graham-cassidy

What is the Graham-Cassidy Healthcare Plan?

Graham-Cassidy is the GOP’s last breath in the partisan healthcare fight.

With budget reconciliation – the parliamentary procedure that allows the Republicans to overhaul the healthcare system with only 50 votes – expiring on September 30, the GOP has introduced and rallied behind one final attempt to repeal the ACA: The Graham-Cassidy bill.

What is Graham-Cassidy?

A healthcare bill introduced by Senators Lindsey Graham (R-SC) and Bill Cassidy (R-LA) along with cosponsors Dean Heller (R-NV) and Ron Johnson (R-WI).

What does it do?

It ends the Medicaid expansion



Graham-Cassidy eliminates the Medicaid expansion in which the federal government encouraged states to expand their Medicaid programs to cover individuals and families earning up to 138 percent of the federal poverty level.  Thirty-one states as well as the District of Columbia expanded Medicaid with the federal government subsidized at least 90 percent of new beneficiary costs.

Instead, the money once deigned for the Medicaid expansion would be reallocated as block grants for states to spend as they choose (funding would expire in 2027).  This means that states who accepted federal dollars to expand health insurance would lose money to states that resisted the ACA – it’s a redistribution from the states that helped residents afford health insurance either through Medicaid or helping people sign up for insurance through federal exchanges to resistant states that did not try to help residents afford health insurance.

Money given to states by Graham-Cassidy’s block grants would not need to be used to help residents afford care.



Graham-Cassidy also ends cost-sharing subsidies and the tax credits that helps low- and middle-income Americans pay for insurance premiums.

What about the individual and employer mandate?

Graham-Cassidy repeals the individual mandate to purchase coverage and offers no replacement to induce people to buy health insurance.

The individual may be unpopular, but it’s absolutely needed to make health insurance affordable.  Healthier individuals, those with relatively low expected medical spending, help subsidize costs for more expensive healthcare consumers.  Remove healthy individuals from the risk pool, as would happen without an individual mandate, and insurers would be forced to raise premiums to pay for an unhealthier and costlier universe of policy holders.

Couple ending the individual mandate with eliminating the ACA’s tax subsidies, and healthy individuals will have little reason to sign up for insurance; the failure to dilute risk would lead to a death spiral.  



What about preexisting conditions?

Graham-Cassidy allows states to ignore the ACA’s ban on preexisting condition discrimination.  In other words, Graham-Cassidy would let insurers charge those with preexisting conditions exorbitant rates that may price society’s most unfortunate entirely out of coverage.  This would, at best, bring healthy individuals back to the market, but even if it does, price discrimination would keep those who need health insurance most from affording it.

Graham-Cassidy does offer states a way out of this problem. It allows them to waive out of the Obamacare ban on preexisting conditions. This would give insurance plans the ability to charge sick people higher premiums, possibly excluding them from coverage altogether. That builds a market that functions well for healthy people but is terrible for sicker and lower-income Americans.



What does the CBO say?

We don’t know.  The CBO has yet to release a Graham-Cassidy score and it won’t before the September 30 reconciliation deadline.  Republicans may vote on a bill that touches 1/6 of the economy and with the potential to disrupt tens of millions of lives without knowing what the bill will do.

Independent analysis from the Center for Budget and Policy Priorities finds that Graham-Cassidy will provide “$239 billion less between 2020 and 2026 than projected federal spending for the Medicaid expansion and marketplace subsidies under current law” (italics original).

These estimates likely underestimate the destructive effects of Graham-Cassidy because the bill has a Medicaid per capita cap.  Block grants won’t adjust for higher costs related to recessions, “public health emergencies, new treatments, demographic changes, or other cost pressures,” leaving states on the hook for covering those costs.

Tens of millions would likely lose insurance.



Who loses?

“In 2026, the 20 states facing the largest funding cuts in percentage terms would be Alaska, California, Connecticut, Delaware, the District of Columbia, Hawaii, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Montana, New Hampshire, New Jersey, New York, North Dakota, Oregon, Rhode Island, Vermont, and Washington. These states’ block grant funding would be anywhere from 35 percent to nearly 60 percent below what they would receive in federal Medicaid expansion and/or marketplace subsidy funding under current law.”  These states all either expanded Medicaid or pushed for residents to sign up in the federal exchanges.


Anything else I should know?

Yes, Graham-Cassidy will greatly disrupt the health insurance market with the ability to collapse it in the long run.

In the short-term, all 50 states and DC would need to create their own coverage programs without guidance, standards, or administrative infrastructure.  Market rules would also have to change.  This means that come 2020, after the transition period has ended, insurers will not know what the individual markets in which they operate will look like.  Insurers, who make decisions based on risk pools and risk expectations, won’t have any idea what the risk pools would be.  They would, at best, increase premium rates to account for uncertainty and, at worst, exit the market entirely.

Ten years from now, in 2027, Graham-Cassidy’s block grants simply expire (as does the ability for states to opt-out of ACA preexisting condition protections).  “Insurers in all states would face a market without an individual mandate or any funding for subsidies to purchase coverage in the individual market yet be subject to the ACA’s prohibition against denying coverage to people with pre-existing conditions or charging people higher premiums based on their health status.  Many insurers would likely respond by withdrawing from the market, leaving a large share of the population living in states with no insurers, as CBO has warned about previous repeal-without-replace bills. ”



Will it pass?

Maybe.  It needs the support of 50 senators and right now it has around 48-49.

Who’s against it?

Rand Paul, though his rhetoric now matches what he said about the BCRA before he voted for it.

Who’s undecided?

Susanne Collins (R-ME), Lisa Murkowski (R-AK), and John McCain (R-AZ).

Who should I call?

The above senators and Shelly Moore Capito (R-WV).

 





3 thoughts on “What is the Graham-Cassidy Healthcare Plan?

  1. “The individual” [mandate] “may be unpopular, but it’s absolutely needed to make health insurance affordable.”

    What? Were you born only 7 years ago? If not, you know the above isn’t true. Health insurance was very affordable BEFORE ObamaCare destroyed it. The premiums were reasonable and the deductibles were very low, on average below $1,000, often $500 or less. Prior to ObamaCare, catastrophic health insurance was commonplace and very inexpensive for policies with higher deductibles, from $5,000 to $10,000.

    A full repeal of ObamaCare would make health insurance affordable again. What was and still is needed where the Federal Government might help… (though the Federal Government helping with anything is debatable)… are subsidized bare-bones policies to cover those who can’t afford basic coverage (struggling young families and self-employed), and subsidized high-risk policies for pre-existing conditions.

    Otherwise, the Federal Government needs to GET OUT of our healthcare and out of our lives, before they completely destroy what was once the greatest healthcare system in the world!

    1. You are so passionate and yet so ignorant. You have no facts right and clearly no understanding of how health insurance markets work. It’s shocking that you can delude yourself into truly believing nonsense at which even the most marginal student of healthcare policy would scoff.

  2. Sorry, but I worked in the medical field, specifically with benefits coordination, billing, etc. AND I routinely witnessed the denial of insurance coverage, treatment, meds, etc. Premium prices were not affordable unless 100% healthy. Even then, caps applied (fine print in policy), limiting the amount payable for meds, treatment, etc. The sad part is that people often did not know about caps until they had a medical issue. This must be stopped.
    The reason for the rise in cost and deductibles is attributable to rising medical costs, Insurance companies and even some employers. THOSE are the real culprits here. The ACA market is separate from the Employer Ins. Plan markets. The ACA regulations, consumer protections keep all of us from being taken advantage of by Ins. companies and/or priced out of Healthcare. WHAT really needs to be addressed is price gouging, lack of transparency with policies, deceptive, confusing policy wording, billing practices, etc. Let’s start there. ps. ever wonder who pays for the uninsured to be treated at Hospitals? Taxpayers! Hospitals receive subsidies to treat people who can’t pay. Subsidies are tax money. We all pay one way or the other.

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