Bond raters say the Graham-Cassidy repeal bill would hurt the U.S. economy, states, health insurers, not-for-profit healthcare providers, and cost about 580,000 jobs.
Ahead of the much-anticipated Congressional Budget Office assessment of the Graham-Cassidy bill, S&P Global Ratings has taken a look at the latest Republican effort to repeal the Affordable Care Act, and found something for everyone to dislike.
In an issues brief released Monday afternoon, S&P highlighted several areas of concern, including:
- Insured levels: Lower level of insured initially in the 133%-400% of federal poverty line as repeal’s funding allocation focuses on the lower FPL levels; gradually over the longer term in the traditional Medicaid ranks as some states are unable to maintain current eligibility levels with a lower share of Medicaid federal funding.
- Macro-economy: 580,000 lost jobs and $240 billion in lost economic activity by 2027, ensuring that the GDP growth remains stuck in low gear of around 2% at best in the next decade.
- States: Increased flexibility comes with fewer federal dollars, creating increased fiscal and operational burdens on the states. S&P expects greater disparity among states in terms of rules for the insurance markets and uninsured levels.
- Insurance industry: Increased uncertainty in the short term with repeal of mandate and lack of clarity around cost-sharing reductions. In the longer term, likely return of medical underwriting will make premium pricing more varied by morbidity.
Medicaid was the largest single outlay of federal dollars to states in 2016, accounting for $330 billion.
S&P notes that under the Graham-Cassidy bill, states will have greater flexibility in how they manage their Medicaid program including benefits, rate setting, eligibility and handling of pre-existing conditions, as well as determining a plan's ability to exclude basic healthcare services from coverage, such as maternity care. That also means that enrollees could be charged more if they have a pre-existing condition.
S&P notes that, while the Congressional Budget Office hasn't been able to complete its assessment of this bill, overall funding reductions appear to be harsher in states that have expanded Medicaid. In prior bill assessments, the CBO estimated that overall more than 20 million people would lose their health care coverage or would find it unaffordable.
“For providers, we would expect a rising number of uninsured patients with growth in unreimbursed costs and a sharp rise in charity care and bad debt,” S&P said. “In short, revenue would likely decline for providers in most states. In addition, we would expect this would contribute to a re-emergence of inpatient volume declines.”
Budget pressures on states would also lead to tougher rate negotiations with providers. “These factors, taken together, suggest the broad impact is very likely to lead to further drops in operating income for many providers,” S&P said.
John Commins is the news editor for HealthLeaders.