The cuts proposed to Medicaid under the Senate version of a health care bill meant to repeal and replace the Affordable Care Act could hit Montana so hard the state would struggle to pay for priorities such as education and infrastructure.
That’s according to a report released Tuesday by Manatt Health and commissioned by the Montana Health Care Foundation.
Under the Senate’s proposed Better Care Reconciliation Act, Montana would lose $5.3 billion in federal Medicaid funds between fiscal years 2020 and 2026. That’s 40 percent of the state’s current federal Medicaid funding.
“We’re putting at risk coverage for 75,000 Montanans and we’re looking at a loss in federal funding in excess of $5 billion for the state,” said Deborah Bachrach, a partner with Manatt. “It’s children, elderly, disabled and low-income families. It’s rural hospitals. It’s community health centers. It’s doctors.”
On Tuesday, Senate Republican leadership announced it would delay a vote on the bill. It was that body’s effort to improve upon the American Health Care Act, the House version of the bill passed in May.
The Senate bill was drafted by a small group of Republican senators, behind closed doors and without public input. Montana’s Democratic Sen. Jon Tester has strongly opposed both House and Senate versions of the bill, saying deep cuts to the Medicaid program would hurt some of the most vulnerable Montanans.
Republican Sen. Steve Daines has not taken a public position, saying he wants to hear from people in a tele-town hall Wednesday night. Tester held a town hall in Great Falls on Saturday that drew about 100 people, many concerned about losing their insurance.
Newly-elected Republican Rep. Greg Gianforte was not in the House when it voted on the bill, but after his election said he would not have voted for the House version.
The bill is the long-promised effort by congressional Republicans to repeal and replace the Affordable Care Act, also known as Obamacare. Reports on its impacts in Montana have mostly focused on Medicaid because of the huge impact of that program here.
Medicaid covers one in four Montanans, or more than 216,000 people, nearly half of which are children. About 79,000 people who earn up to 138 percent of the federal poverty level, or $16,400 a year, gained coverage under an expansion of the program the state Legislature approved in 2015.
“The House and Senate bills contain similar changes to the Medicaid program — changes that would hurt Montana’s most vulnerable residents, including children, seniors, and people with disabilities,” said Montana Health Care Foundation CEO Aaron Wernham on Tuesday. “We find no health benefits of these proposed changes. Indeed, like the House bill, it appears that the Senate’s bill would weaken the state’s healthcare system and threaten our ability to care for our communities.”
Federal Medicaid money has a huge footprint in the state. It represents 38 percent of all federal money sent here. As a percentage of the total state budget, it's much smaller — with Medicaid taking up just 10 percent of the state's budget. For prospective, K-12 and higher education make up 37 percent.
The 40 percent drop in federal funding Manatt predicts comes from a decrease in money for the expansion program severe enough to kill off the program starting in 2021, as well as a cap on federal spending that would affect services to the general Medicaid population -- 96,846 are children and 19,085 are adults who have disabilities.
Under current law, there's an enhanced federal match of 95 percent of what the state spends to insure people covered under expansion. The Affordable Care Act provides for a drop to 90 percent by 2020. The Senate plan lowers the match much more severely and eliminates it entirely by 2024.
The state could not afford to keep the program running without the enhanced match. But expansion would end before that anyway because a state law requires the Legislature to reexamine funding if it ever drops below the levels in the Affordable Care Act. That would happen in 2021.
“The first decision the state will have to make is whether or not it can continue expansion,” Bachrach said. “Given the budget situation and given the specific authorizing legislation, we assume the state will have to end coverage immediately.”
If expansion ends, the federal money that now covers things like the cost of mental health services, in-patient care for prisoners and opioid and other addiction services goes away.
“That coverage is pulled out,” Bachrach said. “We may withdraw coverage from 75,000 but they will still have addiction disorders, they will still be mentally ill, they will still be getting sick and using hospital emergency rooms. And the state can only shift so much of that cost to hospitals as uncompensated care and so the state will look to its budget to cover some of those costs and where does it find the money?”
The other part of the massive cuts come from spending caps on federal money the Senate bill calls for starting in 2020.
The Senate version of the bill sets a cap by looking at what states currently spending on Medicaid, then projecting possible increases in the future.
The bill starts by using the Medical Consumer Price Index in its projections, but by 2025 the projection tied to the non-medical Consumer Price Index, which is significantly lower. Right now the Consumer Price Index is projected to be around 2.4 percent, while the Medical Consumer Price Index is projected to be 3.7 percent.
States could choose to spend more, but Manatt anticipates Montana and most other states will only spend what they get a federal match for.
If Montana wanted to stay under the cap proposed in the Senate bill, it would would have to cut spending on Medicaid here by $892 million between fiscal years 2020-2026.
“States will have to start cutting back,” Bachrach said. “They could cut provider rates. Some benefits are optional. They could cut optional benefits. They could even cut eligibility.”
“It will be bleak and it will start a food fight across constituents and across provider groups because should you consider cutting nursing homes or hospitals or doctors? Should you eliminate home- and community-based services? That’s an option benefit. Those hard choices will fall to your governor and to your Legislature and they will have to start making those choices start in 2020 and in 2025 the choices will be more severe.”