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GOP health care bill shifts costly decisions to New York lawmakers

WASHINGTON – New York State legislators would face a do-or-die moment in less than three years, under the Obamacare replacement proposed by House Republicans this week.

If the GOP health care proposal becomes law – and that's a big if – state legislators would be forced to make hugely costly and politically perilous decisions about the future of health care for millions of New Yorkers.

They would have to decide whether to cut services, eligibility or doctor payments under the extraordinarily generous Medicaid program that serves 6.4 million lower-income New Yorkers – or whether they want to find enormous sums of money to keep the program the same as it is now.

Legislators would also have to determine the future of the state's health exchange, where 3.6 million New Yorkers bought their health insurance this year.

And they would do this amid a fast-changing health care system – that's likely to leave far more people uninsured.

First and foremost, to some, the House GOP plan to replace the Affordable Care Act can be summed up in one sentence.

"This bill is just a federal cost shift onto the states," said Bea Grause, president of the Health Care Association of New York State.

And that is one reason why the bill's political prospects are perilous at best.

Conservatives and progressives alike took shots at the Republican bill, called the American Health Care Act, on Tuesday. Hard-right lawmakers derided it as "Obamacare-lite." Democrats said it would result in millions of people losing their health insurance.

But if the bill does manage to become law in some form, it certainly won't remove government from health care the way some conservatives once hoped.

It will just change the government that's making many health care decisions – from the one in Washington to the ones in state capitals around the country.

Most importantly, the bill creates a federal per-capita block grant to fund Medicaid, the federal-state health plan for the poor, starting in 2020.

That means that New York would no longer get an open-ended subsidy from Washington for the program. Instead, it would have to live within limits set in 2016, not taking into account inflation or market changes that may occur between now and 2020.

The state would especially have to tighten its belt for the 1.9 million people added to its Medicaid rolls under Obamacare.

Under pressure from lawmakers such as Rep. Tom Reed, R-Corning, and Rep. Chris Collins, R-Clarence, the lawmakers who drew up the GOP bill allowed states to continue that expanded Medicaid program, which offered government health insurance to people earning up to 138 percent of the poverty level.

But starting in 2020, the state would receive less federal funding for new enrollees in that Medicaid expansion, along with a set amount for the poorer people on traditional Medicaid.

While exact figures are not yet available, that's expected to translate to hundreds of millions, if not billions, of additional Medicaid costs for the state.

Health care experts said that would force state legislators to choose from among four tough options:

  • They could cut health care services available under Medicaid.
  • They could tighten eligibility requirements.
  • They could reduce the reimbursements medical professionals get to treat Medicaid patients.
  • Or, they could raise taxes and cut other government programs to close the yawning gap in Medicaid funding.

The bottom line, said Rep. Brian Higgins, is that New York will be a net loser under the change.

"New York depends on a lot of federal money for this program ... and the Republican majority is really cutting significant federal funding for this program," said Higgins, D-Buffalo. "This is going backwards no matter how you look at it. It's going to have a deleterious effect on Medicaid."

That's especially worrisome, Higgins said, because 63 percent of Medicaid funding goes to the elderly, with much of it funding nursing home care.

But, Reed defended the Medicaid changes.

He said the bill was constructed to get states like New York to adjust to a new reality in which they have to bear more fiscal responsibility for the program – and exert more cost control over it.

New York has long offered one of the nation's most generous Medicaid programs, opening the program to low-income single men and covering a range of medical services far beyond basic care. And then, Reed noted, New York decided to expand the program again by accepting federal funding to add somewhat higher-income people to the Medicaid rolls under Obamacare.

Asked what New York could do with less federal Medicaid money coming in, Reed said: "That's a question for the elected officials in Albany to decide. If New York chooses to proceed with a program with all the bells and whistles, then the state officials will have to bear the consequences of their decision."

The governor and State Legislature will also have to decide what to do with the state's health exchange, where the self-employed and those who don't get health insurance through employers go for coverage. There's nothing in the Republican Obamacare replacement that would prevent states from continuing running these online health care marketplaces, and Collins said: "I expect states will keep running their exchanges."

But the insurance offerings on those exchanges could look radically different.

On one hand, the GOP bill could expand offerings by allowing insurers to sell low-cost, bare-bones, high-deductible plans that could be more appealing to the young and healthy.

Then again, the young and healthy might choose to not buy health insurance. The GOP plan ends the controversial mandate that Americans buy health insurance or pay a tax penalty – meaning there is less incentive for millennials to buy a policy.

What's more, the GOP bill replaces the subsidies and tax credits that Obamacare gives to people earning less than $47,500 to buy insurance. In their stead is a new set of tax credits, based on income and age, that would help people with higher incomes as well as lower incomes.

The change is a big one, with some unusual ramifications.

For example, a 27-year-old earning $30,000 in Erie County would see his or her federal health care subsidy reduced by $1,130 a year under the GOP plan, according to a Kaiser Family Foundation analysis. Meantime, a 60-year-old earning $100,000 and buying insurance on the exchange would get a brand-new $1,500 tax credit.

Looking at the new tax credits, Donald Ingalls, vice president of federal and state relations for BlueCross BlueShield of Western New York, said: "We do have some concerns about whether the credits would be at a sufficient level to allow people to continue to afford coverage."

The bill also might not work well for unionized employees of large companies in struggling industries. That's because while those companies are required to provide health coverage under Obamacare, the Republican alternative removes that requirement.

Higgins agreed with union leaders who fear that might give companies more leverage in labor negotiations, given that they now can threaten to end their health plans and force employees to go buy their own health care.

Collins disagreed.

"Historically, large companies by and large offer health care to their employees as an enticement for employment, and I don’t expect that to change at all," Collins said.

While much of the GOP bill deals with health insurance, it also deals a severe blow to one of the nation's larger health care providers: Planned Parenthood, which would no longer be able to receive Medicaid reimbursements from the federal government.

House Republicans want to crack down on Planned Parenthood because it provides abortions.

But Michelle Casey, president and CEO of Planned Parenthood of Central and Western New York, said the GOP bill will do much more than that.

Some 63 percent of the patients who go to Planned Parenthood facilities in Western and Central New York are on Medicaid, Casey said. If that funding disappears, those patients would have to go elsewhere for cancer screenings, birth control and the other health care services the agency provides. Planned Parenthood, meanwhile, will likely have to close its more remote offices, Casey added.

All these factors point in one direction, health care experts said:

Fewer people would have health insurance under the Republican health plan. Several health care experts predicted that means that people who once went to doctors would instead flood into the nation's emergency rooms, where hospitals would have to provide care for them even though they don't have insurance.

"The hospitals would clearly be hurt by this," said Michael W. Cropp, president and CEO of Independent Health.

Given the number of industries and special interests affected by the bill, several sources said Republicans – who are trying to fast-track the bill in the House – may well run into a brick wall in the Senate.

There, several moderate Republican senators have complained that the Medicaid block grant could hurt their states, while hard-line conservatives are angry that, like Obamacare, the Republican replacement would subsidize people buying health insurance.

Senate Minority Leader Charles E. Schumer, D-N.Y., urged his colleagues to reject the bill, saying it "would badly hurt millions of Americans and throw our health care system back into chaos."

In other words, expect another long, tedious, strung-out fight over replacing Obamacare, not unlike the fight to pass it seven years ago.

"Right now this is just a preliminary conversation," said Nancy H. Nielsen, senior associate dean for health policy at the University at Buffalo Medical School and a former president of the American Medical Association. "The real fight will be in the Senate."

And it's a debate New Yorkers ought to pay attention to for an obvious reason.

"It's going to significantly affect New York State," Nielsen said.

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