September 25, 2017

Graham, Cassidy just updated their bill—and experts are still figuring out what the changes mean

Daily Briefing

    Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.) on Monday released a revised version of their health reform bill (HR 1628), which would repeal and replace major parts of the Affordable Care Act and overhaul the Medicaid program.

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    According to Politico, the changes appear aimed at key Republican lawmakers who have expressed concerns about the bill—but experts have expressed confusion about the implications of the revisions, even as a possible Senate vote looms this week.

    Revised bill details

    The debate over pre-existing condition coverage

    One key change gives states greater flexibility to waive ACA requirements related to essential health benefits, number of risk pools, age rating, actuarial value, cost-sharing, and preventative services for individuals receiving assistance under the new market block grant program.

    But experts were uncertain on Monday morning about the likely effects of these changes—and, in particular, whether they would allow states to permit insurance companies to charge higher premiums to people with pre-existing medical conditions.

    The Washington Post's "PowerPost" reported that the revised bill "eliminates" the possibility for premiums to vary based on health status, while Axios reported that the revised bill gives states the authority "to decide how much insurers can charge people with pre-existing conditions."

    The confusion appears rooted in the complicated text of the bill, which Nicholas Bagley, a health law expert at the University of Michigan School of Law, in The Incidental Economist Monday described as "internally inconsistent." One section of the bill, he noted, would not permit states to waive "the basic obligation … that premiums can't vary" due to pre-existing conditions—but a separate section suggests that "states can allow insurers to vary their premiums, including on the basis of health status, so long as insurers don't discriminate on the basis of sex or genetics."

    Bagley said his "tentative view" is that insurers would not be able to vary premiums for individuals with pre-existing conditions, but he added, "Who knows?"

    Other regulatory changes

    According to Politico, other changes appear designed to enable provisions of the bill to pass the Senate's Byrd rule, such as a change that "establishes conditions for states receiving funding grants and making insurance market changes that are intended to comply with the parliamentarian's rules." Provisions flagged by the parliamentarian could be stripped out or subjected to a 60-vote threshold.

    Meanwhile, "PowerPost" reports that under the revised bill, states would be required to prove how their new health systems would meet various federal standards, including mental health care parity.

    Changes to state block grant funding

    The revised bill also includes several new provisions to increase the amount of block grant funding certain states would receive. The state block grants would be funded by federal money currently being spent on the ACA's Medicaid expansion, premium tax credits, and cost-sharing reduction payments to insurers.

    For instance, according to "PowerPost," one provision would direct $500 million in funding to states that have been granted so-called state innovation waivers under the ACA, while another would allocate about 25 percent of a $6 billion contingency fund to low-density-population states, such as Alaska—the home state of Sen. Lisa Murkowski, a Republican who is perceived to be a possible "no" vote on the bill.

    The revised bill also includes $750 million for states that expanded Medicaid after Dec. 31, 2015. The revised bill also alters the formula that would determine how state block grants are allocated. For example, the revised bill would implement the changes over the course of a decade, instead of providing funding from 2020 to 2026, as the original bill entailed. However, according to "PowerPost, the revised bill does not change the total sum the federal government would spend on block grants.

    According to Axios, the changes are expected to increase federal funding to Alaska, Arizona, Kentucky, and Maine. Maine is the home state of Sen. Susan Collins, another wavering Republican.

    Compared with current law, a state-by-state breakdown of revised federal funding projections released Monday by Cassidy show the bill would increase federal funding to Alaska by 3 percent, Arizona by 14 percent, Kentucky by 4 percent, and Maine by 43 percent. Oregon and Minnesota would see the biggest funding reductions, losing 17 percent and 15 percent, respectively, "PowerPost" reports.

    However, some industry experts say the revised funding projections are misleading because they do not account for funding cuts resulting from the bill's shifting of Medicaid to a per capita cap program.

    Citing the omission, Kaiser Family Foundation's Larry Levitt called the projections "pretty misleading." And Topher Spiro, a health analyst with the left-leaning Center for American Progress, said overall, Alaska, Arizona, Kentucky, and West Virginia would still receive less funding under Graham-Cassidy than they would under current law.

    Next steps

    Graham and Cassidy are expected to discuss the bill further Monday afternoon during a Senate Finance Committee hearing, but it remains unclear whether the changes will be enough to secure the votes needed for passage.

    With all Democrats expected to vote against the bill, Senate GOP leaders can only afford to lose two GOP votes, assuming that Vice President Mike Pence breaks the resulting tie.

    Sens. Rand Paul (R-Ky.) and John McCain (R-Ariz.) both came out against the original bill, and according to Politico, neither has changed his position in light of the revisions. And on Monday, an aide for Sen. Ted Cruz (R-Texas)—who had come out against the original bill on Sunday—said the senator was still not a "yes" on the revised measure.

    Among other key swing votes, Collins in an interview on Sunday said it was "very difficult" to see herself supporting the bill, and Murkowski has said she needed to review the bill's fiscal effects on her state. According to the Washington Post, neither Collins nor Murkowski as of Sunday night were available for comment on the revised bill (Pradhan/Diamond, Politico, 9/24; Goldstein/Eilperin, "PowerPost," Washington Post, 9/25; Sullivan et al., Washington Post, 9/24; Collins/Kelly, USA Today, 9/25; Owens, Axios, 9/25; Bagley, Incidental Economist, 9/25; Everett, Politico, 9/25; Owens, Axios, 9/25).

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