In a preliminary analysis, the McAuliffe administration estimates that the U.S. Senate’s proposed Obamacare replacement bill would cost Virginia’s Medicaid program at least $1.4 billion over seven years. “The legislation currently up for a vote in the United States Senate would blow a hole in Virginia’s budget and severely impair our ability to offer health coverage and long-term care to the people who need them most,” said Governor Terry McAuliffe in a statement released yesterday.
The per capita caps in the Better Care Reconciliation Act of 2017 affect almost every population covered by Medicaid, and would cost Virginia’s program almost double the $708 million that the House-proposed American Health Care Act (AHCA) was estimated to cost over the same time frame, stated the governor’s office.
The difference between the impact of the House and Senate proposals on per capita caps lies in the “annual growth factor” – the estimation of how much costs will increase in the future over a baseline estimate of Medicaid spending. The Senate bill uses a growth factor that estimates lower growth than the House bill – and both houses use a growth factor that is arbitrary. DMAS estimates costs will outpace the growth factor of both bills; that change becomes more pronounced in later years. Provisions in the BCRA that provide safety net funds to providers and eliminate Disproportionate Share Hospital allotment reductions would not directly make up for the losses Virginia would experience from per capita caps.
According to Michael Martz with the Richmond Times-Dispatch, the estimated loss in federal support in Virginia would jump from $117.2 million in fiscal year 2024 to $327.9 million the next year, and then to $493.5 million the year after that.
Bacon’s bottom line: If this is a fair summary of the impact of the Republicans’ proposed health care reform legislation, then it’s a big deal. It would blow a nearly $500 million hole in the state budget for a Medicaid program that is already one of the most austere in the country.
But let’s look a little closer. The McAuliffe administration says that the Senate and House GOP “annual growth factors” are arbitrary. And perhaps they are. But I would like to know what the McAuliffe administration’s cost escalator is, and what assumptions it is based on. How do we know that it is any less arbitrary? As I understand the Republicans’ logic, the Senate bill would generate savings by giving the states more latitude in how they administer Medicaid. Is it inconceivable that Virginia could run the program more cost effectively than it’s being run at present?
I’m not saying that the McAuliffe estimate is wrong, but I do think we need to subject it to some scrutiny before we accept it as valid.