Photo of Kentucky Republican Mitch McConnell speaking at the 2013 CPAC conference

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By Rose Hoban

After more than a month of anticipation, the U.S. Senate has presented its version of the bill to undo the Affordable Care Act. The proposal rolled out Thursday has some significant differences with the bill presented in the House of Representatives.

The Senate version – crafted in secrecy – would slash Medicaid, which covers about 2 million North Carolinians, eliminate the requirement that everyone carry health insurance, and pay for much of it by repealing many of the taxes that were incorporated in the ACA that mostly affected wealthy Americans and parts of the health care industry.

Who pays for Medicaid in North Carolina? Chart courtesy: NCGA Fiscal Research Division

Multiple media outlets report that Senate leader Mitch McConnell (R-KY) would like to bring the bill to the floor for a vote next week ahead of the July 4th holiday break, once the Congressional Budget Office has estimated the cost and impact.

“It’s a tax cut funded by cuts to Medicaid,” said Duke University health economist Don Taylor.

The bill repeals the tax on so-called Cadillac health insurance plans, taxes on over-the-counter medications, taxes on health spending accounts, repeals excise taxes on health insurance and  sunsets the tanning bed tax – all of the revenue streams that contributed to covering the costs of Obamacare.

Prospects for passage are uncertain, the 48-member Democratic caucus is united against the bill and now at least four Republican senators have indicated they will not vote for the bill. The bill would require at least 50 votes to pass, along with a tie-breaking vote by Vice President Mike Pence.

De-expanded

The Senate legislation, like the House bill, would phase out the extra money that the federal government has provided to states as an incentive to expand eligibility for Medicaid.

That would have little effect in North Carolina. For years, the legislature has declined to expand Medicaid the program to cover anywhere between 350,000 to 600,000 additional people, on top of the 2 million covered by Medicaid now. Nonetheless, an analysis from the Urban Institute found about 107,000 people will still lose coverage. These are people who realized they qualified for Medicaid when they attempted to sign up for insurance on the online exchanges.

One of the first things Gov. Roy Cooper did when he was inaugurated was to call for Medicaid expansion. But legislative maneuvers have stymied his efforts. Photo credit: Rose Hoban

After Roy Cooper was elected governor, he has pushed for expansion only to be successfully blocked in court by legislative leaders.

In recent months, though, some Republicans in Raleigh have softened, introducing a plan to make insurance more accessible to the working poor.

One of the sponsors of that bill, Donna White (R-Clayton) said she hasn’t had time to think about the implications of changes to federal policy in these frenetic waning days of the state legislative session which is slated to wrap up early next month.

The American Health Care Act, passed in May by the House of Representatives, would eliminate Medicaid expansion right away. This Senate bill would give non-expansion states a longer window to add enrollees than in the House version, but the federal government would pay a smaller portion of the cost starting in 2021 and fade out the benefits of expansion by 2024, when the expansion is repealed.

Taylor said that after that, the reductions to Medicaid get steeper than in the House plan, cutting about one-in-four dollars. But those cuts to the program phase in after the next presidential election.

Caps

The biggest change to Medicaid is to establish a cap on federal funding of Medicaid, allowing states to run their programs in a “block grant’’ format, beginning in 2021. Right now, the federal government matches state spending on the program. In North Carolina, that means the federal government pays two dollars for every one spent by North Carolina. Wealthier states get fewer federal dollars.

Under a block grant, however, the federal government would give states a set amount each year to spend as they wish. With North Carolina ranking 35th among states in Medicaid spending per enrollee, a capped structure would create a disadvantage by locking the state in at its historically low spending rate.

“There would not need to be so much seeking permission from federal administrators by states for what they want to do,” said former Health and Human Services Secretary Al Delia who now works as a health policy analyst at East Carolina University.

Delia said that block grants could be a powerful tool.

For example, he said, right now Medicaid pays for a child with asthma to get medications to treat his asthma, along with doctor visits. But under a block grant program, Medicaid administrators could use those dollars to help the same child’s family get an air conditioner, or a vacuum cleaner with a HEPA filter, to reduce dust and prevent asthma attacks.

“There’d be more flexibility in how you spend money,” Delia said. “The presumption is that a federal Medicaid block grant would unshackle the states from a lot of [federal] approvals and waivers and pilots so that states would do what they wanted to do to provide health care to whatever population of the residents of the state they’d want to.”

But Delia cautioned that with fewer dollars, there would be fewer people receiving services.

“We’re talking about 20 percent of this state’s population,” he said.

70 percent

“Medicaid equals kids,” said Scott St. Clair, a pediatrician from Boone who is the current president of the North Carolina Pediatric Society.

St. Clair, who works at the only pediatric practice in a three-county area, noted that 70 percent of Medicaid recipients in North Carolina are children.

How Medicaid enrollment and spending break down in North Carolina. ABD is short for “aged, blind and disabled” a group which also includes children. Data source: DHHS/ Division of Medical Assistance; Charts courtesy: NCGA Fiscal Research Division

“Any cut to Medicaid is a cut to kids, particularly lower income kids, particularly in more rural areas of North Carolina,” St. Clair said. “In our practice, we have close to 50 percent Medicaid population This will make it difficult for physicians in rural areas to continue to stay viable for the practice of pediatrics in rural areas.”

According to the Kaiser Family Foundation, to keep benefits at current levels, states could raise taxes, cut eligibility or benefits, or reduce provider payment as a response to the federal Medicaid reductions. The House bill is projected to cut more than $800 billion from Medicaid over 10 years. The Senate’s version would enact deeper long-term cuts to the program.

McConnell released the “discussion draft” of the bill today as he sent the actual bill to be scored by the CBO.

As in the House version, the Senate bill would allow young adults to stay on their parents’ health insurance plan until they’re 26 years old. And as in the House plan, older people buying insurance could pay as much as five times what younger people pay.

Those plans, though, could change profoundly. The bill allows for states to approve insurance plans that have annual and lifetime spending limits, and also allow for the sale of so-called “skinny” plans that can eliminate coverage for things such as maternity or mental health care. And although coverage of pre-existing conditions remains, the removal of constraints around out-of-pocket costs could make insurance plans for people with a pre-existing plan unaffordable.

Advocates for other patients around the state were quick to weigh in, even as they were trying to absorb what was in the bill.

Steve Hahn, head of the North Carolina chapter of AARP, noted that two-thirds of seniors in nursing homes rely on Medicaid to pay part or all of the cost of their care, as Medicare does not cover those long-term services or supports.

“The design of the plan will likely result in higher health care costs for older and sicker patients,” Hahn said.

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Rose Hoban

Rose Hoban is the founder and editor of NC Health News, as well as being the state government reporter. Hoban has been a registered nurse since 1992, but transitioned to journalism after earning degrees...

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