U. S. Senate Delays Vote on Better Care Reconciliation Act

Calls for Medicaid equity growing

June 30, 2017

The highly-anticipated vote on the Senate’s Obamacare replacement legislation, “The Better Care Reconciliation Act,” (BCRA) was delayed until after the July 4 recess, a move that WHA hopes will allow senators more time to analyze it and gather feedback from hospitals, patients and their constituents.

Based on WHA’s ongoing review, the bill puts Wisconsin in an even worse situation than the bill passed May 4 by the U.S. House of Representatives. 

“Wisconsin remains heavily penalized in both the Senate and House versions of the replacement legislation,” according to WHA President/CEO Eric Borgerding. “The Senate bill takes one step forward by moving more toward income-based premium assistance for health insurance, but it takes about five steps back when it comes to Medicaid.”

The Congressional Budget Office estimated the BCRA would result in 22 million more people uninsured in 2026 and cut $772 billion in federal spending from the Medicaid program from 2017-2026. The bill raises a number of concerns, not the least of which is billions in lost federal Medicaid funding in Wisconsin by perpetuating inequities among states, according to Borgerding.

The Senate made deeper cuts to the Medicaid program than the House bill in part by tying future increases beyond 2025 to the CPI for all urban consumers as opposed to the medical CPI. With respect to tax credits to help consumers buy coverage, the Senate ties them to age, income and geography. The House version would provide a fixed amount based on age only, leading to many concerns about affordability for lower income individuals compared to the Affordable Care Act. However, the Senate eliminates tax credits for people with income between 350 and 400 percent of the federal poverty level (FPL). It eliminates the requirement that everyone must purchase health insurance, and cost-sharing subsidies would end after 2019. 

Wisconsin is not considered an “expansion state.” Wisconsin did add about 130,000 childless adults with income below the poverty line to Medicaid beginning in April 2014. However, this was considered a “partial expansion,” and thus not eligible for the enhanced federal matching funds. As a result, the 31 expansion states have been receiving 100 percent federal funding for the same population that Wisconsin is spending $280 million in state dollars to cover. 

Even more, a recent analysis by the Missouri Hospital Association estimated that non-expansion states will have collectively foregone $683.9 billion in federal Medicaid spending under the American Health Care Act by 2025, with Wisconsin’s share estimated at $37 billion. By changing the indexing, under the BCRA Wisconsin would forego an additional $1.7 billion through 2025 compared to the House bill, for a total reduction of $3 billion. These are dollars that instead could be used to expand our diminishing health care workforce, train more primary care doctors, improve access in underserved rural and urban areas, boost reimbursement and reduce Medicaid cost shifting to employers and families—right here in Wisconsin. 

“It’s really a one-two punch being thrown at Wisconsin,” Borgerding said. “The Senate bill adds nearly $1.7 billion in additional Medicaid funding reductions to what the House already cut, putting the total hit to Wisconsin at about $3 billion. On top of that, Wisconsin will continue receiving billions less in Medicaid funding because we are a so-called nonexpansion state, despite adding 130,000 people in poverty to our Medicaid program at a cost of $280 million to Wisconsin every year. It makes absolutely no sense, and regardless of what anyone thinks about repealing Obamacare, these are glaring inequities that continue and at a minimum our entire congressional delegation should be demanding fairness for Wisconsin.”

On June 2, more than a dozen of Wisconsin’s leading business and health care groups, including WHA, sent a letter to Sen. Ron Johnson urging him to obtain fair Medicaid funding for Wisconsin. In the letter, the group expressed its concern about the eventual impact on state finances, noting, “Th[e] funding inequity would grow over time, not only exacerbating inequities among states but also placing increasing stress on Wisconsin taxpayers and ultimately the state budget.” 

The issue of Medicaid equity is also receiving attention nationally. As reported by Modern Healthcare June 29, several state hospital associations—including those in Texas and Florida that are expected to receive the bulk of the funding for nonexpansion states included in the BCRA—believe the funding is not enough to offset the overall caps and adjustments that would be imposed on the Medicaid program. According to the report, “There are widespread concerns about whether the caps and the adjustments would give states enough financial flexibility to address emerging public health issues, new medical innovations, and demographic changes such as the projected increase in the population of elderly people with long-term care needs.” 

Borgerding again pointed to a proposal floated by the governors from four expansion states (Arizona, Arkansas, Michigan and Ohio) as one way to achieve fairness for, as Borgerding put it, “the non-Obamacare compliant Medicaid expansion Wisconsin has clearly undertaken and is paying for.” 

In a March 16, 2017 letter to Speaker Ryan and Majority Leader McConnell, the four expansion state governors called on Congress to allow states like Wisconsin that expanded Medicaid outside of Obamacare to receive the same enhanced federal matching dollars as those states that expanded Medicaid within Obamacare.

“For a state that has expanded eligibility to childless adults with incomes less than 138 percent FPL, but has not received the enhanced match, federal funding would be adjusted to be equitable with expansion states. Nonexpansion states may choose to expand eligibility for adults at any income level at or below 138 percent FPL, with enhanced federal participation to create funding equity.”

WHA has been working closely with Sen. Johnson, meeting with him in Washington, D.C. and communicating WHA’s position on and voicing concerns with potential repeal and replace legislation. Johnson and three other conservative senators released a statement shortly after the release of the Senate bill expressing their opposition, but remaining opened to discussions. In an earlier press statement, Borgerding commended Johnson for taking a circumspect approach, including “advocating for market stabilization first, while wanting time to understand the broader ramifications of the bill through his stated desire to obtain constituents’ reaction and input.”

WHA will continue to work with Johnson to ensure any legislation produced by the Senate protects hospitals and the patients they serve.

This story originally appeared in the June 30, 2017 edition of WHA Newsletter