A new health care bill recently introduced by a number of senators led by Senators Lindsey Graham and Bill Cassidy would repeal major elements of the Affordable Care Act (ACA), make changes to other ACA provisions, fundamentally alter federal Medicaid financing, and reduce federal spending for health coverage. Key provisions of the Graham-Cassidy proposal would: (1) Repeal the ACA Medicaid expansion and individual insurance market subsidies--including premium tax credits, cost-sharing reductions, and the basic health program--as of 2020. (2) Create a new block grant program to states, which replaces the ACA's Medicaid expansion and insurance subsidies, for years 2020-2026. States would have flexibility to use these funds to cover the cost of high-risk patients, assist individuals with premiums and cost-sharing, pay directly for health care services, or provide health insurance to a limited extent to people eligible for Medicaid. (3) Convert federal funding for the traditional Medicaid program from an open-ended basis to a capped amount. The bill also repeals the penalties under the ACA's individual and employer mandates and allows states to waive benefit requirements and community rating in the individual and small group markets. The proposal would fundamentally alter the current federal approach to financing health coverage for more than 80 million people who have coverage through the ACA (Medicaid expansion or marketplace) or through the traditional Medicaid program. In this brief, we estimate changes in federal funding due to the new block grant program and the Medicaid per enrollee cap on a state-by-state basis under the Graham-Cassidy bill relative to current law. This analysis addresses changes in federal funding for health coverage under the bill but does not project changes in the number of people covered. This analysis is not intended to replace a comprehensive score by the Congressional Budget Office (CBO), which would typically look at changes in federal spending and revenues, coverage, and premiums, addressing all provisions of the bill; however, CBO does not produce state-by-state estimates of the effects of legislation. A description of the methods underlying the analysis is in the "Methods" box at the end of the brief.
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