Graham-Cassidy: A Triple Whammy for Children and Families

When Senators Graham (R-SC) and Cassidy (R-LA) released their proposal to “repeal and replace” the ACA, we had our doubts about just how helpful it would be for children and families, but wanted to wait for the official word from CBO. Now we know.  CBO has issued a “Preliminary Analysis” that leaves no doubt that the proposal is bad news for children and families. In CBO’s view, Graham-Cassidy would drive up the number of uninsured Americans by “millions” and cut federal Medicaid payments to states by “nearly $1 trillion” over the next ten years.

Due to the short time available to review the proposal, CBO could not produce the types of estimates of the financial and coverage effects that it did on previous “repeal and replace” bills.  Nonetheless, CBO makes clear that Graham-Cassidy isn’t just a double whammy for children and families who rely on Medicaid for their coverage, as some of us had thought.  It’s a triple whammy.

First, Graham-Cassidy would increase the number of uninsured Americans by “millions,” in part because “enrollment in Medicaid would be substantially lower because of large reductions in federal funding for that program.”  How large?  “All told, federal spending on Medicaid would be reduced by about $1 trillion over the 2017-2026 period under this legislation, and the program would cover millions fewer enrollees.”  The largest share of that enrollment effect comes from Graham-Cassidy’s repeal of the ACA Medicaid expansion for low-income parents and other adults starting in 2020.

Second, also starting in 2020, Graham-Cassidy would cap federal Medicaid payments to states.  In this “Preliminary Analysis” CBO does not provide an estimate of the federal savings resulting specifically from the cap, but it does note that “in most states, capping federal Medicaid spending would result in less total reimbursement than would occur under current law.”  This shortfall in federal funds would in turn force states to make choices, some of which “could reduce enrollees’ access to care.”  Among these access-reducing choices: lowering payment rates to providers; reducing payment rates to Medicaid managed care plans; reducing covered services; and narrowing eligibility categories or using administrative procedures that make it more difficult to enroll.

Third, Graham-Cassidy would give states the option of imposing work requirements as a condition of Medicaid coverage on non-elderly, non-disabled, nonpregnant adults age 19 or older. The option would be effective October 1. Single parents would be exempt, but only if their child is younger than 6. Again, there is no specific coverage or financial estimate for this provision. However, CBO “anticipates some states would us work requirements—allowed starting October 1, 2017—to reduce enrollment and the associated costs.” To be clear, beginning in 2020, these enrollment cuts will fall entirely on low-income parents and other traditional Medicaid eligibility categories, because Graham-Cassidy will have repealed eligibility for all Medicaid expansion adults.

CBO does not project the employment and economic effects for Graham-Cassidy in this “Preliminary Analysis.” Private sector analysts, however, have examined this question.  S&P Global Ratings economists and credit analysts believe that Graham-Cassidy would result in “580,000 lost jobs and $240 billion in lost economic activity by 2027, ensuring that the GDP growth remains stuck in low gear of around 2% at best in the next decade.” It goes without saying that when economic growth is low, states don’t do well. And when states don’t do well, as Fitch Ratings reminded us, school districts, high cost Medicaid providers, and children and families don’t do well either.

As this blog was being written, Senators Graham and Cassidy announced that they would not be seeking a Senate vote on their proposal this week. They left the door open for another effort at passage in the future, with Senator Graham saying “we’re coming back to this after taxes.”  Hopefully, more formal CBO estimates will be forthcoming before that time so that we can all understand just exactly how bad their proposal would be for Medicaid and the children and families who depend on its coverage.

Andy Schneider is a Research Professor at the Georgetown University McCourt School of Public Policy.