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Senate bill a quadruple whammy to New York Medicaid program

WASHINGTON – The Senate Republicans' health care bill will cost New York billions more than the House bill passed last month.

That's the consensus that health care experts reached after a close look at the legislation.

What concerns analysts most is the Senate's different approach to changing Medicaid, the state-federal program for the poor and the lower middle class that serves about 6.4 million New York residents.

While the House bill includes Medicaid changes that are expected to eventually cost the state $7 billion annually, most experts said it's too soon to predict exactly how much more the Senate bill would cost.

But there's no doubt the Senate measure would be worse for New York's budget.

The Senate bill hits New York's Medicaid program – one of the most generous and expensive in the nation – with a quadruple whammy. The proposal:

- Shrinks federal Medicaid payments to states over time by changing the way they are tied to inflation.

- Includes an "equity adjustment" that reduces funds even more for states such as New York that have especially expensive Medicaid programs.

- Curbs federal funding for states that expanded Medicaid under Obamacare in a way that will cost New York more than $7 billion more annually starting in 2024.

- Preserves the House's controversial Collins-Faso amendment ending the New York's practice of charging counties for part of the cost of Medicaid – which could cost the state far more than the projected $2.3 billion annual price tag.

The Senate and House bills differ in other, more minor ways, but it's the Senate's proposed Medicaid changes that worry state health care experts the most.

"It's a bill that will end up being much worse than the House bill," said Bea Grouse, president of the Health Care Association of New York State.

Senate Republican leaders defended the measure, including the Medicaid cuts. They argue that under the current way of funding Medicaid, states have no incentive to control costs, meaning they offer increasingly generous health benefits to an increasing number of people.

The changes in the Senate bill are aimed at one goal, said Senate Majority Leader Mitch McConnell, R-Ky.: "Strengthening Medicaid for those who need it most."

Tighter caps on fed funding

Some of the Medicaid changes would roll out more slowly under the Senate bill than under its House counterpart, but the bottom-line losses to New York would eventually be greater under the Senate measure.

Both bills replace the current system of federal Medicaid subsidies – which is largely open-ended and dependent on how states structure their Medicaid programs as well as how many people enroll– with per-capita caps on federal funding.

But the Senate bill would make those caps tighter every year starting in 2024. The Senate bill then ties those caps to the regular inflation rate, whereas the House bill ties those caps to increases in health costs – which almost always rise quicker than other costs.

The result: Over the years, New York would receive less and less from Uncle Sam to pay for Medicaid under the Senate measure.

On top of that, the Senate bill includes an "equity" adjustment that trims federal funding even further for states that spend more than 25 percent of the national average on Medicaid.

"Based on 2014 spending numbers, New York is one of about a dozen states, almost all in the Northeast, whose caps would be lowered as a result of this provision – potentially losing billions in aid," said Bill Hammond, a health care analyst at the conservative-leaning Empire Center, an Albany think tank.

Lower subsidy for Medicaid

Then there's the matter of the state's Medicaid expansion. Under Obamacare, states were allowed to expand Medicaid to people just above the poverty line. And while both the House and Senate bills aim to end the Medicaid expansion, the Senate bill does that in a way that would give New York a later but bigger hit.

The House bill stops states from enrolling more people under the Medicaid expansion, but it calls on the federal government to continue paying for 80 percent of the costs for those who went on the expanded Medicaid program before this year.

In contrast, the Senate bill eventually winnows down that federal subsidy to 57 percent. That lower level of federal funding, the Center for Budget and Policy Priorities said, would cost New York State an additional $7.3 billion a year starting in 2024.

Adding it all up, the Senate's Medicaid cuts are two to three times deeper nationwide than those proposed by the House, said Robert Greenstein, president of the Center for Budget and Policy Priorities, a left-leaning think tank.

"This would be the biggest assault on a social insurance program in American history," he said.

Shifting cost from upstate counties and LI to state

And it would be an especially complicated change in New York for one reason. Both the House and Senate bills include a provision by Rep. Chris Collins, R-Clarence, and Rep. John Faso, R-Kinderhook, that would bar the state from charging its upstate and Long Island counties for a share of Medicaid.

Those counties currently pay about a 13 percent share of Medicaid, and shifting those costs onto the state would boost the state's expenses by $2.3 billion annually.

“For decades, Albany’s Medicaid mandate and resulting property taxes have burdened New Yorkers unlike in any other state," Faso said. "What we’ve got to show for this scheme is people fleeing our state in droves." Businesses are relocating and those who stay behind face unpayable bills, he said.

Gov. Andrew M. Cuomo warned, though, that every New Yorker will have to pay a "Collins-Faso tax" to make up the lost county Medicaid revenue. And Hammond, of the Empire Center, said the state's losses under that amendment could be far greater than $2.3 billion annually.

That's because the five boroughs of New York City would likely come before the State Legislature and demand that they, too, be freed of their Medicaid expenses, he said.

Collins and Faso opted not to include New York City in their proposal because doing so would increase the annual cost to the state to a whopping $7 billion. But downstate legislators might insist on the move out of fairness.

"It would be a knotty, complicated, divisive issue for the legislature to deal with," Hammond said.

No penalty for being uninsured

If something similar to the Senate bill were to become law, the state would have to contend with some other changes beyond those in Medicaid.

While most people get their health insurance through their employer or from the government, the Senate bill proposes major changes to the "individual market" where people buy health insurance.

Most notably, the Senate bill – unlike Obamacare and the House bill – includes no penalty for people who decide to go uninsured.

That could disrupt the individual market, said Roberta Rifkin, senior vice president for government programs and government affairs at Independent Health.

In addition, Rifkin said the Senate bill would mean even less coverage under the lower-level "bronze" plans on the state's health exchange, along with higher prices for insurance overall.

"We can't sell our health plans for less than they cost," she said. "The premiums have to equal the cost of the medical expenses. The only thing we can do is try to reduce the cost of care."

State plans could dry up

Otherwise, the Senate bill's impact on New York largely tracks the House bill.

Most notably, under both bills, the state's Essential Plan – aimed at people who earn just a little bit more than those on Medicaid – would likely dry up with the federal funding that supports it, Hammond said. That means the people currently on that plan would either have to get more expensive insurance on the private market or go without.

The same thing could happen to Medicaid recipients if the state decides to end its Medicaid expansion to cope with the cuts in federal funding. That's just one of the likely ramifications if the Senate's Medicaid cuts actually make it into law, several sources said.

"Many states would be forced to kick low-income and disabled people off their health care coverage once federal funding for the Medicaid program is cut, as this Senate bill would do," said Chris Shelton, president of the Communications Workers of America.

Rhonda Frederick, president and CEO of People Inc. in Buffalo, said the Medicaid cuts would turn back the clock to a time when the government didn't take care of its most vulnerable citizens.

“Medicaid is a lifeline that allows people with developmental disabilities to live in the community close to their family and friends and not in some institution somewhere," she said. "People are wondering what all of this means and are concerned.”

News medical reporter Henry Davis contributed to this report.

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