Graham-Cassidy-Heller-Johnson Bill Recognizes Wisconsin’s Innovative Reforms

Borgerding says bill would return “tremendous authority” to the states

September 22, 2017

The U.S. Senate prepares to vote next week on a new proposal that would repeal and replace the Affordable Care Act (ACA) and create significant new flexibility for states. The bill was coauthored by Wisconsin Sen. Ron Johnson and GOP Sens. Bill Cassidy of Louisiana, South Carolina’s Lindsey Graham and Dean Heller from Nevada.

In a written statement to the Associated Press (AP) provided by aides, Johnson said funding formulas to correct the distribution of money under Obama’s law needed to be changed “to reflect the unique circumstances of many states, including recognizing the innovative reforms of Wisconsin.”

The bill would combine all the federal funding for Medicaid expansion, cost-sharing reduction subsidies (CSRs), and the premium tax credits for people buying insurance on the exchange and instead give the money to states in the form of “market-based block grants.” For Wisconsin, the bill recognizes that Wisconsin implemented a “partial expansion” of Medicaid by providing coverage to all with income up to 100 percent of the federal poverty level (FPL). That partial expansion was not recognized by the federal government as a “full expansion,” and unlike other states, Wisconsin has not received enhanced federal funding over the past three years to fund its program. The bill rectifies that inequity by allowing Wisconsin in the initial years to receive additional funds for its program. 

Over time, the bill attempts to equalize the amount of funding across states by providing the same per-person dollar amount. States would receive $4,400 for each person in their state with income between 50 percent and 138 percent FPL. States could then use these dollars to provide health care coverage in a manner they choose. States could waive key provisions of the ACA such as essential health benefits. States could also choose to allow insurers to establish premiums based on age and health status, and could eliminate the medical loss ratio rebate requirements. 

According to two separate analyses—from Kaiser Foundation and from Avalere—Wisconsin could see increased funding of $3 billion over seven years under the bill. If accurate, that could be a significant amount of funding to help sustain the coverage gains Wisconsin has achieved over the past several years. However, a provision included in the bill gives the Secretary of HHS significant authority to adjust the dollar amounts for any state based on risk, wage rates, demographics and other factors. Thus, whether the amounts estimated for Wisconsin would be realized remains uncertain.   

Further, separate from the “market-based block grant,” the bill would set per capita spending caps in the traditional Medicaid program, which covers elderly, blind and disabled, children and other non-expansion adult population groups. The bill would allow the per person amounts to grow over time, mostly limited to the medical component of the Consumer Price Index. The report from Kaiser estimates Wisconsin would receive $562 million less under the traditional Medicaid program per capita caps compared to current law. For WHA, this is an obvious concern, as demand is driven by social and economic factors that are often beyond the control of an individual, a state or a health system.

In a statement, WHA President/CEO Eric Borgerding said: 

“Wisconsin’s uninsured rate has dropped by 41 percent since 2013. With this in mind, WHA’s top two priorities remain sustaining the Wisconsin Coverage Model, which very purposefully relies on a combination of Medicaid for those in poverty (below 100 percent FPL) and subsidized coverage for low-income individuals no longer eligible for Medicaid; and, ensuring Wisconsin is treated equitably when it comes to Medicaid funding—that we are no longer penalized for rejecting Obamacare Medicaid expansion.

The Graham-Cassidy-Heller-Johnson bill appropriately recognizes Wisconsin’s coverage model and its partial Medicaid expansion.  Two national studies conclude that the block grant funding for Wisconsin would be significantly higher under the bill compared to current projections. Achieving fair funding for Wisconsin has been a top WHA priority, and we appreciate the efforts made in this legislation to deliver much needed equity. These are dollars that can be used to address critical health care needs and stabilize Wisconsin’s market. And with the flexibility included in the bill, if the right decisions are made at the state level, Wisconsin’s current coverage model could be preserved and even strengthened, another WHA priority. 

However, WHA remains concerned about the inadequate Medicaid inflationary adjustments  included in the bill for elderly, blind and disabled population groups, and children. These vulnerable populations must be protected and we question whether the funding will keep pace with the need. We are also concerned that a bill, which gives an innovative state like Wisconsin greater authority to craft its own approach to health care, allows the Secretary of the federal Department of Health and Human Services to unilaterally make specific adjustments to funding levels, leaving great uncertainty about the overall impacts for Wisconsin.

If this bill becomes law, tremendous authority will devolve back to the states, and determining the path and direction of coverage will rest largely in Madison. If enacted, Wisconsin must take steps to protect vulnerable populations and to assure continued access to affordable care in our state. Again, Wisconsin has a good model in place; our coverage rate is one of the best in the country with just 5.3 percent uninsured. We should be working to sustain that model and that progress.”

This story originally appeared in the September 22, 2017 edition of WHA Newsletter