Arkansas would lose $6B under proposed health bill, firm says

Funding gains and losses under new health care proposal
Funding gains and losses under new health care proposal

Arkansas would lose $6 billion in federal health care funding over seven years under legislation aimed at undoing much of the 2010 Patient Protection and Affordable Care Act, according to estimates by a health care consulting firm.

In a report released Wednesday, Washington, D.C.-based Avalere Health compared projected spending under the current health care law and the Republican-backed legislation unveiled last week.

Gov. Asa Hutchinson, who expressed support for the new federal legislation Tuesday, repeated that support Wednesday despite the Avalere analysis.

Spokesmen for several health care groups in Arkansas expressed concern that, if passed as proposed, the federal legislation will result in even more people losing health insurance coverage than already expected to become uninsured because of planned state-level changes to Arkansas' expanded Medicaid program.

Avalere's analysis found that the so-called Cassidy-Graham health care bill would reduce funding to 34 states, including Arkansas, and the District of Columbia by about $294 billion between 2020 and 2026.

Sixteen states would gain a total $79 billion, leaving a net loss of funding of $215 billion, according to the report.

The funding includes federal support for Medicaid, as well as subsidies for private insurance provided under the Affordable Care Act.

Under the proposed legislation -- sponsored by Republican Sens. Bill Cassidy of Louisiana, Lindsey Graham of South Carolina, Dean Heller of Nevada and Ron Johnson of Wisconsin -- funding now provided for the insurance subsidies and Medicaid expansion would be converted into block grants to the states starting in 2020.

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Although initially based on past funding for those programs, the amounts provided to each state would gradually shift to an allocation based on the number of residents with incomes of 50 percent to 138 percent of the federal poverty level, according to the Menlo Park, Calif.,-based Kaiser Family Foundation.

According to Avalere, the overall amount provided under those grants would be $95 billion less than projected federal spending under the Affordable Care Act.

Spending would also shift from states, such as Arkansas that expanded Medicaid as authorized under the Affordable Care Act, to those that rejected expansion.

Among those nonexpansion states, the biggest winners from 2020-26, would be Texas which would gain $35 billion; Georgia, which would gain $10 billion; and Mississippi, which would gain $6 billion, according to the report.

The losses to expansion states include $78 billion to California, $45 billion to New York, and $13 billion each to Maryland and Oregon.

Arkansas' funding for Medicaid and subsidies for private insurance during those years would be reduced by 11 percent, from about $54 billion to about $48 billion, the report indicates.

The report's estimates also account for cost caps that would be established on the traditional Medicaid program covering low-income families and poor people who are elderly or disabled.

Those cost caps account for $120 billion of the reduction between 2020 and 2026, according to the report.

The block grants would expire in 2027, leading to even bigger losses in funding unless new money is approved by Congress, the report found.

The Avalere report followed similar findings by the Center on Budget and Policy Priorities, a liberal research organization.

According to a report by the policy center, the loss in federal funding each year would grow to $80 billion by 2026, including a $1.1 billion annual reduction in Arkansas.

Hutchinson, who said he helped craft the legislation along with fellow Republican Govs. Doug Ducey of Arizona, Scott Walker of Wisconsin and Phil Bryant of Mississippi, told reporters Tuesday that the legislation would force states to watch their spending but wouldn't "represent a cost shift to states."

That was Hutchinson's primary objection to earlier legislation this summer, known as the Better Care Reconciliation Act, that would have phased out federal support for Medicaid expansion.

"There's already some stories out there that this is somehow going to cost Arkansas hundreds of millions of dollars," Hutchinson said. "It's just not so."

He said the block grant would give Arkansas flexibility in designing its health care programs and would not require the state to spend its own money.

By contrast, Medicaid expansion is expected to require $1 billion in state matching funds between 2020 and 2026, Hutchinson said.

Asked Wednesday about the Avalere report, Hutchinson said through a spokesman via email: "Graham-Cassidy is a true repeal and replace bill that offers states the flexibility the governors have requested in a block grant format. This is our best and last chance to repeal and replace the ACA."

Hutchinson was in Mexico to visit an Arkansas State University campus and meet with business and government officials.

State Rep. Michael John Gray, chairman of the Arkansas Democratic Party, said Wednesday that the legislation would be "devastating to Arkansas," and that Hutchinson's endorsement of the bill represents an "about-face" from the governor's past support for the state's Medicaid expansion.

The legislation faces opposition from all of the U.S. Senate's Democrats and from Republican Rand Paul of Kentucky, who has said it doesn't go far enough in replacing the Affordable Care Act.

To clear the Senate, the bill would need the support of at least 50 of the chamber's other 51 Republicans, including some who remained undecided Wednesday.

Both Arkansas U.S. senators said Wednesday that they support the bill.

Sara Lasure, a spokesman for Sen. John Boozman, said in an email that the bill "provides flexibility to the states, empowering Arkansas to choose the best method to meet the health care needs of its citizens."

She noted that the bill would also repeal the Affordable Care Act's requirements for people to have health coverage and for large employers to provide it, requirements that she said "have harmed families and business owners."

Arkansas' U.S. Sen. Tom Cotton "believes Graham-Cassidy would be a vast improvement on Obamacare," spokesman Dylan Haney said in an email.

Approved by the state's Republican-controlled Legislature and then Gov. Mike Beebe, a Democrat, in 2013, Arkansas' Medicaid expansion took advantage of enhanced federal funding under the Affordable Care Act to extend insurance coverage to adults with incomes of 138 percent of the poverty level: $16,643 for an individual, for instance, or $33,948 for a family of four.

The expansion was covering almost 309,000 Arkansans as of Aug. 31. Under the so-called private option, most are covered under private plans offered on the state's health insurance exchange, with Medicaid funds paying the premiums.

Hutchinson has proposed moving about 60,000 people off the program by limiting eligibility to people with incomes up to the poverty level starting next year. Federal officials are expected to rule on his request by early next month, state officials have said.

Spokesmen for groups representing Arkansas hospitals and physicians said Wednesday that they were concerned that the proposed federal legislation would cause even more people to lose coverage.

"I think it's the consensus of pretty much everyone that having health coverage helps you have access to health care, which helps keep people healthier," said David Wroten, executive vice president of the Arkansas Medical Society.

Paul Cunningham, executive vice president of the Arkansas Hospital Association, said the expansion of coverage under the Affordable Care Act has helped offset cuts in Medicare reimbursement rates to hospitals.

"There's no talk of replacing any of that" Medicare funding under the proposed legislation, Cunningham said.

Marquita Little, health care policy director for Arkansas Advocates for Children and Families, said she's also concerned about a provision in the proposed legislation allowing states to receive waivers from consumer protections in the Affordable Care Act.

For instance, states could receive approval to allow insurers to charge people higher premiums based on their health conditions, a practice banned under the 2010 law.

"It's really a slippery slope to open that door to all of this flexibility," Little said.

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A Section on 09/21/2017

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