Graham-Cassidy now guts Obamacare even more

Senate Republicans, seemingly short on votes for their last-ditch plan to repeal Obamacare, are desperately tweaking the bill in hopes of winning over both their moderate and conservative wings.

The result is a plan from Sens. Lindsey Graham (R-SC) and Bill Cassidy (R-SC) that would go even further in rolling back Obamacare’s protections for people with preexisting conditions, while adding hundreds of millions of dollars meant to sweeten the deal for senators from key states.

Graham-Cassidy would now, according to health policy experts, effectively end to Obamacare’s insurance protections. People with preexisting conditions could face higher premiums, insurers could choose which services to cover, and plans could also require people to pay more money out of pocket than Obamacare allows.

The core of the latest version of the plan, released late Sunday night, is the same: Much of Obamacare’s funding would be converted into block grants that states could use to set up their own health care programs, while Medicaid would be fundamentally overhauled with a federal spending cap.

The result, according to estimates of the previous iteration, would be hundreds of billions of dollars in federal spending cuts for health care and tens of millions fewer Americans with health insurance, compared to Obamacare.

The bill has looked short of the votes to pass, with conservatives angry it doesn’t do more to roll back the 2010 health care law and moderates wary of the spending cuts. Sen. John McCain (R-AZ) wants a return to regular order and a bipartisan bill. Sen. Rand Paul (R-KY) says it keeps too much of Obamacare. Sen. Susan Collins (R-ME) has yet to see an Obamacare repeal bill she likes. There are more votes in doubt, and Republicans can lose only two of their 52 members and still pass a bill.

So Graham and Cassidy are trying to pull their plan to the right and left at the same time: It would now gut Obamacare’s regulations almost entirely to try to win over conservatives, but it adds funding targeted to some specific states in an attempt to assuage moderate concerns.

“The revised Graham-Cassidy bill is in effect federal deregulation of the insurance market,” Larry Levitt, senior vice president at the Kaiser Family Foundation, tweeted.

Those changes, paired with the remaining deep spending cuts in the bill, mean a dramatic undoing of the changes the health care law made that helped bring the uninsured rate to a historic low and dramatically reduced medical bankruptcies, while also bringing an end to Medicaid as it currently exists.

Yet despite the tinkering, Graham-Cassidy still might not have a majority in the Senate, even as Republicans push to put the bill on the Senate floor before September 30.

Graham-Cassidy now ends most of Obamacare’s insurance protections

States would have wide latitude to rip up the insurance regulations that Obamacare instituted to protect people with preexisting conditions and limit the risks for medical bankruptcy under the new Graham-Cassidy, experts said.

Obamacare prohibited insurers from charging sick people more than healthy people, required plans cover certain essential health benefits, and set rules for how generous insurance coverage must be and how much plans can ask customers to pay out of pocket. Under Graham-Cassidy, states would have very broad discretion to undermine or eliminate those rules.

The bill “amounts to launching a cannonball into the insurance pool and then claiming it won’t cause a splash or make anyone wet,” John Graves, a health policy professor at Vanderbilt University, told me. “This is a radical restructuring of the insurance market, with predictable consequences and probably an endless list of unintended consequences.”

Under Obamacare, insurers had to sell the same insurance at the same price to everybody, with a federal requirement that people buy insurance meant to ensure that healthy people would buy plans. Graham-Cassidy, though, would allow states to split their insurance markets, and insurers could offer different plans at different prices to attract healthy people, who might prefer skimpier plans, and sick people, who need more comprehensive coverage.

Experts had previously warned that breaking up the market that way would lead to skyrocketing costs for sicker people. Conservatives have argued it would be better to segment the market and then funnel federal money to help cover costs for people with a significant medical history, rather than requiring health plans to charge sick and healthy people the same amount, which increases costs for the latter group.

The federal government would also have little oversight of how much states could undo Obamacare’s regulatory regime. The bill does require states to submit a plan, explaining how they would provide adequate and affordable coverage to people with preexisting conditions, but that is the extent of its requirements, experts say.

“The ‘shall’ in the state plan is that the state shall submit a plan,” David Anderson, who previously worked in the insurance industry and is now at Duke University, said. “It does not define what is needed in that plan or consequences or courses of action that can be taken if that plan fails to meet its objectives.”

The bill would cut federal health care spending and overhaul Medicaid

Graham-Cassidy would repeal the funding Obamacare spent to expand health insurance coverage — tax credits for middle-income Americans, the cost-sharing reduction subsides for low-income Americans, and the Medicaid expansion in 2020. 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 new health care programs that must be set up in the next two years.

Under Obamacare, this money has to be spent on providing health insurance. Under Graham-Cassidy, it can be spent on other things. States would be allowed to set up high-risk pools for people with high medical costs, they could pay providers directly for health care services, or they could help people buy insurance.

Through a complex funding formula — including things like population density, percentage of population in poverty, and other factors — the bill would divvy up this money between the states, which would then decide how to put it to work.

The result would be a net decrease to federal spending — $215 billion by 2026, according to one estimate — with states that expanded Medicaid under Obamacare facing the deepest cuts and states that refused to do so seeing increased funding. The funding also expires after 2026 and would have to be reauthorized then.

Otherwise, the funding cuts would be catastrophic, removing hundreds of billions of dollars — trillions, eventually — from the US health care system.

Javier Zarracina / Vox

Graham-Cassidy also fundamentally overhauls Medicaid, placing a federal spending cap on what had previously been an open-ended entitlement. That alone would slash more than $100 billion in Medicaid spending in the next 10 years, according to independent estimates.

Javier Zarracina / Vox

Republicans are getting desperate as they struggle to find the votes

The original version of Graham-Cassidy lacked the votes to pass. Senate Republicans are using the “budget reconciliation” process to move the bill with 50 votes instead of the usual 60, but that still requires 50 of the 52 Republican senators to agree on a plan.

They are also facing an important deadline: The current reconciliation privileges expire on September 30. After that, Senate Republicans would have to at the very least pass a new budget resolution to jump-start the repeal debate again.

The original version of Graham-Cassidy looked dead in the water, with at least four likely “no” votes:

• Sen. John McCain (R-AZ) said he would oppose the bill and called for a return to regular order and bipartisanship.
• Sen. Rand Paul (R-KY) has repeatedly said he opposed the bill because it kept much of Obamacare’s funding through the block grants.
• Sen. Susan Collins (R-ME) said she couldn’t see herself voting for the bill, given the rollback of protections for preexisting conditions and the Medicaid cuts.
• Sen. Ted Cruz (R-TX) said he opposed the initial bill, likely because it didn’t go far enough to roll back Obamacare’s insurance rules.

Sen. Lisa Murkowski (R-AK) hadn’t taken a definitive position on the bill, saying she wanted to review how it would affect Alaska’s funding. But she opposed every repeal plan so far, and outside estimates, including those from the Alaska government, have projected significant funding cuts for the state.

The revised Graham-Cassidy likely starts with two Republican “no” votes: McCain’s concerns about process have not been addressed, and Collins has made protections for preexisting conditions and Medicaid cuts a line in the sand for her. That means it can’t afford to lose any other Republican senators.

The bill includes blatant funding boosts for some of the holdouts. Alaska is the target of several provisions:

• $500 million for states that have set up an Obamacare waiver program — a provision likely directed at Alaska, which set up a reinsurance program through the law’s waiver program.
• Additional federal Medicaid funding made available to certain high-poverty states, which also appears directed to Alaska.
• One-fourth of an $11 billion contingency fund, available in 2020 and 2021, is reserved for “low-density” states like Alaska.

Nevertheless, internal Senate Republican estimates project Alaska would still see a $100 million federal funding cut by 2026 under the block grant — though the estimates argue that because the state would save money on its share of Medicaid expansion, the state would see a net 3 percent bump in funding. (It should also be noted that the GOP’s internal estimates have been rosier than those from outside groups.)

Murkowski has also opposed scaling back the protections for preexisting conditions and ending Obamacare’s Medicaid expansion, both of which Graham-Cassidy would still do.

On the conservative side, Cruz might be appeased by the further rollback of Obamacare’s insurance rules, but Paul does not appear to be. He has been fixated on Graham-Cassidy’s block grants, arguing that they amount to keeping 90 percent of Obamacare.

The Kentucky senator indicated to the Washington Post over the weekend that he could support the bill if the block grants were cut in half, but the latest version of the bill does not take such drastic steps.

Paul, accordingly, still opposes the bill.

So Graham and Cassidy are still tinkering, searching for some sweet spot that gets them to 50 votes by the end of September. But despite further gutting of Obamacare’s insurance rules and some direct buyoffs for key swing votes, they still don’t appear to have a majority.

They have five days to keep working at it.

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