At this point, pretty much everybody in Washington has noticed that the new Obamacare repeal bill Senate Republicans have rallied behind, Graham-Cassidy, would transfer large amounts of cash from blue states to red states. Specifically, its funding formula would strip federal money from places that expanded Medicaid under the Affordable Care Act, like California and New York, and reward those that did not, like Alabama and Texas. Kentucky GOP Sen. Rand Paul, who opposes the bill, has described it as a “game of Republicans sticking it to Democrats.” (Of course his state, which did expand Medicaid under a Democratic governor, also stands to lose out.)
In the past couple of days, the bill’s authors, Sens. Bill Cassidy and Lindsey Graham, have tried to respond to this charge. Their legislation is not a partisan smash and grab, they insist. Nope. Not all. Rather, it merely fixes Obamacare’s own grossly unfair funding formula. How so? Per the New York Times:
“Right now, 37 percent of the revenue from the Affordable Care Act goes to Americans in four states”—California, New York, Massachusetts and Maryland, Mr. Cassidy said. “That is frankly not fair.”
As is his wont, Graham delivered a more elaborate version of this spiel during a floor speech Monday.
“I like Massachusetts, I like Maryland, I like New York, I like California, but I don’t like them that much to give them a bunch of money that the rest of us won’t get,” he said. “Now, if you live in Massachusetts, you don’t get twice the Social Security or 50 percent more than if you live in Pennsylvania. Now how can this happen? Obamacare, for whatever reason, favors four blue states against the rest of us.”
Graham treats this as if it’s some sort of impenetrable mystery, one accessible only to nearsighted budget wonks. But of course, there’s a very obvious, good reason why these four states receive a disproportionate share of Obamacare’s funding today: They expanded Medicaid. That’s pretty much the whole answer. Meanwhile most red-state governors decided to treat health care policy like an Appalachian blood feud and refused the money the Obama administration all but begged them to take. Thus, the high-population California and New York get a very big slice of the ACA’s pie. If Florida or Texas had decided to accept the big, gift-wrapped pile of dough Washington was offering, things wouldn’t look quite so imbalanced.
And this stat, insofar as it has any significance, really is just about California and New York. I don’t know precisely where Graham and Cassidy got their number, but according to the Congressional Budget Office, the federal government is expected to spend about $117 billion on Obamacare’s marketplace subsidies and Medicaid expansion this year. As of 2015, the Kaiser Family Foundation says California was receiving $19.6 billion worth of federal funding for its Medicaid expansion population while New York got $7.7 billion. Maryland and Massachusetts both got less than $2 billion—less than the amount Ohio received for its Medicaid expansion, or than Florida gained entirely for premium tax credits this year, for that matter.
Now, it pains me to have to spell this out, but it’s worth remembering that the federal government offered every single state the same match rate for Medicaid expansion enrollees. All they had to do was sign people up. There was no inequity baked into the formula. So when Cassidy and Graham grouse about how much money California and New York get, they are essentially whining over the fact that Medicaid-expansion states get more Medicaid funding. The only way that might seem unfair is if you happen to live in a state where your stubborn Republican governor turned that money down.
