Experts say GOP bill meant to cut healthcare funding would boost fed role

A GOP bill to cut off funding for part of the healthcare reform law could ultimately shift decision-making power from the states to the federal government, Democrats and nonpartisan analysts say.

The bill, scheduled for a House floor vote Tuesday, would eliminate grants to help the states establish health insurance exchanges. But it wouldn’t strip the federal government’s power to run an exchange in any state that doesn’t set up its own.  

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The White House threatened Monday to veto the GOP bill. 

The Congressional Budget Office said last week that the bill would likely result in the federal government running more exchanges than it would under current law.

“Federal money is essential,” said Len Nichols, a health policy professor at George Mason University. 

Axing the planning grants would only make exchanges more expensive for cash-strapped states while expanding the role for the Department of Health and Human Services (HHS), he said.

The healthcare law envisions exchanges as a one-stop shop for individuals and small businesses to purchase insurance.

A spokeswoman for Rep. Fred Upton (R-Mich.), the bill’s sponsor, said there are too many strings attached to the HHS planning grants. States don’t have any real flexibility over their exchanges, she said, so the idea that Upton’s bill would limit their choices is “smoke and mirrors.”

But consumer advocate and Washington and Lee University law Professor Tim Jost said mandates for state exchanges are laid out in the reform law itself — they’re not conditions attached directly to grant money.

Although states would only be able to receive the grants by working toward an exchange that meets federal criteria, receiving a grant doesn’t bring on new obligations, he said.

Every state except Alaska applied for and received an initial round of $1 million exchange planning grants, and HHS announced another opportunity in January. Officials have said they want the new marketplaces to be state-based, but many Republicans have said the requirements spelled out in the healthcare law are too onerous.

The bill passed the Energy and Commerce Committee, which Upton chairs, on a party-line vote last month.