KY Policy Blog

Cassidy-Graham Bill is Latest Attempt to Unravel Kentucky’s Health Care Gains

By Dustin Pugel
September 15, 2017

The latest attempt to repeal the Affordable Care Act (ACA), known as the Cassidy-Graham bill, would cut Kentucky’s funding for low-income health care by $3.1 billion by 2026. That would be the 8th largest cut in the country, even though Kentucky ranks only 26th in the size of its population.

The bill would undermine health care coverage for millions of Americans in three main ways.

A block grant that squeezes funding for 10 years and then runs out

Perhaps the most devastating of the bill’s cuts would result from turning funding for both the Medicaid expansion and the marketplace subsidies into a block grant. This block grant would increase annually in the short term, but at a rate well below what is needed to pay for the rising cost of care, and would not adjust based on changes in population or health care emergencies.

Compounding this funding cut is the fact that under this bill, states that expanded Medicaid under the ACA would no longer be able to simply offer Medicaid coverage to people earning up to 138 percent of the poverty level, as they can under current law. Instead, they would have to start from the beginning and ask the federal government for permission, and continue to do so every five years. Under any expansion request under Cassidy-Graham, however, the restricted funding would force states to set up a far inferior program that either restricted benefits or limited eligibility.

In 2027, this funding would completely go away, leaving states with 100 percent of the cost for the people covered under these programs; which means in Kentucky would need to find a way to make up $6.9 billion every year. This cut would almost certainly leave states no choice but to discontinue offering affordable coverage options to low-income individuals.

In Kentucky, over 475,000 are covered by Medicaid expansion and 63,700 receive financial assistance for purchasing or using their marketplace coverage.

A permanent and ongoing cut to traditional Medicaid

For people covered under traditional Medicaid – primarily children, pregnant women, those with disabilities and very low-income seniors – the funding structure would change fundamentally from a flexible state-federal match to what is known as a per capita cap. A per capita cap would limit the amount a state receives from the federal government to a fixed amount per person enrolled in Medicaid coverage that is then adjusted more slowly than the actual cost of care. In doing so, this formula would put more burden on the state to pay for an increasing share of costs – ultimately leading to removing people from coverage, reducing benefits, cutting payments to health care providers or some combination of the three.

There are currently 945,500 Kentuckians covered under traditional Medicaid.

Changes to individual insurance that will make it more expensive or unavailable

The Cassidy-Graham bill would immediately eliminate the individual mandate requiring everyone to have some kind insurance coverage or else pay a fine, which the Congressional Budget Office estimated would result in 15 million more uninsured in the following year. These coverage losses stem from some healthy people deciding not to buy insurance but also from people who would no longer be able to afford coverage or find options as insurance companies either raise premiums or no longer offer individual policies. With the bill reducing funds for premium subsidies and cost sharing assistance until 2026 (when it would run out), insurers would find it difficult to justify continued participation in the marketplace. Ultimately, the market for individual insurance would be destabilized and purchasing insurance on and off the exchanges would become difficult or impossible, particularly in rural states like Kentucky.

Updated September 20, 2017.

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