GOP bill's Medicaid cuts draw fire from insurers, governors

(Bloomberg) — The Republican plan to overhaul the Affordable Care Act is drawing strong opposition just two days ahead of a crucial floor vote in the House, driven by the law’s cuts to the Medicaid health program for the poor.

On Tuesday, a group representing major Medicaid insurers said it has “serious concerns” about the GOP bill, estimated to slash $880 billion from Medicaid. Governors, including some Republicans, are also warning that it could blow holes in their budgets and harm constituents.

Whether Republicans have enough votes in the House for the bill to pass isn’t clear. Some moderates are opposed, citing the impact on patients and states, while conservative opponents say the bill doesn’t go far enough to rein in costs and undo Obamacare. President Donald Trump threatened House Republicans who vote against the bill with losing their seats in 2018, and leaders voiced optimism it would pass the chamber.

Funding limits in the bill, called the American Health Care Act, or H.R. 1628, could result in 14 million people losing Medicaid coverage in a decade, according to the Congressional Budget Office. At least five Republican governors have said the caps, where much of the bill’s estimated cost-savings come from, could harm beneficiaries of the joint federal-state program that also covers nursing home care for many people. The nonpartisan CBO hasn’t yet evaluated the bill’s latest amendments.

Unnerved investors

“The American Health Care Act shifts significant financial risk and cost from the federal government to states without providing sufficient flexibility,” Michigan Gov. Rick Snyder said in letters sent to each member of his state’s Washington delegation. “While reforming the nation’s health care system is vital, it is imperative that gains in health coverage and access to care are maintained.”

The cuts are unnerving health care investors, too. Hospital stocks swooned Tuesday amid concerns that an increase in the number of uninsured patients could stick hospitals with more unpaid bills. Community Health Systems Inc. lost 7.7 percent to $8.22 at the 4 p.m. close in New York, while Tenet Healthcare Corp. slumped 6.2 percent to $16.44. Major lobbying groups for hospitals and doctors, such as the American Medical Association and the American Hospital Association, also oppose the overhaul.

“It’s hard to be supportive seeing the size of cuts,” Jeff Myers, chief executive officer of Medicaid Health Plans of America, said in an interview on Tuesday. “It does call into question whether those services can be provided or whether states are going to see massive disruption.”

Myers said the current bill would do harm, and his group supports moving Medicaid over time to per-capita caps, a more limited form of funding that’s an option in the AHCA. Members include Aetna Inc., UnitedHealth Group Inc., Centene Corp. and Cigna Corp.

Paying customers

“We agree that the Medicaid program is not sustainable financially over time,” he said. “We want to make sure that any financial restructuring be done in a way that doesn’t destabilize our state partners or create problems for enrollees.”

Although many large insurers have quit offering plans in the ACA’s individual markets because of financial losses, the bill could still cost the companies millions of paying customers. On the other hand, it also offers insurers tax cuts.

Coverage concerns

The Blue Cross Blue Shield Association, which represents health insurers that offer coverage under that brand, recommended in a March 7 letter that lawmakers ensure Medicaid payments are adequate to cover costs, “so that states can properly invest in Medicaid improvements such as adoption of managed care.”

The Alliance of Community Health Plans, whose members include Kaiser Permanente and other insurers that are linked with their own doctors and hospitals, said it’s concerned about widespread coverage losses.

“More work needs to be done to ensure there is adequate financing for our most vulnerable, hard-working Americans,” the group said in a statement.

Some conservative groups are also opposed, including Heritage Action and Americans for Prosperity, which tweeted “without major changes, we’ll key vote against it & stand with those that stand with us.” The U.S. Chamber of Commerce said it supports the repeal bill.