A common refrain from Washington Republicans supporting the Better Care Reconciliation Act is that it "empowers states." Interestingly, no sitting governor has endorsed this legislation to repeal and replace the Affordable Care Act, aka Obamacare, without caveats. In fact, 30 governors have expressed concerns or outright oppose the bill, including 14 Republican executives.
It's easy to understand why. The details reveal that Republican senators want to pass a bill that cuts funding and then forces governors, rather than themselves, to make tough decisions about who gets what health care.
To explain, first, the GOP bill would create an annual and increasingly binding cap on the federal share of Medicaid spending. This per capita cap would reduce financing for virtually all enrollees: low-income children, individuals with disabilities, adults and seniors. It would do so in a one-sided way. The legislation would shift costs and risks from the federal government to state and local governments with no commensurate changes in federal program requirements.
As a result, this proposal would force states, rather than Congress, to make hard decisions. Governors would have to choose among slashing provider payments to levels that could jeopardize access to care, reducing benefits needed by vulnerable populations, scaling back who qualifies for coverage or raising taxes to prevent such cuts.
Second, the bill gives states the "choice" of continuing the health care law's Medicaid expansion. But this is a bait-and-switch. Because of reduced federal funding, it would cost states 2.8 to five times more to sustain such coverage, an almost unimaginable feat for states that must balance their budgets. And Congress' reneging on federal support for this expansion would cause eight states to immediately roll back coverage.
To put these Medicaid changes into perspective, the Congressional Budget Office estimates that the bill cuts three-quarters of a trillion from the program, equal to nearly every dime of marketplace subsidies. Such reductions cannot be managed with efficiencies alone. CBO projects 15 million people would lose Medicaid coverage by 2026, to say nothing of benefit and access reductions.
Next, let's look at Republican changes to the health insurance marketplaces. The Senate bill would reduce financial assistance for Americans buying coverage on the individual market by an estimated 84 percent in 2022. At the same time, it would eliminate the individual mandate – the requirement that people who can afford insurance either get it or pay a tax. Removing these two policies would knock out key features that encourage large enough enrollment in the insurance pool to support people with pre-existing conditions. CBO estimates that these changes would make offering insurance less profitable and cause people in rural areas to lose access to all marketplace plans.
As a result of the Senate bill, states would be forced to deal with Washington-induced problems. To facilitate this, the bill would allow states to waive popular consumer protections and benefits. For example, states could use state innovation waivers to limit what insurance must cover (i.e., maternity care or opioid addiction treatment) or raise the amount consumers pay before insurance kicks in. Insurers would likely demand such changes given congressional destabilization of the markets to regain young and healthy enrollees to offset a shrinking risk pool increasingly comprised of people who truly need health insurance. States could, alternatively, choose to reinstate the individual mandate or use state funding to replace the lost federal funding.
But to governors, these choices would range from bad to worse. If they reduce benefits or increase consumers' out-of-pocket costs, they would hurt people with pre-existing conditions. If they use state resources to reinstate federal policies, they would divert capital from other state priorities like education and transportation. And, if they did nothing, they would be blamed for insurers leaving the state altogether. That is hardly the type of "choice" promised to governors.
It's no wonder that governors have not embraced this bill. Congress would be removing funding and repealing the least popular parts of the health care law in order to give corporations and wealthy people tax breaks. In return, states would get the unenviable task of figuring out how to make the health system work with less support from Washington. As such, this legislation is less about federalism than about passing the buck.
Jeanne Lambrew is the former deputy assistant to President Barack Obama for health policy and currently is a senior fellow at The Century Foundation.
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