Health and Science

New Obamacare repeal bill could slash federal health funds to states by more than $4 trillion through 2036

Key Points
  • States would lose $215 billion in federal funds under an Obamacare repeal bill through 2026, a new analysis finds.
  • The loss in federal funds could top $4 trillion if Congress failed to appropriate money under the bill after 2026.
  • Republicans are lobbying holdout senators to support the Graham-Cassidy bill to get the 50 votes it needs for passage before a Sept. 30 deadline.
Sen. Bill Cassidy (R-LA) listens during a news conference on health care September 13, 2017 on Capitol Hill in Washington, DC. Senators Graham, Cassidy, Heller and Johnson unveiled a proposed legislation to repeal and replace the Obamacare.
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The new Obamacare repeal bill being pushed hard by Senate Republicans could slash federal health funding to states by more than a whopping $4 trillion through the next 20 years, a new analysis finds.

The same report said that at least $215 billion in federal funds to states would be whacked by 2026, and warned that those cuts would grow dramatically over the following decade if Congress didn't appropriate additional money under the controversial Graham-Cassidy bill.

Those eye-popping projections from the Avalere Health consultancy were disclosed Wednesday as GOP leaders in the Senate and the Trump administration lobbied the handful of Republicans who have not publicly supported the bill yet.

Graham-Cassidy would, among other things, eliminate the expansion of Medicaid benefits to poor people under Obamacare, and also would eliminate the federal subsidization of health insurance purchases in the individual plan market.

While the bill would award federal block grant funds to individual states to craft their own health insurance programs, there would be a net reduction in how much money the government would allocate compared with what it currently does under the Affordable Care Act.

Republicans, who hold 52 Senate seats, need at least 50 senators to pass the bill, which faces a Sept. 30 deadline for approval.

A slew of health advocacy groups and governors of both political parties are opposed to the law because they say it would lead to millions more people losing their health insurance.

Caroline Pearson, a senior vice president at Avalere, said that the significant, long-term federal funding reductions to states seen under the bill would hit hardest those states that have already expanded their Medicaid programs under Obamacare to cover more low-income people.

"States would have broad flexibility to shape their markets but would have less funding to subsidize coverage for low- and middle-income individuals," Pearson said.

Avalere found that through 2026 there would be 34 states, along with the District of Columbia, that would see net federal health funding cuts under Graham-Cassidy.

Seven of those states would see their funds slashed by more than $10 billion apiece during that time frame. California alone would lose $78 billion in funds, and New York would lose $45 billion.

The funding losses would accelerate after 2026, because Graham-Cassidy does not appropriate money beyond that year.

"While funding for 2027 and beyond may be appropriated in the future, the bill currently creates a block grant funding cliff in 2027," Avalere noted.

"The ability of the Congress to appropriate additional funding is uncertain and could be constrained by the need to offset the cost."

If Congress doesn't agree to extend funding under the bill starting in 2027, federal health funding to states would drop by a net of $489 billion through that year, compared with what they would receive if Obamacare remained in place.

There would be 39 states, along with D.C., that would face reduced funds, "and 18 states with reductions of greater than $10B," Avalere's report said.

"By 2027, only 11 states would see an increase in funding under [Graham-Cassidy] compared to current law," according to the report.

However, if the funding isn't extended, by 2036, all states would see a reduction in the money they would have otherwise gotten under Obamacare. The total amount cut could be in excess of $4 trillion, Avalere said.

"Federal funding reductions range from $4B in South Dakota to $800B in California," according to the report.