Graham-Cassidy proposal: What you need to know

The latest Republican legislation attempting to “repeal and replace” the Affordable Care Act drafted by Senators Lindsey Graham (R-S.C.) and Bill Cassidy, MD, (R-La.), and thus deemed the Graham-Cassidy proposal, has gained growing disapproval from several health care organizations, including the AMA and the American College of Physicians.

Within the past week, the AMA and the American College of Physicians (ACP) sent separate letters to the Senators conveying their strong opposition to the bill, citing as main concerns the loss of health care insurance for millions of Americans and its failure to “first, do no harm” to patients. The associations also urged the Senate to reject the legislation and reiterated recommendations to ensure affordable, quality coverage that is accessible to all patients across the country.

Healio Internal Medicine spoke with Megan Foster Friedman, MPP, a health care research analyst from the Center for Healthcare Research and Transformation at the University of Michigan, to uncover the most significant changes proposed by the Graham-Cassidy bill and how it will affect physicians in practice. – by Alaina Tedesco

Question: What can health care providers expect from the Graham-Cassidy bill?

Answer: The Graham-Cassidy legislation is a complex bill, but it does seem fairly similar to the previous bills that the Senate considered earlier this summer, with a couple of major exceptions. Ultimately, the goal of this bill is to repeal and replace the ACA and make some very significant changes to the way the Medicaid program is structured overall. The goal of this bill is also very similar to the intent of the bills we’ve seen earlier this year, such as the Better Care Reconciliation Act and some of the other proposals being considered by the Senate.

What is a little different about the Graham-Cassidy proposal compared to the other repeal and replace packages is that one of the major provisions contained in this bill is a repeal of the ACA’s funding for cost-sharing reductions for those who are low-income and purchasing coverage on the individual market on the marketplaces. It would repeal the tax credits that are given out to low-income individuals to help them pay for their premiums for marketplace plans. It also eliminates federal funding for Medicaid expansion, which has been expanded in 32 states to date.

The bill takes funding for those three programs and eventually converts it into a block grant program for states. Under this program, states would essentially develop their own coverage programs, working from scratch to provide coverage to their residents.

States could use these funds for a variety of purposes, and, unlike the ACA, there is really no requirement to target these block grant dollars toward low-income individuals in helping them afford coverage. It is a pretty complicated formula by which the block grants would be determined and how states would become eligible for the block grants. In the end, it results in a very substantial cut in federal funding to states for both the coverage expansions that were launched under the ACA and also for Medicaid.

Not only would it eliminate Medicaid expansion and rule those funds into the block grant, it would also change the nature of traditional Medicaid, which was in existence before the expansion of Medicaid. The way that program is currently funded is states are responsible for a certain percentage of expenses under the program, and then the federal government matches those funds at a certain rate.

However, just like all of the other repeal and replace proposals we’ve seen so far, Graham-Cassidy would turn Medicaid funding into a per-capita cap system where states would essentially be given a single dollar amount per enrollee on Medicaid; those amounts would grow over time, roughly with the rate of medical inflation, which is a fundamental change in the way the Medicaid program is structured. This would mean that states would have a really hard time responding to cyclical economical changes that drive higher Medicaid enrollment — things like economic recessions, natural disasters and other events that could impact Medicaid enrollment.

In the end, when you combine per capita caps with this new block grant program, states end up getting far fewer dollars from the federal government to help their residents afford and get access to coverage, so it is quite a shift from the current law.

Q: What are the major concerns of the Graham-Cassidy proposal?

A: One of the main reasons why ACP is opposed to this repeal bill is that the organization is very concerned that these changes would result in millions of Americans losing access to coverage; loss of coverage is one of the major concerns with not just the Graham-Cassidy proposal, but also with all of the repeal and replace bills we have seen.

The ACA expanded coverage to millions of Americans by expanding Medicaid by offering financial assistance to individuals purchasing coverage on their own and not getting coverage through their employer, and all of these bills would very likely roll back the coverage expansions we’ve seen. Earlier this year, the Congressional Budget Office (CBO) estimated that the American Health Care Act, which passed the House in May, would result in 23 million more uninsured individuals over 10 years compared with the current law. Then, the Senate rejected the Better Care Reconciliation Act, which had very similar CBO estimates — 22 million more individuals would be uninsured by 2026 relative to current law.

The CBO has not yet scored the Graham-Cassidy bill, but I would imagine we would be seeing similar impacts on coverage. I think the lower federal funding to states could result in a substantial loss in access to coverage.

Q: How will the Graham-Cassidy proposal affect health care providers?

A: What the Graham-Cassidy bill means for providers is a number of things. The ACP would be concerned about the uninsured rate increasing as a result of these changes. We have seen that since the ACA expanded coverage in 2014, health care providers have reaped a number of benefits as a result. Notably, uncompensated care provided by hospitals has decreased substantially in 2014 when some of those coverage expansions went into effect.

If this bill led to a substantial loss in coverage, the uninsured rate would likely increase and that could increase the amount of uncompensated care hospitals have to provide. This is a reversal of the trends we have seen and it would also likely lead to premiums increasing across the board, even for individuals with employer coverage — that is one of the major impacts that this bill might have on the provider care community.

Another thing to keep in mind is that the per-capita cap system this bill would impose on the Medicaid program would put significant pressure on states to help keep costs low, because they don’t have the guarantee of a federal match for their Medicaid expenditures.

[States are] going to be looking at ways to contain costs and keep them as low as possible, and there are only so many ways they can do that: They can limit eligibility and try to limit the amount of people enrolled in Medicaid; they can limit the scope of benefits that are provided; or they can limit the rates they pay to providers to accept Medicaid to reimburse them for those costs. It i’with employer coverage — that’s possible we would see a reduction in provider payments or some other negative consequences as a result of per-capita caps.

Disclosure: Healio Internal Medicine was unable to confirm relevant financial disclosures at the time of publication.