While the new Senate Affordable Care Act (ACA) replacement bill, the Better Care Reconciliation Act (BCRA), is now unlikely to make it to a vote, the Republicans are still interested in dismantling the ACA. Despite the signs that a replacement bill may not be coming in the immediate future, it is still important to understand the potential effects of a bill like the BCRA, which encompasses many of the concepts Republicans are looking for in an ACA replacement bill. The BCRA would have many negative effects on the healthcare industry and the American public.
One area that would be greatly harmed by the bill is Medicaid. Medicaid serves millions of Americans who are low income, disabled, elderly, and children. In 2015, Medicaid provided health coverage for 97 million low-income Americans over the course of the year . Medicaid provides vital coverage to many vulnerable people, for instance Medicaid covers 62% of nursing home residents .
The BCRA would greatly cut funding to Medicaid and lead to an additional 15 million uninsured from the Medicaid population . On top of the negative effects of the BCRA on Medicaid, two thirds of the American people oppose major reductions to Medicaid as part of a plan to repeal and replace the ACA .
The BCRA would convert Medicaid funding to a per capita cap system. Medicaid currently pays states a percent of all Medicaid enrollee’s bills on an unlimited basis. In a per capita cap system, the federal government would give states a set amount of money for each enrollee, this amount would vary for the different groups of Medicaid enrollees (e.g. disabled, children, etc.). Growth over time of this set amount per enrollee would be tied to the Medical Consumer Price Index plus one percentage point through 2025, and then would be tied to the overall Consumer Price Index. Typically, Medicaid spending grows faster than these growth rates, especially the overall Consumer Price Index, which currently is almost 50% lower than the Medical Consumer Price Index .
In addition to switching to a per capita cap system, the bill would cut Medicaid expansion funding. The bill would begin cutting expansion funding in 2021 and by 2024 states will have the same match rate they typically have to cover other populations. Funding will be cut in phases so in 2021 it will be 85%, 2022 it will be 80% and 75% in 2023 . It is very likely that many of the 32 states (including Washington D.C.) that participated in Medicaid expansion would eliminate coverage for expansion adults.
Through cuts and caps, the CBO reports that federal Medicaid funding in 2036 would be about 35% below where it would be under the current law . This amount is enormous and would have crippling effects on states. One study estimated that this would mean that California alone would lose between $37 and $52 billion between 2020 and 2027 .
Medicaid cuts and caps would adversely affect all states but some states would be hit harder. While states can try to save money in certain areas, there are many factors that affect states’ ability to respond to cuts and caps. Many of these factors are out of the control of state governments or cannot be mitigated without sufficient funding.
There are measures states could use to manage their budgets in order to cope with per capita caps, but each measure comes with major challenges and drawbacks . Some measure include:
- States Can Raise Taxes or Make Other Budget Cuts
- Reduce Benefits Not Required by Statute
- Limit Coverage of High Cost Enrollees
- Reduce Provider Rates or Implement Delivery System Reforms
- Implement Policies to Promote Personal Responsibility or Skin in the Game
Read about what these measures entail and their challenges here: http://www.kff.org/medicaid/issue-brief/no-easy-choices-5-options-to-respond-to-per-capita-caps/
The bottom line is that the BCRA would have extensive negative effects on Medicaid programs across the country and adversely affect millions of Americans.