This morning, Avalere, a health-care consulting firm, released an analysis of the Graham-Cassidy-Heller-Johnson bill, the repeal-and-replace legislation that represents the GOP’s last, best shot of dismantling the Affordable Care Act. Against all odds, the bill has been gaining some momentum in recent days, although there remain enough potential holdouts—most notably, John McCain (R-Arizona), Lisa Murkowski (R-Alaska), Susan Collins (R-Maine), and Rand Paul (R-Kentucky)—to kill the bill.
The new Avalere report may give at least some of those holdouts further reason to withhold their support. The report concludes that the Graham-Cassidy proposal would reduce federal funding to states by $215 billion by 2026, and by over $4 trillion by 2036. The legislation would also disproportionately harm certain states by reducing funding for those that expanded Medicaid and/or enrolled large numbers of people in exchange plans, and redistributing that funding to those that did not. Or, in Rand Paul’s words, “the formula was just taken arbitrarily out of space—mostly to take money from more Democratic states and give it to Republican states.”
The map below, from the Avalere report, illustrates what that would mean for each state in 2026:
Overall, 34 states and Washington, D.C., would see funding cuts, while only 16 states would see funding increases. While blue states like California, New York, Washington, and Oregon would be hard-hit, a number of states represented by Republican senators would also see significant funding declines. Federal funding for Alaska, for example, would decline by 11 percent (or $1 billion) in 2026, as compared to under current law. Likewise, Arizona would see an $11 billion (or 9 percent) decline.
What’s more, these funding declines grow over time, since the block grant technically expires in 2026 (although the proposal’s advocates argue it could be renewed) and the bill’s Medicaid per-capita caps grow more slowly than Medicaid spending itself is expected to grow. The Avalere analysis projects that, by 2036, every state would see a reduction in federal funding, as compared to current law. The map below, also from the report, illustrates federal funding declines between 2020 and 2036:
As with previous legislation, this bill would transition federal funding for the Medicaid program, which is currently open-ended, to a capped per-capita system. This change would have dramatic effects for even the traditional Medicaid population, as the chart below illustrates:
By 2036, federal funding for children and adult Medicaid recipients would decline by 31 percent and 37 percent, respectively, as compared to current law.
Because of the tight timeline, the Congressional Budget Office is expected only to produce an analysis of whether the legislation meets reconciliation rules, but not a detailed projection of the legislation’s effects on coverage or premiums. The Avalere report also doesn’t address these outcomes, but the report’s authors did include a reminder of the CBO’s previous findings on how these types of waivers would affect those with pre-existing conditions. “CBO previously estimated that similar flexibilities to those in GCHJ would lead to lower average premiums, largely due to the reintroduction of medical underwriting and coverage of fewer services, and potentially higher enrollment in some states,” the report’s authors write. “However, CBO also projected this flexibility to substantially increase costs of those individuals with significant medical costs and those who would be at risk of medical underwriting.”
At this point, the bill’s prospects remain murky. There are those aforementioned holdouts, for one thing. And on Tuesday, a bipartisan group of 10 governors sent a letter to Senate leaders opposing the legislation. Health-care industry groups also seem to be virtually united against the proposal. The White House and Senate leadership reportedly expect to spend the remainder of the week lobbying holdouts.
