296-12574795088ufr-300x201-9582258The Graham-Cassidy healthcare bill heading to a possible vote next week would appear to be more costly for New York State in the long term than previous GOP repeal-and-replace plans.

The bill not only constrains overall federal funding for Medicaid and insurance tax subsidies (as earlier House and Senate proposals did) but also changes the distribution among the states – to the disadvantage of big-spending states such as New York.

The legislation cosponsored by Senators Lindsey Graham of South Carolina and Bill Cassidy of Louisiana has yet to be scored by the Congressional Budget Office, but there is little doubt that the fiscal impact on New York would be significant.

Governor Cuomo estimated that, as of 2026, Graham-Cassidy would cost the state $19 billion in annual federal health funding compared to current law – a figure in line with projections from the Center for Budget and Policy Priorities.

An analysis by the The New York Times found that New York would lose almost $2,500 per Obamacare beneficiary, the fourth highest amount of any state.

Under Graham-Cassidy, the two big financial commitments of President Obama’s Affordable Care Act – the expansion of Medicaid, and insurance tax credits for individuals – would be converted to block grants to states. Total federal funding for those grants would be less than what the ACA is projected to spend, and aid would be allocated among states in a very different way,

Currently, Washington sends relatively more money to states that chose to expand Medicaid coverage for the poor. Under Graham-Cassidy, it would allocate funding according to each state’s share of the population between 50 percent and 138 percent of poverty – which would mean a larger share to non-expansion states.

The impact on New York would be dramatic: It has about 6 percent of the target population, but currently receives about 9 percent of federal Medicaid spending.

New York would theoretically have the option of continuing its Medicaid program and Obamacare exchange as they currently operate, but it would have to do so with billions less in financial assistance from Washington. Albany would face a choice between finding state dollars to fill the gap – by diverting funds from other programs, raising taxes, or both – or cutting healthcare programs for the low-income and disabled.

Like earlier GOP bills, Graham-Cassidy would also constrain the growth of federal funding for traditional Medicaid recipients, allowing per-recipient aid to increase no faster than a specified inflation rate. That, too, is likely to mean less money overall compared to current law, possibly in the billions per year.

Graham-Cassidy would repeal the mandates requiring individuals to buy insurance and larger employers to offer insurance, which is likely to weaken the fragile market for non-group coverage.

It would also authorize states to seek waivers from Obamacare rules, including the package of minimum benefits that insurance must cover and the requirement for plans to cover pre-existing conditions. These changes are unlikely to affect New York, which has parallel laws in both areas.

Unlike previous GOP bills, Graham-Cassidy does not include a requirement for New York’s state government to absorb what counties outside New York City currently contribute to Medicaid costs. That amendment, sponsored by Reps. John Faso and Chris Collins, would have opened a $2.3 billion hole in the state budget.

Like previous GOP bills, Graham-Cassidy bars the use of federal tax credits to purchase health coverage for abortions (except as necessary to save the life of the mother or in cases of rape or incest). In a new wrinkle, the bill extends that same ban to cover funds spent from health savings accounts that receive federal tax breaks.

This creates a dilemma for New York, where insurance coverage for abortion is required by state regulation. The state would have to change that rule or forfeit the benefit of insurance tax credits for its citizens.

The Senate has until September 30 to vote on a repeal-and-replace bill under budget reconciliation rules, which bypass a Democratic filibuster. With Vice President Mike Pence available to break a tie, Republicans need 50 votes, meaning they can afford to lose no more than two GOP members. So far, Rand Paul of Kentucky has declared his opposition, and Susan Collins of Maine has signaled doubts.

 

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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