New Jersey could be on the hook for up to $7.6 billion and nearly a million residents could have lost their insurance coverage by the end of a decade under the latest Republican proposal to reform healthcare by ending many elements of the federal Affordable Care Act.
Like previous efforts to repeal the ACA, or Obamacare, the bill sponsored by U.S. Sens. Bill Cassidy (R-LA) and Lindsey Graham (R-NC) seeks to drastically reduce federal spending and ease regulatory restrictions in an effort to bring down the cost of commercial health insurance. The proposal is scheduled for a hearing on Monday and Republican leaders hope to pass the measure next week, before a change in their voting rules means they would need to secure more votes — a nearly impossible challenge — to overcome a potential Democratic filibuster.
To create savings, the measure would begin to scale back federal funds available for the Medicaid expansion and marketplace subsidies starting in 2020, and eliminate those programs entirely in 2027. It would also overhaul the basic Medicaid program, placing strict limits on spending that is now largely uncapped.
The most damaging proposal
In addition, it would eliminate many of the mandates associated with the landmark law, including the controversial requirement that individuals purchase insurance, restrictions on how much insurance companies can make on policies, and rules designed to help patients with pre-existing conditions have access to affordable coverage. Critics called it the most damaging GOP proposal to date.
According to several studies of the bill, the formula used to calculate state allocations for the Medicaid expansion and marketplace subsidies — funding that would be combined into a single block grant for each state — shifts funds over time from states that embraced the ACA, like New Jersey, to those that declined to fully participate. Some critics noted the states that gain are Republican strongholds.
When combined with other changes that reward states with poorer residents and lower costs — and deduct from more expensive states — New Jersey would endure some of the greatest losses in federal funding over the next 10 years, compared with other states, according to separate analyses by the nonpartisan Center for Budget and Policy Priorities and State Health Value Strategies, a project by Princeton University’s Woodrow Wilson School of Public and International Affairs.
‘The worst elements’
“It’s like the worst elements of all the bills, rolled into one,” said Ray Castro, the healthcare analyst with New Jersey Policy Perspective, which has tracked the ACA for years. Castro predicted some 900,000 people could lose coverage by 2026. But unlike past proposals, this also shifts the funding over time, he said, noting “they’re taking funds from New Jersey for other states.”
Estimates of the dollar impact vary widely — depending in part on study methodology and various options in the block grant formula — but opposition to the proposal appears to be building. New Jersey Sens. Robert Menendez and Cory Booker, both Democrats, lambasted the plan, along with a growing list of hospital and healthcare allies and even insurance representatives.
Gov. Chris Christie, a Republican who is close to President Donald Trump, also said Wednesday he could not support the plan, given its financial impact on the Garden State.
‘Nothing short of cruel’
State Sen. Joe Vitale (D-Middlesex) the longtime health committee chairman and an architect of several New Jersey Medicaid programs, urged Christie to use his influence with the president to protect Garden State residents. “This proposal is beyond bad policy — it is nothing short of cruel,” Vitale said. “I am hopeful the Senate rejects this effort, and call on our congressional representatives to use every tool at their disposal to defeat this latest repeal and replace plan.”
The Cassidy-Graham bill follows several controversial proposals Republicans in Washington, D.C., have tried and failed to advance since Trump took office and pledged to repeal and replace Obamacare.
The landmark law, enacted in 2014, expanded insurance to more than 23 million people nationwide, including more than 800,000 in New Jersey by expanding the existing Medicaid program and creating a marketplace, or insurance exchange, where low-income customers have purchased commercial plans with government assistance. It also tightened insurance regulations to require more comprehensive coverage.
Under the latest proposal, the ACA would essentially remain intact through 2019; starting in 2020, the Medicaid expansion funds would be combined with dollars for marketplace subsidies into a block grant for each state. The allocations would be based on past spending history at first, but would soon shift to provide more funding for more impoverished states with higher uninsured rates, at the cost of states — like New Jersey — that successfully signed up more health insurance patients and have higher costs.
Saving the feds $246B
By 2026, when those portions of the programs will have ended, the changes would save the federal government $243 billion, when compared to projected spending under the ACA, according to the Center on Budget and Policy Priorities review. The group predicts this could cost New Jersey $3.9 billion over those six years.
“The sponsors are attempting to promote the block-grant concept as an opportunity to innovate, but the fact is that it will only end up hamstringing states and prevent them from responding to emergencies such as the opioid crisis that is taking the lives of people throughout New Jersey and this country,” Vitale warned.
The State Health and Value Strategies analysis predicts that as many as 38 states will lose funding under the new block-grant system, depending on the year, and some could see these dollars cut in half. According to their calculations, New Jersey could lose as much as $7.6 billion over that time; only five other states face larger losses.
While funding for traditional Medicaid, which covers some 1.3 million New Jerseyans, would continue beyond 2026, it would be allocated in a way that significantly restricts spending and forces states to make tough choices in coverage — or raise billions from state taxpayers or other sources to fill the gap. The CBPP analysis suggests this change from a need-based system to a per-person cap will cut up to $175 billion nationwide over those six year and warned it could lead states to restrict benefits and cut costly services, like home and community-based programs, or behavioral healthcare.
The Cassidy-Graham plan also echoes elements of a controversial bill that did pass the U.S. House of Representatives in how it would allow states to obtain waivers enabling them to loosen insurance regulations in an effort to reduce costs, the reviews noted.
If approved, companies would be allow to charge more for patients with pre-existing conditions — although they would be forced to cover them — and would not have to cover all the “essential health benefits” mandated under the ACA, including maternity care, cancer treatment, and behavioral health programs. It would also eliminate the requirement that employers provide coverage and expands opportunities for catastrophic-care-only coverage, plans that are widely viewed as ineffective.
“Once again, we’re staring down a bad bill that would hurt millions of people, and Senate leadership seems intent on ramrodding it through the process with insufficient information and no opportunity for public input,” said Betsy Ryan, president and CEO of the New Jersey Hospital Association, who [link:http://www.njha.com/media/472800/Letter-to-NJ-Delegation-Graham-Cassidy-Bill.pdfwrote to the New Jersey delegation] urging them to protect Garden State patients and taxpayers by opposing the bill.