Under latest health care bill, Republican states would benefit disproportionately

WASHINGTON – The latest Republican proposal for curtailing the Affordable Care Act was assembled with such haste that it may get a vote before a full cost estimate is finished. But it is not a new idea.

At its core, the bill introduced by Sen. Bill Cassidy, R-La., and Sen. Lindsey Graham, R-S.C., would implement a decades-old conservative concept, capping the amount that taxpayers spend on Medicaid and giving states full control over the program. As he's sold the legislation to conservative governors and activists, Graham has described it as a possible triumph for federalism, and a way to end the progressive dream of universal health care managed from Washington.

"Let's get back to the basics of being conservative," Graham said in a Saturday interview with Breitbart News. "We take the money that we would spend on Obamacare in Washington, and we block grant it to the states."

What's new, thanks to the Affordable Care Act, is a discrepancy in state-by-state funding that would be flattened out by the block grants. Most states used the ACA's funding to expand Medicaid; some Republican-run states, liberated by the Supreme Court's decision to make the funding optional, did not. As a result, 14 of the 15 states that would stand to gain from block grants are run by Republicans; Democratic megastates including California, New York and Massachusetts would lose billions of dollars, a feature both Graham and Cassidy have talked up to conservatives.

"We will either have to kick hundreds of thousands of people off of health care, or we will have to dramatically increase taxes," said Sen. Chris Murphy, D-Conn., in one of a string of Monday night floor speeches by Democrats.

"No longer will four blue states get 40 percent of the money," said Graham to Breitbart. "A state like Mississippi, they get a 900 percent increase. South Carolina gets 300 percent."

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Graham, elected in 1994's "Republican revolution" to his first term in the House, was present for Capitol Hill's first serious block-grant campaign. In 1995, in one of many attempts to devolve power from Washington, congressional Republicans teamed up with governors to both cap Medicaid spending and chop up the program's funding in "MediGrants," for each state to apply to their own designs.

The proposal died after President Bill Clinton – using one of the pens Lyndon Johnson used to enact Medicaid – vetoed it, denouncing the "wrongheaded cuts" favored by Republicans.

"The president has to realize that Lyndon Johnson's Great Society has failed," said Newt Gingrich, then the House speaker.

The block-grant concept remained in conservative thought, and reemerged in 2010, when Rep. Paul Ryan, R-Wis., then a ranking member of the House's tax-writing committee, included the idea in a flashy "Roadmap for America's Future." In 2011, newly elected Wisconsin Republican Gov. Scott Walker joined a delegation of conservatives in Washington to testify for the wisdom of devolving Medicaid to states.

"It's the biggest challenge out there," Walker said of state Medicaid spending. "We have maintenance efforts that require us to maintain things by the federal government when we have other things that would work better to manage those costs."

Barack Obama's own veto plan made the block-grant dream futile. This year, Ryan included the idea in the American Health Care Act, the House's vehicle for "repealing and replacing" the ACA.

"Medicaid, sending it back to the states, capping its growth rate, we've been dreaming of this since I've been around – since you and I were drinking at a keg," Ryan told National Review Editor Rich Lowry in March. "We're on the cusp of doing something we've long believed in."

In the 1990s, and recently, supporters of block grants have pitched them as ways to control costs without simply kicking people off of Medicaid. The slower growth in funding, and higher obligations on states, are described as problems that could be fixed once money was liberated from the federal leviathan. At last week's rollout of the Senate bill, former senator Rick Santorum, R-Pa., repeatedly cited Congress's experience with welfare reform to argue that states could succeed where Washington failed.

"You ever hear a governor come to Washington and complain about not having enough money for their welfare program?" Santorum asked. "No, you don't, because we gave them flexibility."

But the shrinking of the welfare rolls, which began in boom times, continued even as poverty increased. Between the 1996 passage of welfare reform and 2013, the number of families living on $2 a day or less rose by 150 percent, according to the National Low Income Housing Coalition.

And the constituency for Medicaid is larger, with 74 million recipients, than the 3 million-plus Americans who receive Temporary Assistance for Needy Families. While some Republican governors, including Walker, have pleaded for Congress to block-grant Medicaid, Graham and his allies have struggled to get a majority of governors on board. The majority of states, which expanded Medicaid under the provisions of the ACA, would see money clawed back and redistributed.

"It is not practical for New Hampshire to craft a system with over $1 billion in cuts to federal funding," New Hampshire Republican Gov. Chris Sununu said on Monday.

"This particular proposal, in part because of how it's designed, would have major consequences for a state like Massachusetts," said Republican Gov. Charlie Baker earlier in September, during a Senate hearing on moving past repeal. "It assumes that the cost of health care should be the same everywhere."

The discrepancies in state-by-state Medicaid spending, created when some states declined to expand Medicaid, have already befuddled some Republicans who are now expected to push the bill through.

"This bill keeps 90 percent of the spending of Obamacare and reshuffles it," said Sen. Rand Paul, R-Ky., the most resolute Republican opponent of the legislation, who said it would have made more sense if the legislation zeroed out the spending of the ACA.

And there are risks in one favorite talking point – that passing the bill would allow red states to fund private health care options, while blue states could go their own way. Sen. John Neely Kennedy, Cassidy's Republican colleague from Louisiana, said Monday that he worried about blue states experimenting with their block grants in ways that would expand government-run, universal coverage.

"If you give California and New York a big chunk of money they're gonna set up a single-payer system," said Kennedy. "And I want to prevent that."

Kennedy, a folksy freshman senator, is not expected to oppose the final bill. But Louisiana, which expanded Medicaid in 2016, is among its losers. According to the left-leaning Center for Budget and Policy Priorities, Louisiana would get roughly $2.3 billion less in health care funding over 10 years, as funding was capped and redistributed to neighboring states.

Estimates like CBPP's may be the only ones that voters see, as the Congressional Budget Office announced Monday it would not be able to provide detailed numbers before September 30, when Republicans lose the ability to pass a bill on a party-line vote.

"I just don't care about the coverage numbers," Cassidy said last week, "because their methodology has proven to be wrong."