New Estimates of the Loss of Federal Funding to Pennsylvania from the Senate Health Care Bill

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The Manatt Health Group and the Robert Wood Johnson Foundation have released a new study of the impact of the Senate health care bill, the Better Care Reconciliation Act of 2017, on the states. Their estimates of the impact of the bill confirms our recent study showing that Pennsylvania will suffer devastating reductions in federal funding for Medicaid.

The new study provides two sets of estimates of how much federal funding each state loses – one if the state keeps the Medicaid Expansion and a second if it does not. According to the study, if Pennsylvania eliminates the Medicaid Expansion in 2021, the state stands to lose $30.1 billion in federal funding between 2020 and 2026 – $25 billion as a result of the elimination of federal funding for the Medicaid Expansion, and $5.1 billion as a result of the impact of per capita caps on traditional Medicaid.

The Manatt / Robert Wood Johnson study projects that 594,000 fewer Pennsylvanians will be insured as a result of the end of the Medicaid Expansion. We expect another 260,000 fewer people to have health insurance or long-term care as a result of reductions in the per capita caps on traditional Medicaid and slightly over 400,000 fewer to be insured through the health care marketplace / exchange or by employer based insurance. All together, we now project that 1.3 million fewer people will have health insurance in Pennsylvania as a result of the Senate health care bill.

Why would Pennsylvania have to eliminate the Medicaid Expansion if the Seante bill is adopted? Because, if it keeps the Medicaid Expansion, it will lose $13.7 billion during the six-year period – $7.7 billion in Medicaid Expansion funding and $6.6 billion in traditional Medicaid due to the per capita caps. The state loses more in traditional Medicaid if it keeps the Medicaid Expansion than if it does not because without the Medicaid Expansion some individuals become eligible for traditional Medicaid, which continues to be reimbursed by the federal government, albeit at lower levels of funding.

But, despite the additional federal funds, maintaining the expansion will cost the state far more than not doing so, again because federal funding is reduced and the state has to pick up a substantial part of the cost of serving the large Expansion population. This additional cost is precisely why we think that Pennsylvania, , which is already suffering from a structural deficit that may approach $3 billion a year in the next few years, and that has a General Assembly that shows no inclination to raise recurring revenues to close that structural deficit, will almost certainly eliminate the Medicaid Expansion by 2021 if the Senate Bill is adopted.

These losses in funding and health insurance coverage will be devastating to hundreds of thousands of people and to state finances. As we will show in reports coming out in the next few days, the impact on the state’s economy will also be devastating.

More details can be found in our editorial board memo on this study.

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