Let’s make a small connection here that needs emphasizing because it’s not usually made in the public debate over the new ACA repeal effort: The connection between block grants and the very, very poor general financial outlook at the state level.

You probably have read that the Graham-Cassidy proposal creates block grants to states to replace direct federal funding of the Medicaid expansion. Essentially, this would throw millions of lower-income people off Medicaid. The Kaiser Family Foundation is correct when it says: “Faced with substantially reduced federal funding, states would face difficult choices: raise revenue, reduce spending in other areas, or cut Medicaid provider payments, optional benefits, and/or optional coverage groups.”

But, here’s the important missing component: a majority of states are in difficult and sometimes dire financial straights–not the least of the reasons being the obsession, mostly from Republican governors/legislatures, to mindlessly cut taxes and starve states of funds needed to provide basic services. And that is especially a big deal because, in theory, the nation is still going through an economic (relatively mild/mediocre/unimpressive) expansion (yes, let’s put aside for a moment wages for workers)–a time when state revenue should be positive and a state’s finances stable.

Here’s what the Center on Budget and Policy Priorities has to say about the states’ financial problems:

“During times of economic growth, states can be reasonably confident that the tax collections upon which they base their budgets will come in as predicted. This year is different, however. In 2017, 25 states are facing or have addressed revenue shortfalls.  More states expect mid-year revenue shortfalls than in any year since 2010, according to the National Association of State Budget Officers. [emphasis added]

The mid-year revenue shortfalls and resulting budget problems — some of which are due to state policymakers’ own ill-advised tax policy choices — that states are facing in 2017 appear to be the first signs of continuing problems. More than half the states lack the revenue needed to maintain services at existing levels in 2018. All told, two-thirds of the states are facing or have addressed revenue shortfalls this year, next year, or both. (See Figure 1 and Table 1.) [emphasis added]

States cut spending, increase revenues, or tap rainy day funds or other reserves to close budget gaps and maintain a balanced budget, which all states do because of laws or tradition. So far in 2017, states have used reserve funds and spending cuts to balance their budgets…[emphasis added]

THE BIG POINT IS:

What happens when the inevitable downturn arrives, entirely possible leading up to the years when the block grants end in 2026 (the bill does not extend the block grants beyond 2026)?

DISASTER…it will be the health care version of the Hunger Games–crumbs being fought over, while millions don’t get covered. States can’t print money. In turn, states will just throw people off Medicaid and/or  cut services even more and layoff public employees–largely because Republicans control a large majority of states and refuse to raise taxes on the richest residents–which in turn will put more strain on states from higher unemployment and lower tax revenues (because out-of-work people don’t pay taxes)

I’ve put below the tables CBPP created on budget shortfalls and the tables KFF produced to show the shortfalls expected to states if the idiotic Graham-Cassidy proposal passes. You can just go down the first one–CBPP–to see the budget shortfalls; the two right hand columns predict the 2018 budget shortfall and, then, what that shortfall means, in percentage terms, relative to the 2017 general fund from which states fund their operations.

Then, pick any state in the CBPP table and scroll down to the KFF tables to see what the shortfalls look like just when it comes to the proposed block grant funding through 2026–and, then, beyond 2026, when there is no money allocated.

KFF tables: