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Cassidy-Graham’s Harmful Impacts on Alaskans Can’t Be Fixed

September 22, 2017 at 4:00 PM

Senators Bill Cassidy and Lindsey Graham have reportedly spent the last several days modifying their Affordable Care Act (ACA) repeal plan, including to add additional resources for Alaska. But no last-minute changes can alter the fact that Cassidy-Graham harms Alaskans — as well as people in every other state.

1. Every independent analysis has found that Cassidy-Graham would cut Alaska’s funding for coverage in the near term and even more dramatically in the long term, even taking into account the supposed “Alaska fixes” already in the bill.

  • An analysis released by the Alaska Department of Health and Social Services (prepared by Manatt) found that Alaska would lose $1.1 billion in federal funding through 2026. The report concludes, “Graham-Cassidy requires sweeping changes that go beyond earlier ‘repeal and replace’ bills and pose unique challenges for Alaska.”
  • The Centers for Medicare & Medicaid Services Actuary found that Alaska would lose $234 million in 2026, a 38 percent cut compared to current-law funding for the ACA’s Medicaid expansion and marketplace subsidies.
  • The Kaiser Family Foundation found that Alaska would lose almost $1 billion through 2027.
  • CBPP estimated that Alaska would lose $255 million in 2026 alone, a cut of more than 35 percent compared to current-law funding for Medicaid expansion and marketplace subsidies, with the cut growing to $844 million in 2027.

While these different analyses focus on different time periods, they unanimously conclude that Alaska would see reduced federal resources due to the bill.

Importantly, these estimates take into account Cassidy-Graham’s exemption of Alaska and four other low-population-density states from the bill’s Medicaid per capita cap through 2026. Even with that exemption, Alaska would face large, near-term funding losses due to the funding formula under the block grant that it creates, which penalizes states like Alaska that expanded Medicaid under the ACA or have high health care costs. And after the exemption ended, Alaska would face the same deep cuts to Medicaid funding outside the ACA — which pays for care for seniors, people with disabilities, and families with children — as the rest of the country.

2. Even if Cassidy and Graham added more funding for Alaska, their plan would still hurt Alaskans.

Some of the plan’s harm results from its huge funding cuts. But much of it results from the plan’s restructuring of federal health programs to eliminate protections for vulnerable groups (including people with pre-existing conditions), make federal funding less responsive to need, and create massive uncertainty in both the individual market and Medicaid. Adverse effects that additional funds for Alaska’s block grant simply can’t address include:

  • Massive near-term disruption, with Alaska left to pick up the pieces. Cassidy-Graham would eliminate the ACA’s Medicaid expansion and support for individual market consumers as of January 1, 2020. That means that states would have just two years to create new coverage programs for low-income adults and completely restructure their individual market for health insurance. The likely result would be massive disruption, probably including large premium increases and insurer withdrawals for individual market consumers, as well as coverage losses and coverage gaps for low-income people now covered through the Medicaid expansion.

    As the bipartisan National Association of Medicaid Directors explained:

    The scope of this work, and the resources required to support state planning and implementation activities, cannot be overstated. States will need to develop overall strategies, invest in infrastructure development, systems changes, provider and managed care plan contracting, and perform a host of other activities. The vast majority of states will not be able to do so within the two-year timeframe envisioned here, especially considering the apparent lack of federal funding in the bill to support these critical activities [emphasis added].

    Or, as Becky Hultberg, the President and CEO of the Alaska State Hospital and Nursing Home Association, put it more simply: “It would be 50 states of chaos.”

  • Inadequate funding for coverage in the face of recessions, public health emergencies, or other unexpected costs. Even without net funding cuts, the Cassidy-Graham block grant would probably make it impossible for Alaska to maintain its current coverage programs. Under the block grant, Alaska’s federal funding for coverage would be capped, meaning that Alaska would bear the full cost of any increases in the number of people needing coverage — for example, during a recession — and the full cost of premium spikes, public health emergencies, or excess health care cost growth in Alaska compared to the rest of the country.

    Particularly given the state’s persistent budget problems due to low oil prices and declining oil production, Alaska would be highly unlikely to assume this much risk. That means it probably couldn’t continue offering Medicaid coverage to all low-income adults who need it. Nor could it likely continue offering tax credits that adjust as needed to shield most individual market consumers from premium increases.

  • Ending protections for people with pre-existing conditions. Cassidy-Graham lets states obtain waivers of the ACA’s consumer protections, including those preventing insurers from charging higher premiums to people with pre-existing conditions and requiring all plans to cover a set of “essential health benefits” such as maternity care and mental health treatment. Alaska didn’t adopt these protections before the ACA, and it would be under significant pressure to revert to its pre-ACA rules due to Cassidy-Graham’s disruption of the individual market and the difficulty of replacing the ACA’s premium tax credits. By eliminating these protections, Alaska might be able to at least keep premiums manageable for young, healthy people, but at the expense of putting coverage out of reach for many older and sicker people.
  • Massive long-term cuts to coverage programs. No special deal will change the fact that Cassidy-Graham’s block grant ends altogether after 2026. At that point, Alaska — like all other states — would be left without any federal funding to cover low-income adults or moderate-income families who don’t get coverage through their employer. That funding cliff could also have near-term implications: for example, Alaska policymakers may be wary of establishing a new coverage program using block grant funding given the block grant’s scheduled end after six years.

    In addition, once Alaska’s exemption from the Medicaid per capita cap ends after 2026, over 150,000 seniors, people with disabilities, pregnant women, and families with children covered by the state’s longstanding, pre-ACA Medicaid program could face cuts in coverage and benefits.

3. Special deals put Alaska’s future at risk. As Senator Lisa Murkowski explained, “This is like a really big deal to get this right for the country. Let’s just say they do something that’s so Alaska-specific just to quote ‘get me.’ Then you have a nationwide system that doesn’t work. That then comes crashing down and Alaska’s not able to kind of keep it together on its own.”

Special deals attract criticism from policymakers from other states; even if enacted into law, they can easily become targets for repeal in future legislation, especially if policymakers are looking for ways to save money in order to finance other priorities.

But even more important, as Senator Murkowski notes, Alaska’s health care system is intertwined with the rest of the country’s. The only way to ensure that coverage programs work well for Alaskans in the long run is to establish a system that works for the rest of the nation as well.

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