Fact and fiction on AHCA

by Bill Hammond |  | NY Torch

us-capitol-477987_1920There have been a lot of conflicting claims about how the House GOP health plan – due for a vote today – would affect New York State. Here is a fact-check for some of them.

“The Republican plan will leave 2.7 million New Yorkers without healthcare …” – Governor Cuomo, March 22

This conflicts with a March 4 assessment by the state Health Department, which said AHCA “places the coverage of more than 1 million New Yorkers in jeopardy.”

Cuomo could be referring to a DOH estimate from January 4, which said full repeal of Obamacare could jeopardize coverage for 2.7 million. This was a worst-case scenario, as officials acknowledged at the time, and the current House GOP bill stops well short of full repeal.

AHCA does reduce federal aid for Medicaid, but it leaves eligibility standards alone – meaning no one covered by the program (more than 6 million, or one in three New Yorkers) would necessarily be displaced. That said, state lawmakers could respond to the loss of federal aid by downsizing enrollment.

The bill eliminates funding for New York’s Essential Plan, which would disrupt coverage for about 400,000 enrollees who do not qualify for Medicaid. It also changes how health insurance tax credits would work, at least jeopardizing the coverage for about 150,000 New Yorkers using credits under the ACA. Many would get less help under AHCA; others would get more. The direct, short-term loss of coverage would be less than 600,000.

The Congressional Budget Office has projected AHCA would cause 24 million Americans to lose coverage over 10 years. The CBO did not break that down by state. New York’s proportional share of that loss by population would be 1.5 million.

“We would be forced to raise state income taxes – either by increasing taxes on all New Yorkers by 10 percent, or if Collins and Faso have their way in protecting only the wealthy, on the middle class by 26 percent.” – Governor Cuomo, March 22.

The Health Department plausibly projected on March 4 that AHCA would cost the state $2.4 billion in federal aid annually as of 2020. Since then, the bill was amended to require the state to take over $2.3 billion a year in Medicaid costs paid by counties outside New York City. The combined impact of those measures – $4.7 billion a year – could equate to a 10 percent hike in the income tax.

How he arrived at his alternative projection of a 26 percent hike on the middle class is unclear.

Of course, the state has other options to raise revenue – such as clawing back part of the county share of sales tax, either statewide or outside New York City. It could cut spending on Medicaid, by eliminating benefits, rolling back eligibility, or lowering payments to providers. It could also find the money by cutting spending elsewhere in the state budget. Or it could do a combination of cutting spending and raising taxes.

“If he can’t find $2.3 billion in a $63 billion program, he shouldn’t run for re-election.” – U.S. Rep. Chris Collins, R-Erie County, The Buffalo News, March 22.

Complying with a mandated takeover of county Medicaid costs would be more difficult than this statement implies. This is because the federal government distributes Medicaid funding to states on a matching basis. In New York, the federal share is 50 percent – meaning the state must put up $1 for every $1 it receives from Washington. By the same token, the state must cut $2 from the Medicaid program to save $1 for its own budget.

To offset the loss of $2.3 billion in county Medicaid funds, therefore, Cuomo would have to make $4.6 billion in cuts.

Plus, other provisions of AHCA, which Collins supports, would reduce New York’s federal funding for Medicaid by $2.4 billion a year – raising the total potential hit to the program to $7 billion annually, or 11 percent.

“The amendment is a proposal to shift to the state the local share of Medicaid from the counties outside of New York City, including Suffolk County. It does not propose a $2.3 billion cut.” U.S. Rep. Lee Zeldin, R-Suffolk County, March 22

The House GOP bill would bar the state from using $2.3 billion in county contributions to finance Medicaid. If the state continues using that money, its federal aid would be reduced by the same amount. The bill does not identify an alternate source of revenue. Unless the state takes money from somewhere else, or raises taxes, it will have $2.3 billion less to spend on Medicaid. It would also forgo another $2.3 billion in matching aid, for a total potential loss to the program of $4.6 billion.

Zeldin and other supporters may intend for state government to make up for the lost $2.3 billion, but the bill does not require or guarantee that.

“Taxpayers in Suffolk County are hitting the jackpot of mandate relief as a result of this proposal.” – Rep. Zeldin, March 22

Zeldin’s home county stands to save $256 million a year that it currently contributes to the Medicaid program, which is more than any other county outside New York City. That represents 37 percent of the county’s total property tax levy (including payments in lieu of taxes). As a share of all property taxes Suffolk County residents pay — including town, village, school, etc. — Medicaid averages less than 5 percent.

How much relief the county’s taxpayers would ultimately receive, however, depends heavily on how the state makes up for the lost revenue.

If the state diverts a enough of the counties’ collective sales tax to raise $2.3 billion – an idea floated many times in the past – Suffolk County would potentially lose $120 million more in sales tax revenue than it would save on Medicaid.

“It would be an additional $2.3 billion cut to Medicaid. That’s just in the areas in Upstate New York and Long Island. That’s who the amendment is affecting.” – Governor Cuomo, March 21

Cuomo has implied that the impact of Medicaid spending cuts would be felt only in upstate counties and on Long Island – the same parts of the state that would stop contributing to the costs of the program under the House GOP bill.

A series of press releases from his office – focusing on the congressional districts of the nine House Republicans from New York – have given estimates of how each hospital and nursing home in those areas would lose if the the House bill becomes law. The total of those estimates, as of this writing, was more than $400 million.

It’s unclear, however, whether targeting the cutbacks to particular parts of the state would be feasible.

Normally, Medicaid operates under one set of rules for the entire state. Since New York City represents the majority of Medicaid recipients – and the majority of spending on the program – it would normally bear the majority of cuts.

Any departure from that norm would have to be written into the state’s Medicaid plan, which is subject to approval by federal regulators. Any targeting of cuts would also have to pass muster with the state Legislature, most members of which represent districts outside New York City.