GOP's latest tweaks to Obamacare repeal leave bill's core intact

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A revised Republican bill to repeal Obamacare attempts to shift funding to sway holdouts but leaves the heart of the original legislation intact.

The changes would steer money to Alaska and Maine, the homes of senators Lisa Murkowski and Susan Collins, who have voted against previous repeal and replace legislation. And states would also get more flexibility to change insurance rules, a measure meant to entice conservatives. Yet the legislation would still reduce future spending on Medicaid and private insurance subsidies by billions of dollars, and let states set the rules for what insurers can charge and what they have to cover.

“They’ve made some minor changes to the funding formula, and they appear to have added some targeted pots of money for a few states, but the big picture of this legislation is the same as last week,” said Matthew Fiedler, a fellow at the Brookings Institution.

The bill, backed by Senators Bill Cassidy of Louisiana and Lindsey Graham of South Carolina, is opposed by doctors, hospitals and health insurers.

On Monday, the chairman of the Senate Finance Committee said passage of the GOP’s latest plan to replace Obamacare is “nearly impossible” because there’s no Democratic support in a chamber that’s narrowly controlled by Republicans.

“I’m not saying anything is impossible because we could always maybe work it out in the end, but so far I haven’t seen” anything to suggest that will happen, Orrin Hatch of Utah said in Washington.

Hatch is holding the chamber’s only planned hearing on the Graham-Cassidy proposal that takes federal health spending under Obamacare and Medicaid and provides grants to states. There are 52 GOP senators and, for the measure to pass, the party can only lose two Republican votes under special procedures that expire September 30. Several Republicans have already expressed opposition to the measure.

In order to gain support for the measure, Republicans tinkered with the legislation over the weekend. Here’s how the new changes work.

The Graham-Cassidy bill redirects Obamacare’s billions of dollars in funding to the states to use how they want. The changes move some of those dollars around.

The bill has a contingency fund worth $6 billion in 2020 and $5 billion in 2021, and a new breakdown of how the money would be given out sends more money to Alaska. It uses a new mechanism to reward low-population-density states—Alaska fits the criteria—even if they already expanded Medicaid under the law, which not all states did. Without the low-density provision, all Medicaid expansion states would get less funding than others.

There’s another $3 billion pot of money to be doled out from 2023 to 2026, this one for states that expanded Medicaid after 2015. Only Louisiana, Cassidy’s home state, and Montana expanded the program that late, according to the Kaiser Family Foundation.

“Expansion states that stood to lose significant amounts of ACA funds will get to that point more slowly, so that would benefit expansion states like Alaska, Arizona and Kentucky,” said Robin Rudowitz, associate director of the Kaiser Family Foundation’s Program on Medicaid and the Uninsured.

In the end, states are still expected to face large cuts because the Graham-Cassidy bill changes Medicaid funding to a fixed, per-enrollee amount from a set percentage of states’ costs. The move would reduce federal spending on traditional Medicaid by an estimated $175 billion over 10 years, according to the Center on Budget and Policy Priorities.

“This version is much starker than prior bills, in that it’s all about buying Republican votes,” said Leighton Ku, a health policy professor at George Washington University.

Changes meant to win over Senate conservatives such as Texas Republican Ted Cruz and Utah’s Mike Lee would permit states to allow insurance companies to provide plans with fewer benefits, while charging higher premiums to the sick or old.

Under the proposal, states could let insurers:

• Impose deductibles that are higher than the limits set by the ACA or remove the health law’s limits on the costs that an individual or family can have to pay in a year. Offer coverage that lacks some of the ACA’s benefits, such as maternity care, prescription drug or mental health coverage.

• Remove requirements that insurers cover preventive-health treatments and immunizations without cost to the customers.

States also can waive protections that bar insurers from charging more to people with pre-existing medical conditions, although the new bill makes an attempt to toughen the policy.

The revised bill says states will have to describe how their health plans “shall” maintain affordable, adequate insurance coverage for those people. That’s a change from the past version, in which a state had to say how it “intends” to make sure people with pre-existing conditions have access.

“The prior language was fairly toothless,” said Brookings’ Fiedler. “They have tightened up half the problem with the switch from ‘intends’ to ‘shall,’ but the standard that they have to achieve is incredibly vague, so I’m not convinced that this imposes meaningful constraints in practice.”

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