Despite regular pronouncements from lawmakers that the Better Care Reconciliation Act (BCRA)—the Senate’s draft health legislation—was designed and proposed as a repeal of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), it is perhaps more accurate to think of the BCRA as a Medicaid reform bill. In fact, in some cases, it was the substantial changes the bill proposed for the Medicaid program, and the ensuing opposition to those changes, which initially led Senate Majority Leader Mitch McConnell (R-Ky) to pull the bill from consideration. This Strategic Perspective examines how legislation like the BCRA could reshape Medicaid and why such changes resulted in stakeholder opposition.
Opposition to the Proposed Changes to Medicaid
Among other changes to tax and insurance provisions, the BCRA sought to restructure Medicaid. Under the proposed legislation, the ACA’s Medicaid expansion would be phased out over four years from 2020 through 2023, with gradual reductions in the federal medical assistance percentage (FMAP) received by states. Perhaps more significant—and objectively the most significant in terms of spending, according to the Congressional Budget Office (CBO)—the BCRA would limit Medicaid spending through a transition to per-capita caps or block grants (see BCRA would curb Medicaid spending growth, increase uninsured numbers, June 30, 2017). The American Health Care Act (AHCA) (H.R. 1628) also proposed this change (see Republicans present health reform that is neither repeal nor replacement, March 7, 2017).
Despite outright claims from the Trump Administration that the BCRA contains no Medicaid cuts, the CBO found that the per-capita caps under the legislation would constrain Medicaid spending in stages.
Conservative opposition. Among the Republican lawmakers opposed to the bill were Sens. Susan Collins (R-Maine), Rand Paul (R-Ky), Mike Lee (R-Utah), and Jerry Moran (R-Kan). While Paul expressed opposition to the bill because it did not go far enough in repealing the ACA, the other senators took their stance out of concerns that the bill would cause too many Americans to lose their health insurance. Opposition also was sounded by conservative Sens. Shelly Capito (R-WVa) and Lisa Murkowski (R-Alaska). Although Capito has expressed a willingness to rollback federal spending under the ACA, she stated her opposition, saying: "I did not come to Washington to hurt people." Murkowski opposed the bill because it would have undone Alaska’s Medicaid expansion. Collins criticized the effects that the bill would have on the "most vulnerable" members of the country.
Additionally, there was speculation that other senators from states that expanded Medicaid under the ACA—including Alaska, Arizona, Ohio, and Nevada—would oppose the BCRA due to its changes to the Medicaid program. However none officially announced their position prior to McConnell’s decision to remove the bill from consideration (see BCRA may be gone, but AHCA, ACA repeal efforts continue, July 18, 2017). Conservative opposition reached beyond senators, with Nevada’s Republican Governor Brian Sandoval expressing unwillingness to support a bill that would cause Nevada residents to lose health insurance. The bill was ultimately rejected on July 25 by a 43-57 vote, with Sens. Collins, Lee, Moran, Murkowsi, and Paul, as well as Robert Corker (R-Tenn), Tom Cotton (R-Ark), Lindsay Graham (R-SC), and Dean Heller (R-Nev) voting no.
Impact on States
To understand the opposition from conservatives, it is helpful to look at the impact the BCRA was expected to have on specific states.
Overall impact. Estimated changes in federal Medicaid spending under the BCRA between 2020 and 2029, across all states, include a reduction of $302 billion due to the phase out of enhanced matching and a reduction of $218 due to per enrollee caps—totaling a collective reduction of $519 billion. The estimate, from the Kaiser Family Foundation, assumes that states maintain coverage and fill in the gaps left by reductions in federal funding. Additionally, if all the current expansion states drop Medicaid expansion as a result of the BCRA, the total loss of related federal funding would total $1.2 trillion. Estimates suggest that it is unrealistic to expect states to make up the lost federal expansion funds, therefore forcing them—in financial terms—to abandon Medicaid expansion.
Nevada. In Nevada, Sandoval’s state, the Medicaid stakes are high, with 17 percent of the population on Medicaid. Under the ACA’s Medicaid expansion, 34 percent of the state’s Medicaid enrollees gained their coverage. Because of the large number of expansion enrollees, Nevada has one of the highest shares of federal Medicaid expansion funding as a portion of total federal funding—40 percent. Thus, if the BCRA were enacted, the state’s large Medicaid expansion population would be at risk of losing coverage, with significant financial loss to the state. Under a per-capita cap or block grant, the state also would face losses because, as a state with a low per-capita income, Nevada receives a relatively high matching percentage under current Medicaid financing. If the current financing program were replaced with a per-capita cap, Nevada would receive $1.4 billion less in Medicaid funding by 2022.
Kentucky. More than 2 million individuals are covered by Medicaid in Kentucky—about 22 percent of the state’s population. Under the ACA’s expansion, 443,300 adults gained coverage in Kentucky—individuals who would be at risk of losing coverage entirely under the BCRA. Like Nevada, Kentucky has a low per-capita income and, therefore, a relatively high matching rate of 70.5 percent. If the current matching system were replaced with a per-capita cap, federal funding for Medicaid in Kentucky would be $6 billion lower in 2022.
Alaska. In Alaska, more than 184,000 people are covered by Medicaid. Estimates suggest that 34,000 of those people would lose coverage under the BCRA. Additionally, the bill would eventually cut almost one-third of the state’s Medicaid funding. The costs to the state would be significant, from FY 2020 through 2026, Alaska would have to increase its own Medicaid spending by $1.2 billion to make up for lost expansion financing.
West Virginia. In West Virginia, over 565,000 people are covered by Medicaid. West Virginia is the state with the largest proportion of its population enrolled in the Medicaid program. The state has the second-lowest per-capita income in the country and one of the highest FMAPs—73 percent. Under the current Medicaid financing structure, West Virginia receives $2.55 federal dollars for every $1 it spends. Under the BCRA, West Virginia would have to expend an additional $3.4 billion between 2020 and 2029 to make up for the loss of federal funding. If West Virginia dropped Medicaid expansion as a result of lower federal funding, the state would lose an additional $7.6 billion over that same period.
Ohio. In Ohio, almost 3 million people are covered by the Medicaid program. Ohio, like many of the other highlighted states, has a lower-than-average per-capita income and a higher-than-average FMAP—62.3 percent. Under the BCRA, Ohio would have to spend an additional $20.5 billion between 2020 and 2029 to maintain its current Medicaid program. Additionally, if Ohio dropped Medicaid expansion, it would forego 32.8 billion over the 2020 to 2029 period.
Uninsured rate. The Urban Institute conducted a state-by-state analysis to determine what the uninsured rate would be in individual states in 2020 if the BCRA passed. The Urban Institute determined that the national average would be 78 percent, with some states, like West Virginia, seeing the uninsured rate rise to 299.4 percent.
As an alternative to the BCRA, Republican lawmakers released the Obamacare Repeal Reconciliation Act of 2017 (ORRA)—legislation that is almost identical to a 2015 bill (H.R. 3762) that passed the House and Senate in December 2015 before being vetoed by President Obama. Under the ORRA, many portions of the ACA would be repealed, including premium tax credits and cost-sharing subsidies, the individual mandate, the employer mandate, Medicaid expansion, and taxes on medical devices, tanning, and net investment income. According to the CBO, as compared to the status quo, ORRA would cause 17 million additional people to lose insurance in 2018 (see Dual bills duel in the Senate; CBO says both take insurance from millions, July 20, 2017). While ORRA would not reshape Medicaid as dramatically as the BCRA, it is an indication that a significant portion of Congress is set on changing the Medicaid program through reductions in program coverage and financing.
The so-called "Skinny repeal"—which, while less far reaching than the BCRA or ORRA did propose to eliminate individual mandate penalties and extend the moratorium on the medical device excise tax—failed with a 49-to-51 vote on July 28. The defeating votes were cast by Senators John McCain (R-Ariz), Collins, and Murkowski (see McCain’s thumbs down vote defeats ACA ‘skinny bill’ repeal, July 28, 2017).
As long as lawmakers continue to debate the merits of (and propose alternatives to) legislation like the BCRA, the fate of Medicaid remains uncertain. So far, the proposed changes have been too extreme for many lawmakers, leading to opposition; however, as ACA repeal measures continue to be proposed, BCRA-esque changes to the Medicaid program may continue to be in the offing. With the Senate Republican’s regrouping and some considering working with Democrats to make needed changes in the health care system, stakeholders must keep a steady eye on Congress to see what’s next for Medicaid.
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