Statehouse opposition to the House Republican's proposed cap on Medicaid payments and phasing out the program's expansion to low-income 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 more-conservative 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 ever,” she said.
The AHCA would convert the federal match in the $552 billion Medicaid program, currently an open-ended 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 low-income 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 participation, 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 people who purchase individual plans. In 2020, the GOP bill ends the ACA's income-based premium tax credits.