Obamacare repeal may cost states billions
Governors, health-industry advocates and other state-level officials are beginning to put a price on the Affordable Care Act's repeal — and it's in the billions.
Estimates reflect deep losses for states such as California, Louisiana, Michigan, New Jersey, New York and Ohio.
In addition to Medicaid funds, states may see less revenue from sales and income taxes though loss of related health care jobs, and hospital failures worry some state officials. A University of California Berkeley report released Dec. 20 said repeal would cost California $20.3 billion in gross domestic product, 209,000 jobs and $1.5 billion in tax revenue.
Such financial worries, along with an interest in keeping people insured, are driving governors to press President Donald Trump and Congress to save Obamacare, according to a governor of a state that didn't adopt the ACA's expansion of Medicaid.
Millions, billions lost
Hundreds of millions, even tens of billions, of dollars in Medicaid funds are at stake for states if the ACA is repealed.
Thirty-one states plus Washington, D.C., opted to expand Medicaid programs under the act, but most haven't ventured a guess as to what continuing the programs would cost them.
Nationally, federal spending on health care for the non-elderly would be reduced by $109 billion in 2019 and by $1.3 trillion from 2019 to 2028 because of the elimination of the Medicaid expansion, premium tax credits and cost-sharing assistance, according to the left-leaning Urban Institute.
Some state estimates show a significant hit with an ACA repeal:
- Louisiana estimates the state would need to spend $1.1 billion in 2018 and $1.096 billion in 2019 to maintain the same level of coverage to its residents if federal Medicaid money under the law is withdrawn.
- Empire Center, a conservative think tank, estimates New York would lose $6 billion in Medicaid funds, while the state’s Democratic governor, Andrew Cuomo, puts the number at $3.7 billion.
- The nation’s most populous state, California, could lose $15 billion in federal funding if the Medicaid expansion under the ACA is repealed, according to the state's Department of Finance.
- An Ohio official said it would lose $3.5 billion.
- A recent report from New Jersey Policy Perspective said it could cost that state $3 billion a year.
What may be lost
Ohio Gov. John Kasich and Gov. Rick Snyder of Michigan, both Republicans, are among the governors hoping to save at least elements of the Affordable Care Act.
According to the Center on Budget and Policy Priorities, Ohio could lose $3.5 billion in federal funding in 2019 and $42.2 billion between 2019 and 2028. And Michigan stands to go without $2.5 billion in federal money in 2019 and $30 billion between 2019 and 2028.
The number of uninsured in both states would rise by the hundreds of thousands, according to the Urban Institute.
States, however, can't estimate the full impact of repeal, according to H.D. Palmer, a spokesman for the state's Department of Finance.
Though some legislation has been offered in Congress, just what would replace the Affordable Care Act hasn't been explained by Trump, he said.
Governors push Congress
One governor, who doesn't wish to be named because he hopes to maintain a good relationship with Trump during negotiations, said that a concerted effort is underway by many of the nation's governors to save the health care law.
"Repeal will have a detrimental effect on state budgets and economies," he said. "We're still hoping to work with him to find a solution."
Kasich, Snyder, and fellow Republicans Gov. Brian Sandoval of Nevada and Utah Gov. Gary Herbert met with lawmakers on Capitol Hill last week to discuss saving Obamacare, but governors haven't had much success meeting with the president, the un-named governor said.
Still, the effort to save Obamacare may be gaining headway.
Sens. Bill Cassidy, R-La., and Susan Collins, R-Maine, who met with governors, held a news conference Jan. 23 to introduce their proposal to keep Obamacare while providing an alternative program in which states may decide to participate. Under the Patient Freedom Act, states could also decide to adopt neither program.
It isn't clear whether the legislation, which has a companion bill in the House from Rep. Pete Sessions, R-Texas, would receive backing from GOP leadership.
If Obamacare is repealed completely, Alaska and Massachusetts might consider raising taxes to cover some of the lost federal funding, while Kentucky, for one, isn't likely do so, according to officials in those states.
Emily Beauregard, executive director for Kentucky Voices for Health, said that Kentucky would lose hundreds of millions of dollars in federal support if the health law is repealed. But health care advocates in Kentucky don't think elected officials there will support paying for displaced Medicaid beneficiaries because the state already finds itself in a difficult fiscal position.
"The federal government is unlikely to cover more than a fraction of the additional uncompensated care, so the rest would have to be a mixture of additional state/local spending, more uncompensated care funded by providers, and more unmet health care needs for the uninsured," said Urban Institute senior research analyst Matthew Buettgens.
Funding 'not in budget'
About half to two-thirds of state budgets are already facing unexpected deficits because of lower-than-expected revenue this fall, according to Kim S. Rueben, project director of the Urban Institute's state and local finance initiative.
"Uncertainty about federal actions in general and health care specifically is a major concern for governors as they pass their budgets," she said.
For example, Kentucky previously budgeted $265 million annually to support hospitals providing charity care, but that line item was eliminated under the ACA, Beauregard said.
“The state is going to have to do something about that,” she added. “That funding is not in our budget now. These are decisions our state legislature and governor would have to make. I’m not sure they would really restore that safety net.”
High poverty rate
An already cash-strapped Louisiana would disproportionately suffer from the loss of funding compared to other states, because it has the third-highest adult poverty rate in the U.S.
"Louisiana gets more Medicaid dollars from the federal government than the rest of the U.S. because it has a large poor population," said Jan Moller, director of the independent, nonpartisan Louisiana Budget Project.
Gov. John Bel Edwards, a Democrat, has said he's concerned about the uncertainty the program now faces, but he doesn't believe that Trump or Congress will repeal the coverage that millions are receiving across the country.
The state also banked about $180 million of federal funds into the current budget to cover new Medicaid enrollees the first year. Repeal of ACA would mean the loss of $4 billion in additional federal funding between 2019 and 2028, according to the Urban Institute.
The implications for the state budget are "extremely serious," Edwards said, because of the widening deficit and a $1.5 billion fiscal cliff facing the state when temporary revenue-raising taxes fall off in 2018.
"Because we are a state that is very tied to the energy sector, we have an economic recession right now while the rest of the country is starting to recover from the great recession," Moller said. "If we lose federal funding for health care, it's only going to make [budget problems] worse."
With assistance from Adrianne Appel in Boston, Tripp Baltz in Denver, Michael J. Bologna in Chicago, Nushin Huq in Houston, Leslie A. Pappas in Philadelphia, Paul Shukovsky in Seattle, and Gerald B. Silverman in Albany, New York.