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Graham-Cassidy Healthcare Bill

What is the 'Graham-Cassidy Healthcare Bill'

The Graham-Cassidy bill is a Republican effort to repeal and replace the Affordable Care Act (ACA or "Obamacare") that would transfer much of the responsibility for structuring, funding and regulating of healthcare markets to the states. It was proposed by Senators Bill Cassidy (R-La.) and Lindsey Graham (R-S.C.) in September 2017, following a number of failed attempts to roll back Obamacare from March to July. Although they planned to vote on the bill during the week of September 25, following an incomplete Congressional Budget Office (CBO) score, the vote did not happen. The decision not to vote on the Graham-Cassidy bill marked the fourth Obamacare repeal bill failure in 2017,  

The bill's full name is the Graham-Cassidy-Heller-Johnson bill; Dean Heller (R-Nev.) and Ron Johnson (R-Wis.) are co-sponsors.

BREAKING DOWN 'Graham-Cassidy Healthcare Bill'

In early September 2017, Senators Cassidy and Graham began to solicit support for a bill that would roll back major provisions of Obamacare and shift control over health markets from the federal government to the states. Majority Leader Mitch McConnell (R-Ky.) indicated in a September 14 meeting that he would bring the bill to a vote if its sponsors could cobble together a majority.

The timeline was tight: The Senate parliamentarian had ruled that the ability to pass legislation using reconciliation would expire at the end of the month. Reconciliation allows Republicans, who control 52 seats in the Senate, to pass legislation with a simple majority (50 votes plus Vice President Mike Pence), rather than the 60 that would normally be needed to avert a Democratic filibuster. 

The bill needed to receive a CBO score showing that it would not raise the federal deficit over a ten-year period in order to qualify for the expedited process. The score was expected on or shortly after September 25, but would not include estimates of how many people will lose insurance coverage; these figures, which ranged from 16 to 32 million in 2026, played an important role in scuppering previous attempts to repeal and replace Obamacare.

Senators Rand Paul (R-Ky.) and John McCain (R-Ariz.) – who cast the deciding vote against the Republican "skinny repeal" bill in July and is a close friend of Graham's – have said they would vote against the bill. Susan Collins (R-Maine) also voted "no," which left the Republicans one vote short.


The Graham-Cassidy bill would:

   • Repeal the individual mandate, which requires almost all Americans to obtain health insurance or pay tax penalties, without providing a replacement at the federal level. States would be free to devise their own substitutes or to revive the mandate at the state level. The mandate serves to keep insurance markets stable; without it, defenders of the provision warn, relatively young and healthy customers would choose to forgo insurance in order to save money on premiums. Since the remaining pool would be older and sicker, premiums would rise for all customers, pushing yet more of the relatively healthy to give up coverage. This vicious cycle, which can lead to the collapse of an insurance market, is known as a "death spiral."

   • Repeal the employer mandate, which penalizes businesses above a certain size that do not provide health insurance to employees.

   • Eliminate premium and cost-sharing subsidies in 2020. States would receive block grants, which they could use to fund subsidies if they chose. The Market-Based Health Care Grant Program, as the grants would be called, would receive $1.176 trillion over seven years. The bill does not mention any funding for subsidies after that year. Larry Levitt, Senior Vice President for Special Initiatives at the Kaiser Family Foundation, asks what effect this potential cliff-edge could have on funding decisions:

What would states do with health care block grant dollars under Graham-Cassidy, knowing the money could disappear entirely in 2027?

— Larry Levitt (@larry_levitt) September 18, 2017

Avalere Health forecasts that all states would experience a net decline in funding from 2020 to 2036, with the average cut exceeding 30%. Nationwide the cut would amount to almost $4.2 trillion.

   • Allow states to modify community rating, which prohibits insurers from denying coverage or charging more based on pre-existing conditions. Insurers would still not be able to refuse coverage based on health status, but they could decline to cover some costs associated with pre-existing conditions. States would also be able to change the definition of essential health benefits, 10 conditions that insurers are required to cover under the ACA. 

   • Allow insurers to charge older customers five times what they do younger ones – up from a ratio of three under current law.

   • Increase maximum Health Savings Account (HSA) contributions and allow patients to use HSAs to pay for over-the-counter drugs.

   • Devote $155 billion to a reinsurance fund for insurers that suffer losses, which would be available from 2018 to 2020.

   • Fund Medicaid through per capita grants beginning in 2020, with the option to receive the funds as block grants. In 2025 spending growth per non-elderly enrollee would be linked to overall inflation, which increases at a slower rate than medical inflation. The Market-Based Health Care Grant Program, which replaces subsidies, would also replace Medicaid expansion funding. States would have the option to impose work requirements for some Medicaid recipients.

   • Repeal the medical device excise tax and delay the implementation of the "Cadillac tax" on high-cost plans until 2026.

   • Block Medicaid reimbursements to Planned Parenthood for one year. Medicaid is already bound by the Hyde amendment, which prohibits the program from paying for abortions (except in cases of rape and incest), so the funding cuts would affect other services such as cancer screening and STD testing and prevention.

   • Apply the Hyde amendment to federal health grants to states, prohibiting these funds from paying for abortions except in cases of rape or incest. The Senate parliamentarian may strike this provision from the bill on the basis that it does not directly relate to the budget (a requirement for passing the bill under reconciliation). Even so, the Graham-Cassidy bill would provide grants to states through the Children's Health Insurance Program (CHIP), which is bound by the Hyde amendment, beginning in 2021. The abortion restrictions would still come into effect, albeit with a delay.

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