New Jersey and Pennsylvania could be among the biggest losers in the Affordable Care Act replacement plan that squeaked through the House on Thursday, policy experts said, and for reasons that have gotten little public attention.
One example: Both states devote more of their Medicaid spending to seniors and disabled people combined than almost anyplace else in the country. Care for these groups is especially costly, and the GOP plan would not keep pace with their needs. So the states could be forced to cut benefits or raise taxes to maintain services that many people do not consider optional.
The bill approved Thursday is expected to undergo major revisions in the Senate. Still, health-policy analysts and health groups, including the American Medical Association, AARP, and others, expressed alarm.
"Premiums will skyrocket for older adults; essential health benefits will no longer provide a standard of care; and Medicaid expansion, on which the community-based behavioral healthcare system in New Jersey is now overwhelmingly dependent, will be weakened," Debra L. Wentz, president and CEO of the New Jersey Association of Mental Health and Addiction Agencies, said in a statement.
The nonpartisan Congressional Budget Office has not yet projected the bill's impact. It had estimated that an earlier version would leave 24 million more people uninsured by 2026.
"It disproportionately hurts higher-cost states like New Jersey," said Heather Howard, a former state health commissioner who teaches health policy at Princeton's Woodrow Wilson School. Unlike the health-care law signed by former President Barack Obama, the GOP plan does not consider applicants' location when calculating subsidies for private plans bought through government-run exchanges, so residents of states where insurance costs more would have to pay more.
New Jersey banned discrimination based on preexisting conditions more than 20 years ago, so that part of the Affordable Care Act had less of an effect there. But the state neither mandated coverage nor subsidized premiums for those who could not afford it. The result, over time, was higher prices and fewer purchasers — a "death spiral" in the individual insurance market, said Raymond Castro, director of health policy for New Jersey Policy Perspective. The Obama law's individual mandate and subsidies restored the state market, he said.
Castro predicted that the Republican plan, if it becomes law, would put New Jersey back on the path to a market death spiral, and that other states would start down that road. Even blue states might then be forced to ask permission to raise premiums for residents with preexisting conditions, he said, because otherwise everyone's insurance would be priced beyond reach.
The health-policy analyst pointed to another part of the Republican bill that would hit New Jersey hard. It changes the federal funding formula for Medicaid from an entitlement that rises along with costs to a cap that rises with enrollment but not enough to match expected outlays.
Because of the way it calculates changes in total Medicaid spending, states that devote more to older and disabled beneficiaries would lose out. A recent analysis by the Urban Institute determined that New Jersey would lose the most -- $31 billion over 10 years.
"What do you do? Do you cut off categories of people? Do you reduce benefits? Increase cost sharing? Those are terrible Sophie's Choices," said Ann Torregrossa, executive director of the Pennsylvania Health Funders Collaborative and director of former Gov. Ed Rendell's office of health-care reform.
She and others also pointed out that the Affordable Care Act stabilized finances for hospitals that had been operating on the edge, partly by covering patients who could not pay their bills.