Republicans’ federal health care bill devastating to Minnesotans, would shift significant responsibility to the state

Minnesota’s costs to ensure health care for a particular group of Minnesotans would increase by 228 percent in 2021 if the American Health Care Act became law. This bill would significantly weaken the federal government’s role in funding affordable health care for many low-income Minnesotans and Minnesotans living with disabilities or needing in-home care. That’s according to a recent analysis from the Center on Budget and Policy Priorities.

Last month, Republicans in the U.S. House of Representatives passed the American Health Care Act (AHCA), which cuts roughly $1 trillion from health care while giving hundreds of billions of dollars in tax cuts to high-income Americans and insurance companies. This bill makes severe cuts to Medicaid, totaling $834 billion over the next decade and backing the federal government out of a decades-old promise to work with states to ensure that Americans can afford health care.

The federal government has historically made payments to states for part of the cost of providing health insurance to folks on Medicaid. In Minnesota, Medicaid is called Medical Assistance. The Affordable Care Act, also known as Obamacare, gave states an opportunity to extend affordable health care coverage through Medicaid to adults with incomes under 138 percent of the federal poverty line, or $16,600 for an individual. The federal government covered at least 90 percent of the costs for this expansion group. In Minnesota, expanding Medicaid has contributed to positive results. In 2015, only 4.5 percent of Minnesotans went without health insurance. Compare that to 8.2 percent in 2013, the year before the Medicaid expansion rolled out as part of the ACA.

However, the AHCA would drastically change the federal government’s role. Starting in 2020, states would only receive the standard federal payment rate – 50 percent in Minnesota – for any new enrollees in the ACA expansion population. But many of those who are currently covered by Medicaid could quickly fall to that lower matching rate. People at these income levels often see their incomes rise and fall over the course of a year. One month they may get more hours at work and earn too much to qualify for Medicaid, and then another month, their hours may get cut and they would once again qualify. When they re-enroll, Minnesota would need to pay for 50 percent of their costs instead of the 10 percent under the ACA enhanced rate. The Center on Budget and Policy Priorities estimates that with these substantial payment rate changes, it would cost Minnesota $497 million to maintain the Medicaid expansion in 2021, with costs rising higher in subsequent years.

That’s a significant cost shift to the state, and wouldn’t be an easy gap to fill. This demonstrates why is is so important for Minnesota policymakers to maintain an important funding source for affordable health care, the provider tax, so the state is in a better position to respond to federal health care changes. Without state action, the provider tax is due to disappear on January 1, 2020.

As the AHCA heads to the U.S. Senate for debate and negotiation, lawmakers must re-focus on health reform that improves health care for Americans, building on the strengths of the Affordable Care Act rather than reversing the historic coverage gains made in the past several years. Health reform that moves us in the right direction must maintain or increase the number of Americans with health insurance, lower health insurance premiums and deductibles, and preserve or strengthen protections for pre-existing conditions and benefit standards. The Senate would be wise to focus on those goals rather than pass anything resembling the House version.

-Clark Biegler

About Clark Biegler

Clark Biegler is the Minnesota Budget Project's policy analyst.
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