Obamacare Repeal Bill Offers Both Enormous Flexibility and Uncertainty

The latest Republican proposal to undo the Affordable Care Act would grant states much greater flexibility and all but guarantee much greater uncertainty for tens of millions of people.

The legislation, proposed by two Senate Republicans, Lindsey Graham of South Carolina and Bill Cassidy of Louisiana, would not only reduce the amount of federal funding for coverage over the next decade, but would also give states wide leeway to determine whom to cover and how. The result is a law that would be as disruptive as many of the Republicans’ previous proposals, but whose precise impact is the hardest to predict.

The bill would initially preserve nearly all the funding currently provided to Americans through Obamacare’s state insurance marketplace subsidies and expansion of Medicaid. But starting in 2020, that funding would be reallocated to state governments as block grants. Over time, the division of money would shift among the states based on a complex formula, and the total pot would grow according to a set rate, not based on the number of people nationwide who sign up for coverage.

States could use the money to replicate Obamacare’s programs, or to pursue completely different health policy strategies. The bill lays out some standards for program goals, but gives states broad discretion to use the funds in a variety of ways. “There will be clear differences between states about how they implement,” said Deep Banerjee, an analyst with Standard & Poor’s. “It will create quite a bit of uncertainty over the next few years.”

The bill is structured as a sort of slow-motion repeal of Obamacare’s main coverage programs. Though the bill establishes the new state block grant program for a decade, all of the program’s money expires after 2026. That makes it different from the Obamacare overhaul bill passed by the House and a previous bill considered by the Senate, which would have made modifications and cuts to those programs, but preserved them in perpetuity. The expiration of the Obamacare programs alone would probably mean that about 23 million fewer Americans would have health coverage, if compared with current law, according to an estimate the Congressional Budget Office made in regard to a previous repeal bill.

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