The senator who cast the final vote to kill Obamacare repeal is unexpectedly helping to revive that effort from the dead.
Sen. John McCain told the Hill Wednesday that he would support a plan offered by Sens. Lindsey Graham (R-SC) and Bill Cassidy (R-LA) to repeal the Affordable Care Act. And McCain later released a statement clarifying that he supports the bill in concept, but hasn’t seen a final product.
“While I support the concept of the Graham-Cassidy proposal, I want to see the final legislation and understand its impact on the state of Arizona before taking a position,” McCain said in that statement.
The Senate rejected four different Obamacare repeal plans in late July. Cassidy-Graham emerged in the midst of that chaotic process. It’s the last health plan left standing — and also the most extreme.
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The senators who back the bill have spent the past two months selling it as a compromise plan and say it is a way to return power to states, giving local governments more control over how they spend federal dollars.
“We need to let states take care of themselves and give power back to patients,” Cassidy wrote in a mid-July op-ed for the Washington Post. “Let a blue state do a blue thing and a red state such as mine take a different, conservative approach.”
But the most detailed version of the plan we’ve seen so far does much more than that. The proposal would eliminate the health care law’s subsidies for private insurance and end the Medicaid expansion. The health insurance marketplaces would no longer exist as they are envisioned to continue under other Republican proposals.
The federal government would convert some (but not all) of that spending into a lump-sum payment to states. States could choose to spend this money on providing insurance, or they could use it to fund high-risk pools, or do other activities to pay the bills of patients with high medical needs. States wouldn’t get this money for free: They’d be required to kick in a small percentage themselves.
The plan hasn’t been scored by the Congressional Budget Office yet — again, suggesting it will not move quickly — but analysts who have studied Cassidy-Graham estimate it would cut deeply into federal funding for the health law programs, likely resulting in millions losing coverage.
Cassidy-Graham would arguably be more disruptive, not less, to the current health care system. It would let money currently spent on health insurance go toward other programs, providing no guarantee that the Affordable Care Act programs individuals rely on today would continue into the future.
“It would substitute a block grant for the funding that now provides states with resources for Medicaid expansion, premium tax credits, and cost-sharing reduction subsidies,” says Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities. “People don’t have a guarantee of meaningful coverage. It’s totally different.”
Cassidy-Graham spends less on health care, gives states more leeway in how to spend the money
There are a few versions of Cassidy-Graham in the mix right now: a six-bullet-point plan put out by Cassidy’s office, Cassidy’s Washington Post op-ed, and a one-page summary floating around Twitter.
The most detailed version is what the two senators introduced last week as an amendment to the Better Care Reconciliation Act. You can read it here, starting on page 22. This likely is not the final version, as Cassidy has said they’re still working on the bill — but it’s both the most recent and most in-depth version released publicly at this point.
Cassidy-Graham would repeal the health care law’s tax credits for middle-income Americans, the cost-sharing reduction subsides for low-income Americans, and the Medicaid expansion in 2020. This makes it a bit more radical than other Republican plans, which leave a (less generous) version of the tax credits in place.
It replaces all those programs with a market-based health care grant program, which would send states a lump sum of money to put toward health care–related purposes.
Under Obamacare, this money has to be spent on providing health insurance. Under Cassidy-Graham, it can be spent on other things. The options include:
Notably absent from any of these options is a requirement to focus funds on low-income populations. This would be a big shift from the Affordable Care Act, which targeted its spending on the lowest-income populations by expanding Medicaid and providing the biggest tax credits on the private marketplace to those who earn the least.
Cassidy-Graham would make it much more expensive for states to continue Obamacare if they like it
This new proposal is the second one Cassidy has put forward. He had an earlier plan with Sen. Susan Collins (R-ME) that appears to have fizzled out at this point, which would have included a track where states that like the current health care law could keep it in place.
Cassidy has set himself apart from other Republicans in this debate by conceding that some states actually like the Affordable Care Act and find that it works well for their constituents.
“California and New York, you like Obamacare, you should keep it,” Cassidy said at a February press conference on his bill with Collins. “It’s not for us to dictate.”
But this new bill would not allow a state like California to keep the Affordable Care Act in place unless it wanted to kick in significantly more money.
Here’s why: The complex funding formula used to divvy up the big pot of money would tilt more funding toward sparsely populated states. It advantages rural states that have fewer people per square mile than those with denser, more urban populations.
Cassidy-Graham would also take the current Medicaid expansion spending from the 30 states that participate in the program and divvy it up among all 50 states. For a place like Texas, which has not expanded Medicaid, this would be a windfall — it might see its overall health funding rise under Cassidy-Graham. But a state like California would be dramatically disadvantaged, as it would see some of its Medicaid expansion funds sent elsewhere.
The individual market would become dysfunctional under Cassidy-Graham
Cassidy-Graham includes a requirement that insurance plans accept all applicants regardless of preexisting conditions. This would mean that many Americans with high-cost conditions would be expected to seek coverage.
But Cassidy-Graham also ends the two policies that are meant to bring healthy people into the marketplace: the mandate to purchase coverage and the tax subsidies to make coverage affordable.
This would be a marketplace where insurance companies have to accept all patients — but there is little incentive for those who are relatively healthy to purchase plans. There would be no requirement to purchase coverage, nor would there be a guarantee of subsidies to make that coverage affordable (although states could choose to spend their grant toward this purpose).
States have experimented with this combination of policies before. In the 1990s, Washington state ended preexisting conditions without a mandate or subsidies. Seattle Times journalist Carol Ostrom recounted what happened next:
States could take steps to fix these problems, but Cassidy-Graham leaves them relatively hamstrung. They’re getting less federal funding to expand coverage, especially if they are densely populated places like California or New York.
But remember, states would have to pay money to get access to that money, by putting up a small amount of matching funds. If they couldn’t come up with the necessary funds from the state budget, they could be left badly out of luck with a dysfunctional insurance market — and little recourse to fix it.