WASHINGTON – The House Republican plan to repeal and replace the Affordable Care Act would significantly change Medicaid and expose states to new fiscal and policy risks, Fitch Ratings said in a report on Tuesday.
"In our view, the proposed change to federal funding for states for Medicaid would result in fiscal strain that would increase over time," S&P Global Ratings said in a separate report.
Republicans on the House Ways and Means Committee proposed the American Health Care Act (AHCA) Monday night and said they plan to vote on it on Wednesday. The Congressional Budget Office has still not "scored" the bill for costs and the impact on the deficit.
President Donald Trump voiced support for the measure, which would dismantle ACA taxes, eliminate the individual and employer mandates, and transition Medicaid to a per capita allotment for states, among other things.
But Democrats blasted it for capping Medicaid and very conservative Republican lawmakers and groups criticized it for not going far enough.
Reps. Richard Neal from Massachusetts and Frank Pallone from New Jersey, the top two Democrats on the Ways and Means Committee and the Energy and Commerce Committee, respectively, said the proposed AHCA is a "drastic and devastating step backwards." They said it "would ration care for more than 70 million Americans, including seniors in nursing homes, pregnant women and children living with disabilities by arbitrarily cutting and capping Medicaid."
Sen. Ron Wyden, D-Ore., the top Democrat on the Senate Finance Committee said the proposal "ends Medicaid as we know it [and] decimates state and family budgets while putting America's most vulnerable at risk." He said it "steals money from Medicare to give a massive tax break to the wealthy."
Senate Minority Leaders Chuck Schumer, D-N.Y. vowed to defeat the bill, which he dubbed "Trumpcare."
Conservative groups such as Heritage Action, FreedomWorks and Americans for Prosperity also criticized the House Republican plan for not going far enough to repeal the ACA.
The AHCA proposes to end Medicaid's entitlement structure and move to a per capita system on Jan. 1, 2020. The plan would use fiscal 2016, which ended on Sept. 30, as a base year. Medicaid would be divided into different categories – the elderly, the blind and disabled, children, expansion states under the ACA, and everyone else. Under the bill, it would be determined what each state spent in each category in fiscal 2016 and that amount would be inflated to 2020 and annually thereafter based on the Consumer Price Index for medical care.
"That's going to have the biggest effect" on states and localities, said Eric Kim, a director at Fitch Ratings. Medicaid represents one third of state budgets, he said.
The Kaiser Commission on Medicaid and the Uninsured estimated last year when the Republicans tried to repeal the ACA that repealing the ACA would reduce federal spending on traditional Medicaid by $1 trillion, or 26%, over 10 years, according to Fitch.
"Reducing federal Medicaid funding anywhere near 26% over 10 years would require states to make significant budgetary changes," Fitch said. "Implications for lower levels of government including school districts, cities, counties, and public higher education institutions that rely on state support could be more significant given their generally more constrained budgetary flexibility."
"Hospital and skilled nursing home providers would be at risk of reduced coverage eligibility, reduced reimbursement service provided, or both," Fitch said.
The AHCA would also end new enrollment in the Medicaid expansion and the enhanced federal match that 31 states and the District of Columbia opted into on Dec. 31, 2019. These expansion states would be faced with "a unique policy predicament" of denying Medicaid access to individuals who would otherwise qualify beginning in 2020, or taking on significant costs they had thought would be borne by the federal government, Fitch said.
