Some hospital groups have come out in opposition to the latest ACA overhaul, primarily over concerns that it would reduce future Medicaid spending growth.

Sept. 19—The outlook for an individual-insurance marketplace stabilization package may be worsening in Congress as prospects for a last-ditch Republican healthcare reform effort appear to be improving.

Sens. Lindsey Graham (R-S.C.), Bill Cassidy (R-La.), Dean Heller (R-Nev.), and Ron Johnson (R-Wis.) are pushing a healthcare reform bill that would repeal and replace components of the Affordable Care Act (ACA), significantly change Medicaid financing, and create a new block-grant program that states could use to provide insurance coverage and access to care.

Senate Republicans have launched a last-minute push to pass the measure prior to a Sept. 30 deadline, before which they will need only 51 votes under so-called reconciliation rules.

The ACA-overhaul push faces similar deadlines to a bipartisan effort to stabilize the individual marketplaces, led by Sen. Lamar Alexander (R-Tenn.), chairman of the Senate Health, Education, Labor, and Pensions Committee, and Sen. Patty Murray (D-Wash.), the committee’s ranking Democrat. Despite recent evidence that a bipartisan stabilization deal is imminent, it appears the Senate will shift its focus to the ACA-overhaul measure.

“They’re going to focus on Cassidy-Graham, see if they can get that done next week. If that happens, do you need a stabilization package?” said Joel White, president of the Council for Affordable Health Coverage, a coalition of health insurers and other businesses. “You’ve got money for 2018 in Cassidy-Graham.”

The shift to an ACA overhaul bill was seen by others in regular contact with members of Congress and their staffs.

Graham-Cassidy “has become much more alive than it was thought to be two weeks ago, even a week ago,” Ed Haislmaier, a healthcare policy adviser at the right-leaning Heritage Foundation, said in an interview.

The bill would allocate $10 billion in 2019 and $15 billion in 2020 for states to use to bring down premiums and set up programs to provide coverage. It also would replace premium tax credits, cost-sharing reduction (CSR) payments, and enhanced Medicaid expansion funding by 2020 with block grants to the states to use for health care, and would include per capita caps—with a block-grant alternative—for Medicaid.

The new bill’s approach differs sharply from the Alexander-Murray market stabilization effort, which was expected to appropriate CSR payments, fund a federal reinsurance program, and provide more state flexibility on ACA coverage requirements.  Alexander had hoped the stabilization bill would clear by Congress by Sept. 27, when insurers were due to finalize 2018 rates.

If the Graham-Cassidy overhaul fails, White said in an interview, Congress may go back to a stabilization package that requires plans to pass that money on to consumers, who would be paying premiums based on rates set under the assumption that there would be no CSR funding.

“I’m hearing the Republicans aren’t willing to do anything on cost sharing if Democrats aren’t willing to give on deregulation,” Haislmaier said.

As of Sept. 19, nine states had approved 2018 ACA marketplace plans, with premiums increasing an average of 17.82 percent assuming CSR availability and individual-mandate enforcement—and rising by 24.67 percent without that support, according to tracking by ACA advocate

Late on Sept. 19, Alexander intimated that the market stabilization push was over.

“During the last month, we have worked hard and in good faith, but have not found the necessary consensus among Republicans and Democrats to put a bill in the Senate leaders’ hands that could be enacted,” Alexander said in a written statement.

Hospital Opposition

Hospitals have repeatedly pushed for an insurance stabilization package—while frequently opposing some of the coverage flexibilities sought by Republicans—but are starting to move against the Graham-Cassidy bill.

Four of the five major hospital advocacy groups have voiced opposition to the bill, including America’s Essential Hospitals (AEH).

 “It appears to significantly restrict federal health care funding through per-capita caps and block grants, which would shift costs to states, patients, providers, and taxpayers,” Bruce Siegel, MD, president and CEO of AEH, said in a written statement. “Further, 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.”

The Congressional Budget Office, the legislature’s nonpartisan scorekeeper, said a complete analysis of the coverage impacts under the bill was not expected for several weeks—long after the deadline to pass the bill. However, the office said it will release a “preliminary assessment” of the bill “early next week.”

Sister Carol Keehan, president and CEO of the Catholic Health Association, issued a call to contact members of Congress to express opposition, in part because of the bill’s $175 billion reduction in Medicaid spending over the next 10 years. The left-leaning Center on Budget and Policy Priorities (CBPP) estimated that the bill’s per capita caps would reduce federal Medicaid spending by about 8 percent by 2026.

“The new block grant funding is estimated to be $239 billion less over ten years than under current law, resulting in large cuts for many states,” Keehan wrote. “States that have expanded Medicaid or have high Marketplace costs and/or enrollment will face the deepest cuts as funding would not be tied to actual costs of coverage or the number of individuals enrolled.”

State Impact

In a Sept. 18 rating commentary, Fitch Ratings stated that the bill was “more disruptive for most states” than the three failed ACA overhaul bills that Republicans previously tried to enact.

“States that expanded Medicaid access to the newly eligible population under the [ACA] are particularly at risk under this latest bill,” Fitch analysts wrote. “In the short-term non-expansion states may see gains under the bill given redistribution of ACA-related spending streams. But, over time even non-expansion states will face budgetary challenges given the proposed changes to Medicaid, which will likely accelerate for all states over time.”

Federal Medicaid funding currently comprises about 20 percent of state budgets.

Although it remained unclear whether Republicans would be able to corral the 51 votes needed to pass the bill, the healthcare investment research firm Hedgeye gave even odds on Sept. 19 that the Senate will pass such a measure by Sept. 30, “with a bias for going higher in the coming hours/days.”

“We have reset our expectations due to the rather unusual political dynamic between the White House and Congress; the emergence of a viable legislative vehicle—the Cassidy Graham Heller Johnson amendment to the American Health Care Act—and the heretofore unsuccessful efforts to craft even the most benign bipartisan solutions to the ACA’s more pressing problems,” the firm wrote in a research note.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Tuesday, September 19, 2017