Avalere Analysis Shows Republican Health Bill Would Cut $215 Billion

The Graham-Cassidy-Heller-Johnson (Graham-Cassidy) ACA repeal bill would cut federal funding for health care by $215 billion through 2026 compared to the current law, according to a recent analysis of by Avalere Health.

The analysis explains that the bill would significantly alter the financing structure for the traditional Medicaid population by moving it from an open-ended system to a capped, block-grant system for states. Avalere projects that 34 states plus Washington DC would see significant reductions in federal Medicaid funding as a result of these changes.

“The ‘Graham-Cassidy’ bill would significantly reduce funding to states over the long term, particularly for states that have already expanded Medicaid,” Caroline Pearson, senior vice president at Avalere, said in a press release. “States would have broad flexibility to shape their markets but would have less funding to subsidize coverage for low- and middle-income individuals.”

Avalere projects that California would lose $78 billion dollars in federal Medicaid funding by 2026 under the Graham-Cassidy bill. Conversely, Texas would gain $35 billion in funding through this same timeframe. The report highlighted that 7 states would face reductions higher than $10 billion, while $16 states would see gains in funding through 2026.

Elizabeth Carpenter, senior vice president at Avalere Health, explained that states that expanded Medicaid under the ACA would be hit hardest by the Graham-Cassidy act due to having larger amounts of Medicaid enrollees—compared to states that did not expand Medicaid.

“The largest impact of the proposed bill would be the reallocation of federal dollars between states,” she said. “Medicaid expansion states and states that have enrolled a high number of people in insurance affordability programs would be most adversely impacted.” 

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Additionally, Avalere projected that all 50 states plus Washington DC would see significant funding cuts through 2036—ranging from $4 billion in South Dakota to $800 billion in California—when compared to funding allocated under the ACA.

Avalere noted that the bill would have greater cost impacts outside of Medicaid funding due to the fact that it also repeals the individual mandate, which keeps premiums lower by leveling risk pools; repeals the premium tax credits; which allow qualifying families to subsidize high cost health plans; and the cost-sharing reductions; which keep premiums lower by providing incentives to insurers for covering lower income Americans.

Avalere also told Vox that the bill could strip protections for patients with preexisting conditions by granting states the power to waiver the ACA’s community rating. Language in the bill does vaguely offer some protections for patients with preexisting conditions by limiting state waivers only to states that provide a description of “how the state intends to maintain adequate and affordable health insurance coverage for individuals with preexisting conditions.”

According to Chris Sloan, a senior manager at the health research firm Avalere, vague language like “intends” and “affordable” leave the door open for lawmakers to strip these protections because the bill does not define what “adequate” or “affordable” mean.

“You can be charged more for a specific condition,” Mr Sloan told Vox. “You could stretch the definition pretty broadly of what counts. Maybe you fund a high-risk pool that only allows in some number of people, and that counts. It's a pretty wide space.”

Avalere is a nonpartisan research firm specializing in health economics and outcomes.

—David Costill