Republican healthcare bill would harm state finances – Moody’s

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By Robin Respaut | SAN FRANCISCO

SAN FRANCISCO The Republican-proposed bill to
replace Obamacare would be a credit negative for U.S. states,
according to Moody’s Investors Service, because it would shift a
greater share of the cost of Medicaid to the states.

The bill, known as the American Health Care Act, aims to
replace the Affordable Care Act, commonly known as Obamacare.

The bill proposes to shift federal funding for Medicaid, the
government insurance program for the poor, from a state-match to
a per capita cap, resulting in a greater financial burden on
states, Moody’s reported.

The proposal would also phase out funding for expanded
Medicaid by 2020, leaving states to pick up the difference or to
drop enrollees from their Medicaid programs.

The Congressional Budget Office estimated the proposed
reform would cut federal spending by $880 billion between 2017
and 2026, reaching a 25 percent lower level by 2026 compared to
current-law projections.

“States will face difficult decisions in this regard,”
Moody’s reported on Friday. “If states maintain the expansion
programs for non-elderly adults with incomes up to 138 percent
of the federal poverty level, they will be on the hook for a
larger portion of expenses related to new enrollees.”

Already, state Medicaid spending is expected to consume a
larger portion of state revenues, growing by 28 percent of tax
revenue by 2025, up from 24.5 percent in 2017, the rating agency
estimated.



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