5 Obamacare Changes States Want, Ranked From Most to Least Likely to Pass

Although many governors oppose the latest repeal bill, it has some of what they've asked for.
by | September 15, 2017
From left: Sen. Bill Cassidy, Sen. Dean Heller, Sen. Lindsey Graham and Sen. Ron Johnson hold a news conference to unveil legislation to reform health care. (AP/Andrew Harnik)

*Update on Sept. 22 at 2:46 p.m. EST: U.S. Sen. John McCain announced his opposition to the Graham-Cassidy bill on Friday, likely killing the latest effort to repeal Obamacare. In his statement, he again called for a bipartisan compromise.

After attempts to repeal the Affordable Care Act (ACA) this summer failed, the Republican-led Congress is trying again to kill President Obama's signature law.

The Graham-Cassidy bill calls for eliminating Medicaid expansion, medical device tax credits and subsidies, and using all that money instead for block grants, which would give states more flexibility but less funding.

Its chance of passing before Sept. 30 -- the end of the fiscal year and the end of the ability to pass legislation with a simple majority -- is uphill but possible. A vote has yet to be scheduled, and the nonpartisan Congressional Budget Office has said that it won't have time to analyze its full impact before a possible vote happens. The measure needs the backing of at least two of the three senators, including John McCain, who opposed the GOP’s last attempt at repeal. Some say the fact that Arizona Gov. Doug Ducey endorsed the bill may sway McCain to support it, too.

But more governors have come out against the bill. A bipartisan group of 10 governors as well as leading stakeholder groups, like the American Medical Association, the American Hospital Association and AARP, have all urged Congress to reject it.

Before the scene-stealing move by Sens. Lindsey Graham and Bill Cassidy, there was a bipartisan debate about how to alleviate some of the law's problems with a lot of advice coming from the states. The U.S. Senate Committee on Health, Education, Labor and Pensions (HELP) held a series of hearings this month to get the opinions of governorsstate insurance commissioners and other health-care stakeholders. In addition, a bipartisan group of governors sent Congress a letter this month outlining their ideas for reform

That effort now appears to be dead -- though Democrats are still hopeful it will be revived.

“I am disappointed that Republican leaders have decided to freeze this bipartisan approach,” said U.S. Sen. Patty Murray in a statement on Tuesday. “But I am confident that we can reach a deal if we keep working together.”

Taking the latest developments into account, here's a breakdown of what state leaders have asked of Capitol Hill during hearings and in letters, from most to least likely to pass.

 

End the Medical Device Tax (Most Likely)

An unpopular tax from the beginning, it seems inevitable that 2.3 percent tax on medical devices introduced by the ACA will soon go away -- whether the repeal bill passes or Congress comes up with a compromise.

While the prices of medical devices have actually gone down, a 2015 Senate report found that the industry would be better off without the tax.

Utah Gov. Gary Herbert listed it as one of his major recommendations, and the Graham-Cassidy-Heller-Johnson bill kills it. But that doesn’t mean that everyone thinks eliminating it is the best idea.

“The idea that a 2.3 percent tax is killing the industry is just not fact. Someone needs to take a real hard look at their profitability before and after the tax and see if it makes much of a difference,” says Tim Jost, a professor emeritus in health law at Washington and Lee University.

He concedes, however, that “when you’ve got Sen. Elizabeth Warren and Sen. Al Franken supporting a tax cut, it’s got a pretty good shot.”

 

More Flexibility and Control (More Likely)

This is also an area where state officials and Republicans in Congress agree.

The repeal bill would give states far greater control over health care with the creation of block grants. But even if that doesn't pass, Congress could streamline the federal waiver process that grants approval to states to tinker with policies that officials believe will better work for their populations.

The process of getting a waiver approved right now is strenuous, often taking months -- sometimes up to a year -- to complete. For example, Kentucky submitted a waiver last October asking for permission to implement more work requirements in their Medicaid program. The waiver is still pending. 

This change would likely give GOP states more freedom to implement conservative ideas, such as work requirements and charging Medicaid recipients premiums. It would also allow states to more easily adopt industry-backed administrative reforms.

“States should not be limited by yesterday’s standards,” says Matt Salo, executive director of the National Association of Medicaid Directors in a conference call Thursday.

He says the association supports waiver reform that makes the approval process more efficient, allows states to piggyback on common waivers and creates a path for some waivers to become permanent. (Right now, they are only good for a five-year period, then states have to reapply.)

Although it’s likely we’ll see some kind of waiver reform, it would take some time to iron out what a new bureaucratic process would look like.

 

Keep Funding Cost-Sharing Reduction Payments (Likely)

The fate of cost-sharing reductions (CSRs) has worried policy experts and insurers since the moment President Trump took office.

His administration has gone back and forth on whether or not it will fund those subsidies, which help insurers offer low-income people cheaper rates on the marketplace. The U.S. Department of Health and Human Services has issued statements saying they would fund CSRs, only to have President Trump later tweet that he would refuse to pay them.

The pressure from the health-care industry at large is intense, and every single one of the governors and insurance commissioners who testified -- even John Doak, the anti-Obamacare insurance commissioner from Oklahoma -- said that continued funding was necessary.

And yet, the latest repeal bill calls for an end to CSRs. But even if the Graham-Cassidy bill passes the Senate and gets a signature from Trump, cost-sharing reductions are likely to be funded at least until the bill takes effect.

 

A Federal Reinsurance Program (Less Likely)

Under a reinsurance program, the government covers the cost of the most expensive patients, so insurers are only on the hook for the reasonably healthy and incentivized to lower premiums for everyone. It's something on the wish list of every single governor who testified before Congress, each claiming that it would help them stabilize their own markets.

The Trump administration agreed to fund a reinsurance program in Alaska after the state initially funded its own and was able to slow growth in premiums from 42 percent to 25 percent. But other states are unlikely to get federal support.

U.S. Sen. Lamar Alexander, chairman of the HELP committee, was quick to dismiss it during hearings.

“States are free to set up their own reinsurance programs. There's nothing magic about the federal government setting up a reinsurance program,” he said.

And a federal reinsurance program definitely won't happen if the Graham-Cassidy bill becomes law.

 

Stop Cutting Outreach and Enrollment Funding (Least Likely)

In Ohio Gov. John Kasich and Colorado Gov. John Hickenlooper’s letter to Congress, they urged the federal government to continue funding outreach and enrollment efforts for the ACA. It's necessary, they argue, to getting those “young invincibles” in the marketplace and thus making the population healthier and less costly for insurers. 

The Trump administration slashed the advertising budget for open enrollment by 90 percent and cut the budget for “navigators,” people who help others sign up for coverage on the marketplace, by 40 percent.

“I worry that these decisions will result in fewer people enrolling and relatively fewer healthy people enrolling, exacerbating the issues that already exist in the risk pool,” said Pennsylvania acting Human Services Secretary Teresa Miller, who was formerly insurance commissioner of the state, in the hearings.

But if the repeal bill passes, there won't be any marketplaces to advertise for since the bill gets rid of them. And even if the bill doesn't pass, it's unlikely Congress will undermine the Trump administration on this.