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Moody’s: New Healthcare Bill Would Hurt States

Moody's Investors Service said the bill proposed by congressional Republicans to replace the Affordable Care Act would be a credit negative for U.S. states because it would shift a greater share of the cost of Medicaid to the states...
March 21, 2017

Moody's Investors Service said the bill proposed by congressional Republicans to replace the Affordable Care Act would be a credit negative for U.S. states because it would shift a greater share of the cost of Medicaid to the states. Under the American Health Care Act, federal funding for Medicaid would be shifted from a state-match to a per capita cap, which Moody's said would place a greater financial burden on states. Furthermore, the bill would phase out funding for expanded Medicaid by 2020, leaving states to pick up the difference or drop enrollees from their Medicaid programs.

“States will face difficult decisions in this regard,” said Moody’s. “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.”

The rating agency estimated that state Medicaid spending will rise from 24.5 percent of state tax revenues in 2017 to 28 percent by 2025.

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