Is the Senate Health Care Bill Really About Tax Cuts?

Plus: Who wins and loses under Graham-Cassidy. By Yuval Rosenberg and Michael Rainey Graham-Cassidy Bill Would Cut Funding to 34 States. Who Loses the Most? The Obamacare replacement bill now being considered in the Senate — and scheduled for a vote [next week]( — would reduce federal funding to states for health care by $215 billion through 2026, and those cuts would shoot up to more than $4 trillion through 2036, according to a [new analysis]( by consulting firm Avalere Health. What it means for states: The analysis found that the Graham-Cassidy bill’s approach to Medicaid financing, which would award block grants to states and implement a per capita cap, would reallocate federal money, creating near-term winners and losers. Thirty-four states and the District of Columbia would see funding reductions by 2026, with states that expanded Medicaid under Obamacare being hardest hit. Seven states would lose more than $10 billion each, with California losing $78 billion and New York funding dropping by $45 billion. The block grant funding in the bill expires in 2026, and Congress would have to re-appropriate money for the block grants to continue. “The ability of the Congress to appropriate additional funding is uncertain and could be constrained by the need to offset the cost,” the report says. Without that renewed funding, by 2036 all states would have their funding reduced compared with the current law. Other winners and losers: “The bill creates a financial incentive for states to direct coverage to very low-income residents near or below the poverty line, potentially at the expense of lower-middle-income individuals who currently receive exchange subsidies,” Avalere’s Chris Sloan said. Separately, analysts at [The Commonwealth Fund]( and the liberal [Center for American Progress]( found that 32 million fewer people would have health coverage after 2026. Why it matters: The Avalere estimate may be the best available given that the non-partisan Congressional Budget Office said it would only be able to provide a [partial assessment]( of the bill’s effects by early next week and would require at least several weeks to evaluate the legislation’s potential effects on the deficit, health insurance coverage levels and premiums. The figures are sure to ramp up criticism of the bill, which would repeal Obamacare’s subsidies for health coverage in the individual market and its expansion of Medicaid benefits for low-income Americans, among other things. Health care groups, a number of governors and even talk show host [Jimmy Kimmel]( have come out against the bill as Senate Republicans have worked to round up the 50 votes required to pass it. [Share]( [Tweet]( [Forward]( Is the Graham-Cassidy Health Care Bill Really About Tax Cuts? Another important point about the Graham-Cassidy plan: The abrupt elimination of federal health care funding for block grants to the states in 2027 doesn’t have to be in the bill, the Center on Budget and Policy Priorities says in a new [report](. Authors David Kamin and Richard Kogin take issue with two claims the bill’s sponsors have made in defending the funding cliff: First, that it’s necessary in order to unlock the procedural method known as reconciliation that Republicans want to use to pass the bill without Democratic votes. Second, that it doesn’t really matter because Congress will reauthorize funding for the block grants before they expire. “The first claim is false, the second highly misleading,” the CBPP authors charge. On the first point, the authors explain that the block grants could be made permanent because reconciliation requires that legislation not add to the deficit beyond the 10-year budget window. The Graham-Cassidy bill meets that test “since its cuts to health care funding are deeper than its tax cuts, whether or not the block grant continues.” On the second point, they warn that, even if Congress were to reauthorize funding for the block grants, the uncertainty surrounding the decision is likely to have consequences before 2027. States might pull back on programs to expand coverage, insurers might drop out, and health care providers might hold off on new hires or investments. At the same time, the authors write that the budget baseline would suddenly be lower once the block grants expire, making it harder to renew the funding. Lawmakers would have to scale back the grants or come up with hundreds of billions of dollars in additional offsetting cost cuts. And they suggest one other reason the legislation may have been written to have the federal funding end: Lowering the budget baseline and showing smaller deficits for 2027 and beyond could make it easier to push through the tax cuts Republicans are pursuing. “In this way, policymakers could essentially use health cuts to finance tax cuts, even if they are not packaged together in the same bill.” [Share]( [Tweet]( [Forward]( Chart of the Day From the [Kaiser Family Foundation]( Fiscal Flashes States Face a $645 Billion Hole for Retiree Health Care Liabilities: State and local governments are going to face some unpleasant budgetary facts next year. The Governmental Accounting Standards Board is asking states and cities to start recognizing future liabilities for retiree health care costs on their balance sheets, starting in fiscal 2018. According to a new analysis from the Pew Charitable Trusts of [data from 2015]( the latest available, U.S. states have retiree health care liabilities of $692 billion and assets of $47 billion, for a net liability of $645 billion. The recognition of these large and growing liabilities — Pew says retiree health care costs rose 6 percent in 2015, and will likely continue to rise as Baby Boomers age out of the state and local workforce — could hurt state bond ratings, driving up costs and creating political pressures to cut benefits. ([Wall Street Journal]( Thelma and Louise Ride Again? Some Republican senators are having a difficult time explaining their support of the Graham-Cassidy bill. Vox asked nine senators about the bill, and most struggled with the idea that millions of people will lose their health insurance under the bill, while emphasizing the virtues of local control and the wisdom and efficiency of state officials. “Our states — our 50 states — are very flexible, very innovative. Much more so than we are here. I think it will work, and it will be a big step toward federalism,” said Sen. Richard Shelby of Alabama. A more colorful analysis was offered by Sen. Pat Roberts of Kansas, who said: “Look, we’re in the back seat of a convertible being driven by Thelma and Louise, and we’re headed toward the canyon. … we have to get out of the car, and you have to have a car to get into, and this is the only car there is.” ([Vox]( Flights of Hypocrisy: Back in 2009, Tom Price spoke out against House Democrats who wanted to spend $550 million on private jets for lawmakers to use. A Republican representative from Georgia at the time, Price told [CNBC]( that the purchase of the jets was “another example of fiscal irresponsibility run amok.” Now Secretary of Health and Human Services, Price seems to have changed his mind about the virtue of government officials using private jets at taxpayer expense. Just last week, Price used a chartered private jet to travel to three HHS events — including one at a resort in Maine — at an estimated cost of $60,000. While previous HHS secretaries typically flew commercial, reports indicate that Price has been traveling by private jet for months. “Official travel by the secretary is done in complete accordance with Federal Travel Regulations,” an HHS spokesperson said. ([Politico]( Lobbyists Are Really, Really Ready for Tax Fight: Just how geared up are special interest groups for the tax battle ahead? The National Association of Home Builders has ads ready to go to either support or oppose the tax overhaul, depending on what it includes. "We're at DEFCON One," the trade group's president said. In case you couldn't tell he's serious, he added: "Tax reform, it's a blood sport." ([Bloomberg]( What We're Reading - [Kimmel, Not Cassidy, Is Right on Health Care, Analysts Say]( – Politico - [Why Democrats Should Love the GOP Health Care Plan]( – Slate - [Obama Expresses Frustration Over GOP Repeal Effort]( – The Hill - [Fed Signals One More Rate Hike in 2017]( – Marketwatch - [Give Us Real Tax Reform, Not a Pig in a Poke]( – Jim Jordan and Mark Meadows, Wall Street Journal - [I've Covered the GOP Repeal Plans Since Day One. Graham-Cassidy Is the Most Radical]( – Sarah Kliff, Vox - [Canada's "Reverse Brain Drain" in the Age of Trump]( – Axios - [Why Understanding Value Is Central to True Health Care Reform]( – Morning Consult - [The Hidden Obamacare Detail That Could Cost Hospitals Billions]( – Wall Street Journal - [Mnuchin's in the Spotlight and the Glare Is Harsh]( – Albert Hunt, Bloomberg View - [Maintaining Full Employment Is the Key to Raising Wages]( – The New Yorker - [Apple Likes the Patent ‘Death Squad.’ Allergan Pays to Avoid It]( – Bloomberg - [Norway’s Sovereign Wealth Fund Reached $1 Trillion]( – Quartz Copyright © 2017 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com. Our mailing address is: The Fiscal Times 712 Fifth AvenueNew York, NY 10019 [Add us to your address book]( Want to change how you receive these emails? You can [update your preferences]( or [unsubscribe from this list](