The Centers for Medicare and Medicaid Services (CMS), a division within the Department of Health and Human Services (HHS), projects federal health care spending would be $18 billion lower in 2026 under the latest Republican health care bill than under current law. In all, 31 states would receive less federal money for providing their residents with health insurance.
The CMS estimate — first obtained by Axios — is more generous to the Graham-Cassidy bill than previous released estimates. For comparison, the left-leaning Center for Budget and Policy Priorities projected an at least $80 billion cut in federal health spending in 2026.
Bipartisan health care consulting firm Avalere told ThinkProgress they are not able to provide a year-by-year estimate at this time. Based on their reading of the CMS white paper paper, Avalere Policy and Strategy Senior Vice President Caroline Pearson said the estimate appears not to paint the full picture of reductions to federal funding. The estimate does not appear to include cuts to the overall Medicaid program, which kick in 2020. “The block grant component is comparable to our own estimates,” Pearson added.
The bill, first proposed by Sens. Lindsey Graham (R-SC) and Bill Cassidy (R-LA), would repeal the Affordable Care Act (ACA) marketplace subsidies and Medicaid expansion in 2020. The federal government would replace the previous funding stream and instead allow states to create their own block grant program. Proponents say by doing this, the bill would give governors more flexibility. But the formula is written in such a way that money is transferred from states that saw higher coverage gains under the ACA, which were predominately blue states, to those who saw lower gains, which were predominately red states. The greater flexibility also means states can roll back essential health benefits and allow insurers to raise premiums for sick patients or those with pre-existing conditions. The CMS estimate only appears to reflect the aforementioned changes.
Concurrently, starting in 2020, the proposal converts Medicaid — for low-income adults, children, elderly, and disabled — from a program that has an open-ended federal financing to one that is limited to a set amount per enrollee. This capped financing structure appears not to be accounted for in the CMS estimate, according to the Avalere expert.
According to Axios, these are the numbers, the Trump administration has been giving to Senate Republicans — who want to reduce federal spending — as the White House looks to gain their votes before the September 30 deadline.
Additionally, the CMS outlays appear only to estimate funding reductions in 2020 and 2026, and not provide an accumulative sum. The Kaiser Family Foundation found that overall federal funding under the new block grants would be $107 billion less than what the federal government would have spent under current law from 2020 to 2026.
The CMS white paper also neglects to include funding for 2027, when federal spending decreases exponentially. Starting in 2027, the Graham-Cassidy bill would make even larger cuts to the overall Medicaid program because the per capita caps growth rate falls. Avalere estimates that between 2020 and 2027, federal funding under the new block grants would be $489 billion less than under current health financing. Republicans, unwilling to commit to the GOP health bill, have said during past ACA repeal-and-replace efforts that they are concerned with cuts to the Medicaid program.
The Congressional Budget Office (CBO) will only be able to provide a preliminary estimate on the Graham-Cassidy bill. They will not be able to provide point estimates of the effects on the deficit, health insurance coverage, or premiums until after lawmakers are scheduled to vote — making the independent analyses that have come out so far that much more important.
Just two months ago, Republicans turned to HHS for a cost estimate on their other health care bill before the CBO could provide a comprehensive analysis. (For context, the CBO is an agency created to provide nonpartisan analysis for lawmakers so that they don’t turn to partisan groups — like think tanks and government agencies.) The health department’s review of the Better Care Reconciliation Act — with an amendment added by Senator Ted Cruz (R-TX) — left many health experts dumbfounded, who said the analysis was largely incomplete.
The CBO would not have provided state-by-state cost estimates, which HHS and other think tanks and health care groups did. The numbers dealt heavy blows to two key Republican lawmakers on the fence:
- According to HHS, Alaska — home to Sen. Lisa Murkowski — would see a 38 percent decrease in federal funds in 2026.
- According to HHS, Arizona — home to Sen. John McCain– would see a 9 percent decrease in federal funds in 2026.
The HHS analysis did give Sen. Susan Collins (R-ME), who has also expressed concerns about the Graham-Cassidy bill, some good news. Maine would see a 44 percent increase in federal funds in 2026. Murkowski and Collins — the two key Republicans who saved the ACA earlier this summer when the party pushed for repealing and replacing it — have largely opposed the Graham-Cassidy bill due to its deep cuts to Medicaid.
Avalere, meanwhile, has projected that by 2036, all states would see a decrease in federal funds relative to current law.
— Avalere Health (@avalerehealth) September 20, 2017
It still remains unclear whether Republicans can gain the 50 votes needed to pass the Graham-Cassidy bill, which will be voted on next week. If just two more Republican members oppose this bill, their latest effort at repealing and replacing the ACA will fail again. Currently, Sen. Rand Paul (R-KY) is the only Republican to repeatedly say he won’t vote for the bill.
This story has been updated to include new information by Avalere.