The champions of new Republican legislation to repeal the Affordable Care Care keep talking about fairness.
They don’t mean fairness to people with pre-existing conditions, or fairness to people who can’t afford to pay for insurance without Obamacare’s help. Those two groups would suffer mightily under the bill, as multiple analyses have shown.
No, the Republicans mean fairness to states. And it is one of the most cynical arguments they’ve made yet.
The legislation, which GOP leaders hope to bring to a vote next week, would not simply cut overall federal spending on health care. It would redistribute money among the states ― taking billions of dollars away from California and Maryland, among others, while giving a significant, if temporary, boost to states like Mississippi and Texas.
The bill’s co-sponsors, Sens. Bill Cassidy (R-La.) and Lindsey Graham (R-S.C.), have been quite open about creating new winners and losers among the states. They have said it’s only proper, because, as Cassidy said Monday, “Right now, 37 percent of the revenue from the Affordable Care Act goes to Americans in four states. That is frankly not fair.”
The funding imbalance is real. Under the Affordable Care Act, the federal government picks up most of the cost for states that expand their Medicaid programs. And that means states that have expanded Medicaid, like California and Maryland, end up getting a lot more federal money than those, like Mississippi and Texas, that haven’t.
But the divide between the states exists because GOP officials in some states have turned down federal money available to them, using discretion that would not exist if not for a lawsuit that was part of the right-wing legal assault on “Obamacare.”
In other words, the imbalance in state funding exists because a group of conservatives have done everything they can to avoid helping some of America’s neediest citizens get health insurance.
Now Graham and Cassidy are exploiting that situation to sell a plan that eventually would take insurance away from low-income people in every state ― even the ones Graham and Cassidy claim to be helping.
How Republicans created the Obamacare funding divide
Remember, the Affordable Care Act’s original concept was to have the government provide insurance to every non-elderly person who didn’t have access to employer coverage. Early on, Democrats decided the most efficient way to do that for people living below or just above the poverty line was to enroll them in Medicaid. That meant expanding the program, because in most states it covered only certain classes of poor people, typically with much lower incomes.
Medicaid is a joint federal-state program, and, legally speaking, the federal government can’t simply order states to do something. Instead, it has to use financial incentives, which is what the Affordable Care Act’s authors sought to do ― by making all Medicaid funding, including money for the parts of the program already in operation, conditional upon states opening the program to more people. Some conservatives groused that this was a form of extortion, and when right-wing legal activists, working with Republican officials, launched their infamous lawsuit challenging the individual mandate, they also made the case that the new Medicaid arrangement was unconstitutional.
Few legal observers took the claim seriously ― until the Supreme Court handed down its ruling and, in a decision upholding other parts of the law, struck down the Medicaid financing scheme. (Two Democratic appointees, Stephen Breyer and Elena Kagan, joined the five Republican appointees in that part of the ruling, although some speculated they had made an implicit deal to join the conservative justices on that point in order to keep a majority upholding other aspects of the law.) That made it much much easier for states to turn down money for the Medicaid expansion.
“A group of Republicans and conservative activists turned state opposition to Medicaid expansion into a litmus test.”
Even after the court ruling came out, the law’s supporters assumed all states would sign up ― if not right away, then within a few years, simply because the offer from Washington was such a financially advantageous one. The federal government would be providing nearly all the money for the new people who would become eligible, which meant states wouldn’t have to put up much of their own. Many studies suggested that states would ultimately get most or even all of the money back, partly because they wouldn’t have to pick up the indirect costs of charity care from hospitals. Also, the money would boost economic growth.
But the law’s critics, in and outside of the Republican Party, turned opposition into the Medicaid expansion into a litmus test for true conservatism. States with Democrats in control signed up quickly. In most (not all) states where Republicans had leverage over at least one branch of government, expansion became a huge fight ― sometimes pitting Republican governors willing to put aside their ideological predispositions in order to help their constituents, against their own legislatures and conservative activists.
Some of those Republican governors prevailed, which is why states like Michigan and Ohio now have expanded Medicaid programs ― and why those governors are among those who have spoken out most forcefully against Graham-Cassidy. But 19 states have held out, and predominantly they’re the most conservative states of the country.
As Jordan Weissman put it recently in Slate, ”Most red-state governors decided to treat health care policy like an Appalachian blood feud and refused the money the Obama administration all but begged them to take. ... If Florida or Texas had decided to accept the big, gift-wrapped pile of dough Washington was offering, things wouldn’t look quite so imbalanced.”
The fight is still happening, by the way. In Kansas, it’s the Republican state legislature that wants the expansion and the Republican governor, Sam Brownback, who has blocked it. The legislature voted overwhelmingly to expand the program in April, but came up just three votes short of the supermajority it needed to override Brownback’s veto.
Graham-Cassidy funding for states is a shell game
Sure enough, Kansas is among the states looking at funding increases during the first six years of Graham-Cassidy. It would get an additional $2 billion, according to an analysis of the bill by Avalere Health. That’s 11 percent more than it stands to get now, with the Affordable Care Act in place. Other big winners include Texas, whose $35 billion windfall would mean a 14 percent increase, and Mississippi, whose $6 billion gain works out to a 13 percent increase.
Meanwhile, Maryland would lose $13 billion, leaving it with 16 percent less money that it stands to get now. And California? It would lose $78 billion, leaving it with 13 percent less in federal funding. Few states have tried as hard to make the Affordable Care Act work, or been so successful. The coverage losses there could be staggering.
As it happens, it’s not only traditionally Democratic states that end up losing out. Florida, which hasn’t expanded Medicaid, would nevertheless lose money because Graham-Cassidy also punishes states where enrollment in subsidized private plans has been high, and signups in Florida are among the highest in the nation.
Alaska, Arizona, Ohio and West Virginia also stand to lose money, because all of them expanded Medicaid. All four have Republican senators who have publicly wavered about reform, making them particularly important politically. This is why you are reading so much about negotiations with one of Alaska’s GOP senators, Lisa Murkowski, and proposals to throw a whole bunch of extra money at her state.
The irony is that every single state ― including Mississippi and Texas ― stands to lose money from Graham-Cassidy eventually. Partly that’s because the bill authorizes new health care spending only through 2026. The money vanishes after that. The other reason is that the bill introduces massive, permanent cuts to the traditional Medicaid program, creating an ever-growing gap between what the federal government is providing and what the states would need to maintain coverage levels. (Vox has an animated map, based on Avalere’s numbers, to show how this would happen over time.)
So even for Mississippi and Texas, Graham-Cassidy turns out to be a bad deal by the numbers. They just wouldn’t feel the pinch as quickly as some other states. That may help explain why the National Association of Medicaid Directors issued a strong letter on Thursday opposing Graham-Cassidy. The letter came from the group’s leadership, but the Washington Post’s Greg Sargent reports that multiple officials from traditionally Republican states were in favor of sending it.
Graham, Cassidy and their allies don’t advertise that they are cutting Medicaid or that the cuts will eventually touch even those places they keep promising to help. But, of course, that shouldn’t be surprising. From day one, they have sold their effort as a more sensible version of repeal, one that will make health care more accessible and not less, when the very opposite is true.
CORRECTIONS: A previous version of this story mistakenly stated that Maine had expanded Medicaid.