296-12574795088ufr-300x201-9582258The U.S. Senate GOP’s health bill, though pitched as more moderate than the House plan, would be harder on New York in at least one respect.

The Senate’s discussion draft, released Thursday, would impose a tighter Medicaid funding limit on the highest-spending states – New York among them – while being relatively generous to the lowest-spending states.

Over time, this “equity” adjustment would reduce New York’s funding from Washington more sharply than the House GOP’s American Health Care Act, which was projected to cost the state several billion dollars a year.

After 2023, the Senate plan would also adjust its Medicaid caps by a lower inflation rate – the overall Consumer Price Index, instead of the CPI for medical services – which would mean lower funding nationwide compared to the House plan.

At the time time, the Senate’s “Better Care Reconciliation Act” would phase out Obamacare’s Medicaid expansion more slowly than the House plan, delaying some of the fiscal pain for states. In the short term, this would translate into relatively more money for states compared to the House plan.

Here are a few of the provisions of particular concern to New York:

The ‘equity’ adjustment: Like the House plan, the Senate bill would set per-recipient caps on federal Medicaid funding, which would be increased annually by the medical inflation rate. Starting in 2024, however, the Senate would switch to the regular inflation rate, which is usually much lower and would put a tighter constraint on spending growth.

Of special concern to New York, the Senate bill introduces the new twist of an “equity” adjustment: If a state’s per-recipient spending is more than 25 percent above the national average, its funding cap would be lowered by 0.5 to 2 percent. If, on the other hand, a state’s spending is more than 25 percent below average, its cap would be raised by 0.5 to 2 percent.

Based on 2014 spending numbers, New York is one of about a dozen states, almost all in the Northeast, whose caps would be lowered as a result of this provision – potentially losing billions in aid.

Two of the highest-spending states – Alaska and North Dakota – would be exempted because of their low population density.

Collins-Faso: Like the House bill, the Senate plan would compel Albany to absorb $2.3 billion in Medicaid costs that it currently shifts to counties outside New York City. This amendment, which applies only to New York, was sponsored by Reps. Chris Collins of Clarence and John Faso of Kinderhook.

It promises relief for upstate and Long Island taxpayers, but opens a hole in the Medicaid budget that Albany would have to fill, either with spending cuts or tax increases somewhere else. If New York City legislators demand similar relief, as seems likely, the dollar amount to be replaced would more than triple.

Tax credits: For people shopping for insurance in the commercial marketplace, the House plan would replace Obamacare’s income-based tax credits with credits based on age. This would create complications for New York, which is one of two states that bans insurers from charging higher premiums to older customers. Unless that state law is changed, younger New Yorkers would get substantially lower tax credits than older New Yorkers even though they pay the same premiums.

The Senate’s tax credits are a hybrid, based on both income and age. They mesh well with New York’s system at the lowest incomes. But from 150 percent of poverty and up, they would compel an older New Yorker to pay more out of pocket than a younger one, even though the premium is identical – a mirror image of what would happen under the House plan.

Overall, the Senate’s tax credits are less generous than the status quo. Eligibility would end at 350 percent of poverty, instead of 400 percent under Obamacare, and they would cover a smaller share of the premium for some people.

Abortion: Like the House plan, the Senate bill bars consumers from using tax credits to buy a health plan that covers abortion (except in cases of rape, incents, or to save the life of the mother). This clashes with a New York regulation that requires plans to cover abortion, with a sole exception for the Catholic-affiliated Fidelis Care. Unless this rule change, Fidelis would be the only option for New Yorkers to use their tax credits. It’s possible, however, that this provision will be deemed to violate the procedural rules that the Senate is following to avoid a filibuster, and will be removed from the bill.

The Essential Plan: This plan – which offers state-funded coverage to people between 133 percent and 200 percent of the poverty level – is an optional benefit under the Affordable Care Act that only New York and Minnesota exercised. Both the Senate and House bills would scale back federal funding for the program, which the Cuomo administration has said would make it unsustainable. Of the roughly 700,000 New Yorkers enrolled, about one-third could switch to Medicaid. The rest would have the option of trying to buy coverage through New York’s exchange.

About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

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