Politics & Policy

The Corner

Here’s How Much Cassidy-Graham Shrinks the Federal Government

When I wrote up the new health-care bill last week, I noted that there would be some back-and-forth about the extent of the cuts it makes to federal spending. Today we have a new report from the respected consulting firm Avalere, though it discloses the work was funded by the liberal Center for American Progress. (The note says “Avalere maintained full editorial control.”)

A lot of headlines are going to throw around the number $4 trillion, allegedly the total cuts over a 20-year period. Ignore them, even if you wish they were true. As I wrote before, the bill has no provisions dictating what Obamacare-replacing money states will receive after 2026, so Congress will need to appropriate more funds at that point. This is quite arguably a dumb way to do it, given Congress’s inherent dysfunction and some budget rules that will make such appropriations tricky, but it makes it impossible to “estimate” what will happen in 2027 and beyond. It is simply absurd to assume there’ll be no “state block grant funding available from 2027 onwards,” as Avalere did.

There are some numbers taking seriously here, however. One is $95 billion, the amount the bill cuts Obamacare funding between 2020 and 2026 — which is 7 percent of the funding under current law. What you think of that, of course, will depend on whether you think that Obamacare spends too much and/or that states should be expected to pony up if they want to continue the status quo.

The analogous numbers for the bill’s reforms to traditional Medicaid are $120 billion and 4 percent, swelling to more than a trillion dollars, or 12 percent, over the 2020–2036 period. Is that acceptable? It depends on the degree to which Medicaid spending is out of control today.

The report also highlights that the bill would equalize funding between states that expanded Medicaid and those that didn’t (meaning that, generally, red states would get more and blue states would get less). Further, it notes the funding formula would encourage states to focus their efforts on residents “at or near the poverty line, potentially at the expense of lower-middle-income individuals who currently receive exchange subsidies,” as Avalere senior manager Chris Sloan is quoted saying in the press release.

In my previous piece I said I liked much about the bill but was dubious about its prospects. The buzz in recent days has been that it has a better-than-expected chance of passing. If it does, it will chip away at federal spending — a great goal but perhaps a political liability.

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