The Cassidy-Graham bill to repeal the Affordable Care (ACA) would eliminate the ACA’s Medicaid expansion and marketplace subsidies, replacing them with a temporary block grant to states. The block grant would not only cut total federal funding for coverage but also drastically redistribute funds across states. States that made the most progress in boosting coverage under the ACA — especially due to the Medicaid expansion — would lose disproportionately. But even states that get a short-term funding boost would eventually see funding cuts, and all states would suffer due to other aspects of the bill, including its Medicaid per capita cap, its removal of protections for people with pre-existing conditions, and the insurance market uncertainty the bill would cause. Ultimately, no state would win under Cassidy-Graham.
Moreover, under the per capita cap, states would have to cover 100 percent of unanticipated cost increases for Medicaid that are driven by, for instance, new breakthrough treatments or prescription drug price spikes. They’d also have to cover the cost increases that the cap doesn’t account for, like the aging of the population as the baby boom generation gets older and requires more health care and long-term services and supports.
In a letter this week, the National Association of Medicaid Directors explained that: “Taken together, the per-capita caps and the envisioned block grant would constitute the largest intergovernmental transfer of financial risk from the federal government to the states in our country’s history.” Most states wouldn’t be able or willing to absorb this much risk, especially with block grant funding ending after 2026. That means expansion states most likely could not continue to offer Medicaid coverage to all low-income adults who need it, and also that non-expansion states could not continue to offer individual market tax credits that adjust in size as needed to shield individual market consumers from premium increases.