and Minnesota, would lose 17 percent and 15 percent, respectively, of their federal funding between 2020 and 2026 relative to the current law. The two states have only Democrats in the Senate and in the governor’s mansion. It is a topic that is likely to come up on Monday during a Senate Finance Committee hearing on the bill; Sen. Ron Wyden (D-Ore.) is the panel’s ranking member.
The revised Cassidy-Graham legislation doesn’t change the total sum the federal government would spend on the block grants from 2020 to 2026. Instead, it tries to smooth over the formula of how the money would be distributed in an effort to put the states on a more equal footing.
Independent analysts had estimated a wide variation in block grant funding that states could get under the initial version of Cassidy-Graham: Mississippi would get 148 percent more relative to current law, while New York would get 35 percent less, according to an analysis by the Kaiser Family Foundation.
The range in state funding would now be narrower. South Dakota would see the largest funding increase at 88 percent, Oregon the greatest decrease.
The latest version notably retains more funding for states represented by key holdout senators. Kaiser had estimated that Maine would get 8 percent more under the initial Cassidy-Graham; it would get 43 percent more under the revised bill, according to the state-by-state summary.
But the state funding estimates don’t take into consideration the bill’s additional cuts to regular Medicaid spending. If those were considered, states like Alaska would still be losing out on federal funds overall. And the GOP estimates also assume that states would slash their own funding for coverage and then factor that into the final number as “state savings.”