The Decider: Senate O’Care Repeal Bill Lets HHS Decide Who Suffers Most

The Senate Obamacare overhaul bill cuts a massive amount of federal funding of health coverage — a cut that will only increase in time – and replaces it with a comparatively minuscule pot of health care funding for the states. How that money will be used to paper over the massive spending cut will be left largely to the discretion of the Department of Health and Human Services, meaning the states will have to compete for the pool of available funds with no guarantees they’ll get the assistance they’ll need to make up for the shortfall.

“The [HHS] Secretary can do what he wants or she wants with the money,” Timothy Jost, a health law specialist at Washington and Lee University, told TPM.

The ambiguous language gives the HHS significant power as President Trump seeks to push wary GOP senators into supporting the widely criticized bill. It sets up a scenario in which the administration can dole out funding as its discretion, giving it leverage over states struggling to make ends meet, while on the flip side giving the Republican administration the opportunity to stiff blue states.

Already there are reports that top HHS officials are pointing to the vaguely described pools of money while trying to convince Republicans to sign on to the legislation, the Better Care Reconciliation Act. Tellingly, where there is any specificity in how the bill’s allotments are described, it’s aimed very obviously at the GOP senators who have been most vocally raising concerns.

But amidst all the politicking are the serious policy implications. States will likely need to jump through new hoops to access what little is available to make up for the reductions in federal funding.

As Gov. Brian Sandoval (NV), one of BCRA’s biggest GOP critics, put it Friday, “Anybody can do the rudimentary math.” The Senate GOP bill cuts hundreds of billions from Medicaid and replaces it with a fraction of that in state funding.

The Congressional Budget Office found that the initial bill cut $772 billion from Medicaid, in provisions that went largely unchanged in the latest version unveiled Thursday. The band-aid the legislation is offering to address that shortfall, as well as the risk of a major disruption in the individual market, comes in the form of $182 billion in “stability” funds, largely doled out at the HHS’ discretion, and a few other adjustment to the Medicaid caps the HHS will be able to make.

Centers for Medicare and Medicaid Services Administrator Seema Verma (pictured above) met with about half a dozen skeptical GOP senators Thursday after the revised bill’s release and, according to the Washington Post, gave a presentation stressing that the money could be used by states to mitigate their coverage losses.

This pittance of a pay-off comes with little guidance or guardrails.

“States will have to apply for assistance and the department will issue what regulations it wants for conditions for receiving those funds, and can decide which states to give them to based on whatever criteria is established,” Diane Rowland, executive vice president at the Kaiser Family Foundation, told TPM.

A $50 billion short-term fund  is available for insurers to “to assist in the purchase of health benefits coverage by addressing coverage and access disruption and responding to urgent health care needs within States,” in accordance with yet-to-be written guidance from the CMS administrator. The rest comes in a “long term state stability and innovation allotment,” with $15 billion earmarked for insurers’ high-risk programs. Again, the CMS will be in charge of writing the rest of the guidance.

“It’s completely up to the CMS administrator, who gets the money,” Jost said.

An additional $45 billion was included in the revised legislation for opioid programs, reflecting the request of Sens. Shelley Moore Capito (R-WV) and Rob Portman (R-OH), both from addiction-ravaged Medicaid expansion states. The funding is doled out as the Health and Human Services secretary “determines appropriate.”

“It really isn’t targeted to individuals so that in a timely manner they can seek out and obtain the care that they need,” Judy Solomon, vice president for health policy at the left-leaning Center on Budget and Policy Priorities, told TPM.“ Every state is going to want it, regardless of need. So does it really go to where there is the highest incidence, like Medicaid can?”

“Insurer can do it through coverage, not through some formula that may or may not be a good measure since every state wants something,” she added.

Sen. Marco Rubio (R-FL), it appears, had requested a provision in the bill relieving states of the legislation’s per-enrollee limits on the federal Medicaid spending in the case of public health emergencies, such as Zika.

Here, too, that depends on if the “Secretary determines that such an exemption would be appropriate” and it comes with an annual maximum.

The only real exception to this trend is a carve out obviously designed for Alaska—home to Sen. Lisa Murkowski (R-AK), one of the toughest votes for the GOP to win—that guarantees the state will annually receive 1 percent of the long-term stability funds.

The new bill added waivers for states to access $8 billion for home- and community-based care programs, which would be very vulnerable under the proposed Medicaid overhaul otherwise. Surprisingly, there actually is some guidance there, but the guidance appears to be a major wink at Republican senators from rural states.

“The Secretary shall select States to participate in the demonstration  project on a competitive basis except that, in making selections under this paragraph, the Secretary shall give priority to any State that is one of the 15 States in the United States with the lowest population density,” the legislation said.

“In the the past, they’ve given the states more federal matching funds as an incentive,” Rowland said, of the Obama administrations home-based care waivers. “Now, they’re talking about a pool of money that they have to compete for, and that’s a very different degree of flexibility and assistance to the states.”

With the general ambiguity, there’s the potential for side-deals to help Republicans get their beleaguered bill across the finish line. More broadly, however, there’s the implications for how it affects the individuals whose coverage is threatened by the bill, and the state officials who will have to make tough decisions about their programs future.

“They’re doing this very inadequate damage mitigation in all these different ways,” Solomon said, while citing her previous career working with state health care officials. “All the sudden: How I am going to manage all these different funds and apply to them? It’s just mind boggling, when you have a system that’s working but you’re ripping it out to do this.”