Latest health care repeal bill in Senate could cost Minnesota billions

WASHINGTON – Minnesota stands to lose billions of dollars in federal funding if Senate Republicans are successful next week in their latest bid to dismantle the Affordable Care Act.

Supporters of the so-called Graham-Cassidy bill say it returns control of health care policy to the states. But many Minnesota health officials counter that it endangers care of seniors and people with disabilities and would lead to even more costly premiums in the individual market.

"People won't be able to afford to get coverage and at the end of the day more people will go without the medical care that they need," said Jim Schowalter, CEO of the Minnesota Council of Health Plans. "This takes us back several steps."

Like other states, Minnesota under the proposal would get a federal health care block grant, with flexibility in how to spend it. But an analysis by the Washington-based health care consulting firm Avalere Health found that Minnesota would lose $8 billion over the next decade compared to what it would receive under the Affordable Care Act.

The federal mandate to have health insurance would go away, along with the system of subsidies and tax credits designed to make premiums more affordable. The bill would also end the expansion of the Medicaid program to those who are slightly above the poverty level, and like other Republican proposals, federal Medicaid dollars to states will be capped.

That could result in a $37 billion loss to Minnesota in federal Medicaid funding by 2030, according to an analysis by the Minnesota Department of Human Services. MinnesotaCare would see its federal funding stream eliminated entirely. The program, which serves 92,000 working poor, is mostly paid for with federal dollars.

"If the repeal of ACA passes, it's going to just be a nightmare," Gov. Mark Dayton told reporters this week.

"The uncertainty for states and for the people of Minnesota is going to be really destructive."

By comparison, Wisconsin would gain $3 billion under its block grant because the bill funnels federal dollars away from states that accepted aid during the Obama administration to those that did not.

"There's a significant transfer of funds from blue states to red states," said Andy Slavitt, a Minnesotan who served as acting administrator of the Centers for Medicare and Medicaid Services for the last two years of the Obama administration. The bill, he said, creates "losers and bigger losers."

National and state groups representing hospitals, nursing homes, doctors and some insurance companies have opposed the bill.

"Not much has improved since the last failed attempt by the U.S. Senate to pass an ACA repeal and replace bill," said Kari Thurlow, senior vice president of advocacy for LeadingAge Minnesota, a long-term care industry group.

Nearly 60 percent of all nursing home care in Minnesota is paid for by Medicaid, which also provides funds to help people live independently at home or in assisted care facilities. The Medicaid spending caps proposed by the bill would force the state to cut benefits and reduce provider reimbursement rates, she said.

"It will hurt the most vulnerable and in many cases jeopardize people's ability to stay in their homes as they age," said Will Phillips, state director for AARP Minnesota.

The elderly and people with disabilities make up about 20 percent of the 1.1 million people in Minnesota's Medicaid program but account for nearly 60 percent of spending.

Minnesota currently provides benefits to people with disabilities that are not required by federal law, making them vulnerable to cuts as federal funding decreases over time, said Mike Gude, communications director for the Arc Minnesota, a disability rights group in St. Paul.

"These programs provide supports that help people with disabilities get and keep jobs in the community and helps them live in their own place in the community," he said. "All of those kinds of services would be threatened."

In addition to Medicaid cuts, Minnesota would have about two years to change health policy to conform with the new law, if enacted, compared to the seven years it has taken to implement Obamacare.

"All of sudden to undo all that and redo to establish new programs and new approaches," said Lynn Blewett, a public health professor at the University of Minnesota. "I just can't imagine what will happen."

Sen. Bill Cassidy of Louisiana, a physician and a lead sponsor of the bill, dismissed criticism, saying it comes from "those who wish to preserve Obamacare, and they are doing everything they can to discredit the alternative."

"More people will have coverage, and we protect those with pre-existing conditions," Cassidy told CNN.

The bill does require that "adequate and affordable" coverage be available for those with pre-existing conditions, but since the terms aren't defined in the bill, critics fear insurers could jack up the price of those plans beyond most people's ability to pay. States could also obtain waivers that would erase some protections.

"Over the next 10 years, 32 million people will lose coverage," Slavitt said. "Premiums are likely to shoot up in the near term — 20 percent in the first year, and the consumer protections that people really value, like: protection against being discriminated against for having a pre-existing condition, having a lifetime cap on your policy, all those are gone."

The bill's sponsors are scrambling to lock in the 50 votes they need to pass it before a Sept. 30 procedural deadline.

The Associated Press contributed to this report.