States warn latest Obamacare repeal plan ‘impossible’ to set up
State officials are warning they face a daunting, near-impossible task of rebuilding their health care systems from the ground up in just two years under the GOP’s latest Obamacare repeal plan.

The last-ditch repeal plan from Sens. Lindsey Graham and Bill Cassidy would eliminate Obamacare’s insurance subsidies and Medicaid expansion and replace the funding with block grants shared among states beginning in 2020. Governors and state legislatures would be charged with designing coverage schemes for the 27 million people insured through private Obamacare plans or Medicaid expansion — with as much as $107 billion less over a decade, according to estimates. That’s on top of hundreds of billions of dollars in cuts the bill, H.R. 1628 (115), makes to the traditional Medicaid program, which would be transformed from an open-ended entitlement into a budgeted program.

Ten Republican governors, mostly from Medicaid expansion states, have objected to a plan that could cost them billions of dollars. Health insurers, who largely remained neutral throughout the GOP’s months-long repeal effort, condemned Graham-Cassidy “unworkable” and “impossible.” The board of Medicaid directors issued a searing indictment of the plan, a rare rebuke from a group that represents states ranging from deep red Texas to blue-as-they-come California.

“Honestly, I am really struggling to figure out how we would respond,” said Teresa Miller, Pennsylvania’s acting secretary of human services, at the Senate’s lone hearing on the repeal plan Monday afternoon. Miller testified that it’s “highly unlikely” Pennsylvania would be able to build a functioning insurance marketplaces by the bill’s 2020 deadline.

The Graham-Cassidy plan, which as of Monday was still struggling to earn enough Republican support, would result in funding cuts to 35 states, particularly those that had the greatest success enrolling people under Obamacare, according an analysis from the Kaiser Family Foundation. The states that would receive more funding are predominately those that resisted Obamacare and may lack the health care expertise – and desire – to build new coverage systems.

A revised version of the bill released Monday morning offers new funding for states represented by GOP senators skeptical of the effort: Lisa Murkowski of Alaska, Susan Collins of Maine, John McCain of Arizona, and Rand Paul of Kentucky. But their states would still see overall funding cuts, and none of the holdouts have been swayed by the changes ahead of a Sept. 30 deadline to pass a repeal bill with just GOP votes.

Republican lawmakers supporting Graham-Cassidy have brushed off concerns about abruptly shifting responsibility for the nation’s health care system to the states, most of which – unlike the federal government – are constrained by requirements to balance their budgets each year.

“I have complete confidence in [state] policymakers that they can come up with plans, that they know the state better than the federal government does,” said Sen. John Kennedy (R-La.), whose home state expanded Medicaid to more than 400,000 poor adults last year.

The Senate plan would allow states to scrap many of Obamacare’s insurance regulations and protections that Republican critics say drive up the cost of insurance, in hopes of winning over conservative Sens. Ted Cruz and Mike Lee.

However, the plan would give states limited time to solve the politically fraught policy dilemmas that have stumped congressional Republicans for years, such as how to ensure affordable coverage for people with expensive medical conditions. State legislatures typically meet only a few months each year, and gubernatorial elections in 36 states next year could slow efforts to develop new health care plans. That means newly elected governors could have less than a year to develop, pass and implement a statewide insurance system.

If a state fails to agree on a plan by 2020, it would lose out on all federal block grant funding for the year, leaving low-income residents without government aid to obtain coverage.

Though the latest bill revisions give some states, including Alaska, more money to cover people, it doesn’t provide additional financial help to study and set up new health care systems. The plan designates just $2 billion to help states implement new systems over two years. That’s about half the time and federal money spent on the run-up to the Obamacare marketplaces’ disastrous debut in fall 2013.

Texas, which has the nation’s highest uninsured rate, is expected to be the biggest beneficiary under Graham-Cassidy, gaining an estimated $34 billion over a decade, according to the Kaiser analysis. Gov. Greg Abbott, a Republican, on Monday said he welcomed the plan’s new flexibility for states.

But the state’s legislature isn’t scheduled to meet again until January 2019, likely setting back efforts to devise a coverage system. Committee chairs said if Graham-Cassidy becomes law, they would call interim hearings to work out key details.

“I think we take the ball and run with it as fast and furious as possible,” said state Sen. Charles Schwertner, an orthopedic surgeon who chairs a key health care committee.

Graham-Cassidy’s boosters argue the plan’s enhanced funding for states refusing Obamacare’s Medicaid expansion will nudge them to broaden access to insurance.

Texas, however, already has a laundry list of health care issues to address, including a spike in maternal mortality rates, crumbling mental health hospitals and Hurricane Harvey recovery. Texas state Rep. Garnet Coleman, a Democrat, said he expects the Republican-controlled Legislature is just as likely to trim eligibility for health programs and cut payments to Medicaid providers.

The state already has one of the country’s stingiest Medicaid programs — three-quarters of recipients are children — and Coleman said Texas could potentially use the additional leeway from the federal government to slash state spending on Medicaid.

“I don’t think all of the sudden the state is going to get generous,” he said.

It’s a dilemma that would play out across the nation, particularly in conservative states that have long criticized the Affordable Care Act’s coverage expansion as unaffordable and deferred much of its implementation to the federal government.

In the meantime, insurance experts expect the uncertainty that’s wracked the Obamacare markets this year would only get worse, potentially driving more insurers out of a marketplace they know will be defunct in a couple years.

“It’s really hard to wrap your head around this,” said Jennifer Tolbert, the director of state health reform for the Kaiser Family Foundation. “Insurers have spent the last seven years basically adjusting to this new market with these standardized rules, and then you’re moving backwards to how things were prior to the ACA.”