Focused Read in 2 minutes
Fact Sheet Courtesy of Families USA
September 2017
(Excerpted and highlighted for easy reading. You will find the link to the complete fact sheet, including appropriate citations below!)
Senators Graham (R-SC) and
Cassidy (R-LA) have proposed a gigantic new block grant that would
dramatically cut funding both for Medicaid expansion and for
financial assistance that helps low-wage workers and moderate-income
families buy private insurance.
Cosponsored by Senator
Heller (R-NV), the Graham-Cassidy plan brings back troubling features
of health care repeal bills that the Senate rejected on a bipartisan
basis: major cuts to the underlying Medicaid program and the
revocation of key protections for people with preexisting conditions.
Congress should reject
this or any other partisan proposal that takes health insurance away
from tens of millions of Americans. Instead, lawmakers should focus
on bipartisan approaches to stabilizing health insurance
marketplaces.
What’s in the
Graham-Cassidy proposal?
Their plan has three
main elements.
1.
A new block grant that would slash federal funding currently slated for Medicaid expansion and for financial assistance with marketplace coverage. After making huge cuts, the block grant would entirely end after 2026, leaving millions stranded without any federal help.
2.
Large Medicaid
cutbacks like those in health care repeal proposals already rejected
by the Senate on a bipartisan basis. The underlying Medicaid program
would be cut and restructured, posing serious risks to seniors,
children with special health care needs, and others among the more
than 70 million Americans who get their health coverage through
Medicaid.
3.
Elimination of
consumer safeguards̶̶--a step similarly copied from health care
repeal proposals already rejected by Senators from both parties.
State waivers would effectively end important national standards for
private coverage, taking away essential benefits from people with
preexisting conditions.
What’s wrong with
block grants?
Block grants do not
respond to changing circumstances.
States are forced to
cut health care or other critical services during economic downturns,
precisely when people need help the most
Under current law, when
the next economic downturn hits, and more people qualify for help
after losing employment and earnings, federal funding for Medicaid
and marketplace subsidies automatically keeps pace. With a block
grant, by contrast, no additional funding responds to increased need.
During the Great
Recession, millions of Americans lost both earnings and coverage from
employers, turning to Medicaid for help. With Congress increasing
rather than capping available resources, federal Medicaid funding
rose from 2008 to 2011 by 45 percent in Alaska, 89 percent in
Arizona, 29 percent in Maine, 42 percent in Nevada, and 34 percent in
West Virginia. If the ACA’s Medicaid expansion had been in place,
these states would have benefited even more, since expansion coverage
more than triples Medicaid’s responsiveness to economic downturn.
By contrast, the
Graham-Cassidy block grant would have limited total federal funding
growth to 2.1 percent per year or less, totaling a maximum 6.4
percent increase from 2008 to 2011. If this proposal had been law,
states would have faced a grim choice: deny health coverage precisely
when residents most needed help; or preserve health coverage by
raising taxes or cutting other state priorities, like education,
social services, and infrastructure. States would face the same grim
choice during future recessions if this bill becomes law.
Block grants prevent
states from responding to unexpected health care needs
States often encounter
significant, unexpected health care cost increases...like the
opioid epidemic; or catastrophic weather events, like Hurricane
Harvey. Under current law, federal Medicaid funding and federal
financial assistance for marketplace coverage automatically rise to
share the cost of these unpredicted events.
Block grants would end
that federal-state partnership, which has been at Medicaid’s core
since the program’s inception. Instead, each state would be left on
its own to shoulder the cost of unexpected health care problems.
States that are experiencing hard times economically or that have a
limited tax base would find themselves unable to respond, leaving
residents without the help they need to cope with new and emerging
health care challenges.
By making federal
funding rigid rather than responsive to economic conditions, block
grants kill jobs during recession
Today, federal funding for
Medicaid and private insurance automatically rises if the economy
declines and more people qualify for help. Additional federal dollars
are spent on doctors, hospitals, and nurses, who buy other goods and
services. The proposed Graham-Cassidy block grant would end this
responsiveness, eliminating crucial support that limits economic
damage in hard times.
The impact of such
“automatic stabilizers” has been studied with unemployment
insurance (UI), which, like Medicaid and ACA assistance for private
insurance, automatically injects money into the economy during
economic downturn. In the average quarter of the Great Recession, UI
saved 1.6 million jobs and boosted gross domestic product by $123
billion, according to rigorous research.
For 2020, UI benefits are
projected to total $38.9 billion, or less than one-fourth the $166
billion in health care funding that the Graham-Cassidy plan would
convert into a rigid block grant.8 Health programs differ from
UI in many important ways. However, their vastly greater size,
compared to UI, suggests that the Graham-Cassidy proposal would
substantially reduce the automatic infusion of federal dollars when
economic contraction hits. The result: millions more Americans could
lose their jobs.
Block grants let states
divert federal resources away from needy residents and toward fiscal
chicanery
Historically, block grants
have let states redirect federal dollars away from services for needy
residents. The Graham-Cassidy plan fits squarely within that
troubling tradition, authorizing the use of block-grant funds to
“provide payments for health care providers for the provision of
health care services.” This remarkably broad language could provide
opportunities to divert federal dollars away from helping low- and
moderate-income consumers obtain health insurance.
Uniquely troubling
features of the Graham-Cassidy block grant
1.
It would cut $375
billion from Medicaid expansion and financial assistance for
marketplace health coverage. The amount being cut would rise from 16
percent in 2020 to 34 percent in 2026.
2.
It would end all
funding after 2026, leaving 29 million Americans stranded, without
any known source of health insurance.
3.
It would arbitrarily
redistribute federal money from some states to others. The
proposal's convoluted formula would lower funding for nearly all
states by 2026, but California, Connecticut, Delaware, D.C.,
Florida, Massachusetts, New Jersey, New York, North Carolina, and
Virginia would experience particularly immediate and severe cuts.
4.
It would replace not
just Medicaid but also financial assistance with marketplace
coverage for low-wage and moderate-income families. For the first
time, states would become accountable for serving millions of
privately insured residents who, until now, have been exclusively
the federal government’s financial responsibility.
5.
Unlike previous
Republican proposals, the Graham-Cassidy plan would mandate block
grants for all states, rather than give states a choice...
The Graham-Cassidy plan
lets insurers deny essential services to people who need health care,
including those with preexisting conditions
Like previously rejected
partisan proposals to repeal health care coverage under the ACA,
Graham-Cassidy would let states weaken standards that now require
insurance companies to cover essential benefits, such as maternity
care, treatment of mental health and substance use disorders, and
prescription drugs—essential services that most individual market
plans denied before the ACA.
The nonpartisan Congressional Budget Office (CBO) estimated that roughly half of the country’s population lives in states that would eliminate benefit requirements. According to CBO, people who live in those states
“would experience substantial increases in out-of-pocket spending
on health care or would choose to forgo the services. ...In
particular, out-of-pocket spending on maternity care and mental
health and substance abuse services could increase by thousands of
dollars in a given year” for people who need such care. States
could also repeal other protections for people with preexisting
conditions.
The Graham-Cassidy plan
cuts and fundamentally restructures the underlying Medicaid program
Like earlier health care
repeal bills rejected by bipartisan Senate majorities, this new plan
would make major cuts to the traditional Medicaid program, which
serves seniors, children, people with disabilities, parents, and
pregnant women. The Graham-Cassidy proposal would limit federal per
capita funding and give states the option to turn the entire Medicaid
program into a block grant.
Reductions would total at
least $41 billion a year by 2026, with additional cuts if
particular states experience faster-than-expected increases in health
care costs. Other changes to the broad Medicaid program would
eliminate federal funding for Planned Parenthood clinics, cut payment
for hospital care, and let states impose new paperwork requirements
that cause eligible consumers to lose health insurance.
Conclusion
The Graham-Cassidy
proposal represents another extreme and partisan attempt to take
health insurance away from tens of millions of Americans in working
families. Rather than continue down a road that the American people
and senators in both parties have already rejected,13 Congress
should focus its attention on bipartisan strategies to stabilize and
strengthen the individual health insurance market.
You can read the Fact Sheet, in full, here
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