$215 Billion Less Funding by 2026 Due to GCHJ Bill


September 22, 2017

A new report released on September 20 by Avalere Health found that the proposed Graham-Cassidy-Heller-Johnson bill (GCHJ) would reduce federal healthcare funding by $215 billion over the next decade. Crunching the numbers from a recent report developed by the Congressional Budget Office on subsidy allotments and funding, Avalere reported that the latest Republican repeal-and-replace proposal would lead to significant funding shortfalls beyond the initial 10-year time frame. An official CBO report has yet to be released on the economic impact of the GCHJ bill.

Between 2020 and 2026, funding for states would drop by about $215 billion. The following year – for which there is no guaranteed funding – federal funding would decrease cumulatively nationwide by $489 billion. By 2036, funding changes top $4.1 trillion. That’s because the current GCHJ bill only allocates federal spending for the next 10 years. Congress would have to appropriate funding in a new bill by 2027 to ensure uninterrupted cash flow to the states.

Absent new appropriations, most states would start to feel the pressure by as early as 2020. Four states – California, Massachusetts, Maryland and New York – currently receive 37 percent of federal funding for Obamacare programs, including Medicaid expansion and subsidies for low- to middle-income households. These states and others that have expanded Medicaid will feel the brunt of the impact under the GCHJ.

The Graham-Cassidy bill converts federal funding for Obamacare provisions to a block-grant program based on a state’s population of people earning between 50 and 138 percent of the federal poverty level. For most states, primarily those that expanded Medicaid, the GCHJ approach would result in far less funding than they currently receive.

The news isn’t entirely grim nationwide — at least in the short term. By 2026, 16 states will see an increase in federal funding. Texas, for example, stands to gain $35 billion in federal funding over the next 10 years. Georgia ($10 billion), Mississippi ($6 billion) and Missouri ($4 billion) are among other states that will benefit from the GCHJ’s reallocation of funds. The number of states experiencing an increase in funding drops to 11 by 2027. By 2036, every state will experience a sharp drop in federal funding.

The Congressional Budget Office has not released its own estimates on the long-term viability of this latest Republican proposal, nor is it likely to in time for a vote on the bill next week. Conservative lawmakers have until September 30 to vote on and pass the bill under budget reconciliation rules. That’s not enough time for the CBO to deliver a full picture on the impact of the bill. The CBO is slated to release numbers of its own as to the direct impact of the GCHJ on the federal deficit sometime next week, but it’s unclear how much insight the office can provide in such a limited time frame.

Millions of Americans who gained coverage under the Affordable Care Act could be affected by reduced funding over the next decade if the GCHJ proposal is voted into law. States would be forced to focus on individuals and families with the lowest incomes, potentially leaving a substantial portion of health insurance exchange customers in the middle income range without affordable options for coverage.