Thirty-Five States to Lose Federal Funding under ACA Repeal Bill

The bill proposed this week by Senators Graham and Cassidy would repeal many provisions of the  Affordable Care Act and redesign the Medicaid program. Through 2026 the federal government would  provide each state a block grant in lieu of funding for Medicaid expansion and subsidies for health insurance purchased through the ACA marketplaces. Federal funding for Medicaid, absent the expansion, would be converted to a per capita cap basis, reducing federal expenditures over time. After 2026, the block grant would disappear. The bill would also eliminate consumer insurance protections of the ACA including prohibitions against annual and lifetime limits and underwriting practices related to pre-existing conditions.  

The Congressional Budget Office is expected to release its analysis of the bill’s impact next week. In the meantime, other analyses of the bill help explain how the bill’s provisions would affect federal funding coming to the states.

The Center on Budget and Policy Priorities charts the loss in federal funding to states between the bill’s implementation in 2020 and 2027, after the block grants end.  

The Center for American Progress estimated 32 million people would lose health insurance coverage in 2027 after the block grants to states end under the Graham Cassidy proposal. CAP also provides state by state estimates.

The New York Times Sept. 20 analysis calculates the funding change per person, based on the numbers of people currently in the Medicaid expansion programs in those states that have them and the numbers receiving ACA marketplace subsidies. In 35 states and the District of Columbia, federal funding after 2027 would decrease, ranging from a high of over $2,000 per person in Oregon to about $250 in Indiana. In fifteen states, all ones that did not adopt Medicaid expansion, federal per person funding would increase, from over $1,000 in Alabama, Kansas and Mississippi, to less than $250 in Virginia and Wisconsin.

The bill’s sponsors do not argue that some states would see reduced federal funding. StatNews reported yesterday, “Massachusetts will see the $8.68 billion it is set to receive in 2020 for its health care spending on some 772,000 people dwindle to just $3.41 billion by 2026, according to an analysis from Cassidy’s office.”

The drop in funding “gives strong incentives for the states to be more efficient with their program,” the Washington Post reported Ed Haislmaier, a senior fellow at the conservative Heritage Foundation, said of the Graham Cassidy bill. “That is, states may be able to maintain the ACA structure and regulations as long as they streamline operations.”

Governors have weighed in on the bill. A bipartisan group of ten governors sent a letter in opposition to the bill on Sept. 19. Fifteen Republicans governors have endorsed the bill, according to the Washington Post

The bill is expected to have a hearing next week before the Senate Finance Committee. The CBO analysis is also due next week. In order to pass with a simple majority, the bill must be adopted by the Senate by September 30 while the budget reconciliation rules are still applicable. 

Other analyses of the bill: