North Carolina would get billions less from the federal government for health insurance coverage if the latest Republican proposal to repeal and replace the Affordable Care Act becomes law, according to three studies released this week.
The bill, sponsored by Sen. Lindsey Graham, R-S.C., and Sen. Bill Cassidy, R-La., would redirect money that is currently provided to individuals to subsidize the cost of premiums and to states that expanded Medicaid and send it to all states in the form of block grants. It removes the individual mandate to buy health insurance and certain mandates on businesses to provide insurance, but it does not repeal the majority of taxes in place under the Affordable Care Act, also known as Obamacare.
The new bill also converts federal funding for traditional Medicaid from an open-ended program to a capped one. About 2 million North Carolinians use Medicaid; more than half are children. The insurance also covers some of their parents, the elderly and the disabled. The federal government pays about two-thirds of the cost, with the state picking up the rest.
The proposed legislation faces an uncertain future in the Republican-controlled Senate, which must pass it by Sept. 30 to take advantage of a procedural move that allows it to pass with just 51 votes. North Carolina Sens. Richard Burr and Thom Tillis plan to vote for the legislation. Both voted for a repeal-and-replace plan the Senate rejected this summer.
“I’m for everything that gets us to solving the Obamacare problem — and it’s a problem,” Tillis said last week. “It’s a good step. I’ve said repeatedly the bill that we had on the floor in August was only one piece in a multi-step process that we’re going to go through. This bill doesn’t solve it. It just puts it on footing that I think is more likely to get us to a solution.”
The tight deadline means that the Congressional Budget Office is unlikely to produce a comprehensive report on the impacts of the legislation to premium prices or the number of people covered. Outside groups, however, have been studying the legislation.
The bill would result in North Carolina receiving $8.1 billion less from 2020 to 2026 than under the current law, according to the Kaiser Family Foundation.
Kaiser found that federal funding overall would be reduced by $160 billion.
The Center on Budget and Policy Priorities, a left-leaning think tank founded in 1981 to analyze government budgeting with a focus on the impacts on low-income Americans, found the bill would reduce federal spending by $243 billion, including $80 billion in 2026 alone. The budget center pegged North Carolina’s share of that one-year loss at $1.1 billion.
The bill tends to advantage states that did not expand Medicaid under the Affordable Care Act because it takes money from the states that did expand Medicaid and redistributes it. North Carolina, which did not expand Medicaid, is an outlier among Southern states, according to the budget center.
While many of its neighbors – including Georgia, Tennessee, Virginia and South Carolina – would see an increase in federal funding, North Carolina would not, according to the center.
“It’s largely because North Carolina, like Florida, has done really well with marketplace enrollment,” said Edwin Park, the vice president of health policy for the budget center – referring to enrollment in the exchange where people can buy individual health insurance policies and receive subsidies based on income.
More than 549,000 people enrolled in North Carolina’s exchange during the latest enrollment period, at the end of 2016.
“It’s moving money from expansion states to non-expansion states as well as states that have done really well with marketplace enrollment to states that haven’t,” Park said.
Avalere, a health research firm, found that the Graham-Cassidy legislation would lead to a $215 billion reduction in federal funding to states by 2026. According to Avalere, North Carolina would receive $1 billion less in funding from 2020 to 2026.
“States would have broad flexibility to shape their markets but would have less funding to subsidize coverage for low- and middle-income individuals,” said Carolina Pearson, senior vice president at Avalere.
Republicans have advocated repealing the Affordable Care Act since it passed in 2010, but the 2016 election results, which gave them control of Congress and the presidency, offered their first realistic chance to dismantle the system. The House passed a repeal-and-replace bill earlier this summer, but the Senate has been unable to find the votes for any iteration of repeal or repeal-and-replace.
Graham-Cassidy is their last, best chance, this year at least, to deliver on their campaign promises.
The bill would shift decisions to state leaders such as those in the North Carolina legislature – both on spending and on whether to continue prohibitions on charging people more because of their pre-existing medical conditions.
“Obamacare dramatically increased health insurance premium costs for North Carolinians and generated hundreds of millions of dollars in unfunded Washington spending mandates that diverted our state's tax dollars from priorities like increasing teacher pay,” North Carolina Senate leader Phil Berger said in a statement. “It is far too early in the process to comment on how a final Obamacare repeal bill might impact the state budget, but ending the catastrophic Washington takeover of health care is good policy.”
Many outside groups have opposed the legislation, including AARP.
The proposal puts health care for older people at risk, said AARP National President Eric Schneidewind, who was in Raleigh this week.
Medicaid supports two-thirds of spending on nursing home care, he said in an interview. Forty percent of people older than 50 have pre-existing conditions, he said.
He called the proposal “a serious, if not the most serious, that we have seen.”
The Blue Cross Blue Shield Association is against the bill. Blue Cross Blue Shield is the largest health insurance provider in North Carolina.
“Although we support providing states with greater flexibility in shaping health care options for their residents, we share the significant concerns of many health care organizations about the proposed Graham-Cassidy bill,” Blue Cross Blue Shield said in a statement.
“The bill contains provisions that would allow states to waive key consumer protections, as well as undermine safeguards for those with pre-existing medical conditions. The legislation reduces funding for many states significantly and would increase uncertainty in the marketplace, making coverage more expensive and jeopardizing Americans’ choice of health plans. Legislation must also ensure adequate funding for Medicaid to protect the most vulnerable.”
News & Observer staff writer Lynn Bonner contributed to this report.