The latest Republican-led effort to overhaul the Affordable Care Act could lead to spending cuts for state education funding from Kindergarten through college, Fitch Ratings said in a new report.
The bill introduced last week by Sens. Lindsay Graham (R-South Carolina), Bill Cassidy (R-Louisiana), Dean Heller (R-Nevada) and Ron Johnson (R-Wisconsin) would keep a lot of the ACA’s regulations intact though it would eliminate the individual and employer mandate and shift insurance subsidies and Medicaid funding for coverage of poor Americans to block grants controlled by states.
In restructuring Medicaid to a “per-capita cap funding mechanism” the new Senate legislation would replace Medicaid’s existing open-ended entitlement structure paid for via a match of funds between the states and federal government. If a particular state Medicaid program is faced with a large number of people in need of expensive medicines or treatments, more federal dollars would flow to the state. States also see an uptick in Medicaid patients when companies lay off workers.
But the Graham-Cassidy legislation would make major changes that could hurt state finances.
“As total Medicaid spending represents approximately one-third of state budgets, the fundamental changes proposed could challenge that flexibility,” Fitch analyst Eric Kim wrote. “Negative implications for entities that rely on state support, including school districts, cities, counties, and public higher education institutions could be more significant given their generally more constrained budgetary flexibility.”
Because federal dollars for Medicaid account for about 20% of state budgets, Fitch “believes substantial Medicaid cuts would require states to make material budget adjustments over the next decade and beyond.”
“In a time of already muted revenue growth, spending cuts could affect K-12 and higher education the most,” Fitchreport said.
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The legislation faces a procedural deadline of Sept. 30 so GOP Senators are rushing to come up with something they think can pass. In the Senate, where the GOP has a 52-48 majority, there is little room for error with some Senators last week already predicting the demise of the Graham-Cassidy bill even before it has been “scored” by the Congressional Budget Office.
But the bill is familiar to earlier unpopular versions offered in the U.S. House of Representatives and Senate such as the Better Care Reconciliation Act, which would trigger the loss of coverage for more than 20 million Americans, the CBO said. Majority Leader Mitch McConnell’s BCRA was wildly unpopular and opposed by hospitals, doctors and the health insurance industry, which made a surprisingly aggressive attack over the weekend.
Some of those same groups see the Graham-Cassidy-Heller-Johnson as equally bad for patients and state budgets.
“By taking an approach so close to that of the earlier House and Senate plans, it’s reasonable to conclude it would have a similar result: millions of Americans losing coverage,” America’s Essential Hospitals CEO Bruce Siegel said Friday.
“Unlike those previous proposals, Graham-Cassidy provides no meaningful relief from looming cuts to Medicaid disproportionate share hospital payments ,” Siegel said. “Further, it would impose strict new limits on how states raise support for the safety net. Rather than providing flexibility, this would limit states’ coverage and financing choices.”[“Source-forbes”]