? Republicans in the U.S. Senate released a health care plan Thursday that Kansas officials say could put struggling community hospitals in even more financial risk by imposing strict caps on Medicaid spending and reducing subsidies that help others buy private insurance through online exchange markets.

The plan, which is being called a “discussion draft” of a bill that Senate leaders plan to vote on in the coming week, is intended to fulfill campaign pledges that many Republicans made to “repeal and replace” the Affordable Care Act, the federal health care law commonly known as Obamacare.

But while some have said it is less Draconian than a similar plan passed by the U.S. House in May, Kansas health care advocates say it would still present significant problems for the state.

“We don’t see the Senate bill as an improvement over the House bill,” said Tom Bell, president and CEO of the Kansas Hospital Association.

Sen. Pat Roberts, a Republican and the senior senator from Kansas, issued a statement Thursday in full support of the bill.

“This bill is the best path to immediate relief for patients in 2018,” he said in a press release issued Thursday. “This bill is the best possible bill under very difficult circumstances.”

But Kansas’ other senator, Republican Jerry Moran, said he needed more time to study the bill.

“I will fully review this legislation and am awaiting the Congressional Budget Office score to gain a complete understanding of the impacts and consequences this bill would have on hardworking Kansans,” he said in a news release. “If this bill isn’t good for Kansas, it isn’t good for me.”

Obamacare basics

The Affordable Care Act was President Barack Obama’s attempt to provide universal health coverage in the United States through a combination of public and private health plans.

It started with a mandate that nearly all individuals carry a minimum amount of health insurance and that all large employers make affordable coverage available to their full-time employees.

For all others, the ACA offered two options. First, it authorized states to greatly expand their Medicaid programs to cover individuals with incomes up to 138 percent of the federal poverty level, or $16,643 a year for an individual. And for people with incomes above that amount, it offered subsidized private insurance plans that people could buy through online “exchange” markets such as HealthCare.gov.

The Senate plan unveiled Thursday would leave the subsidized exchange markets in place, although the subsidies would be significantly less than under current law. But it would repeal the individual and employer mandates, along with the taxes and fees that have supported the ACA, and it would phase out the Medicaid expansion program, which has extended coverage to an estimated 11 million people in the states that chose to take part in that program.

“Most of the major insurance market changes (made under the Affordable Care Act) were left intact, and the real change has to do with removing the taxes related to the ACA and then eliminating the Medicaid expansion,” said Bob St. Peter, president and CEO of the Kansas Health Institute, a think tank that studies health policy issues from a state perspective. “At a high level, that seems to be where it is.”

Kansas hospitals and Medicaid expansion

Originally, the Affordable Care Act required states to expand their Medicaid programs, with the federal government paying at least 90 percent of the cost of covering that group. But the U.S. Supreme Court struck that down as unconstitutional and said Congress could only make that an option for states.

Kansas remains one of only 19 states that has not taken advantage of Medicaid expansion, and that has been a huge problem for Kansas hospitals.

That’s because one of the ways Congress offset the cost of Obamacare was to greatly reduce federal Medicare payments to hospitals that were meant to offset their cost of providing uncompensated care to the uninsured, something that the health care law was supposed to eliminate.

In Kansas, though, hospitals continued incurring costs for treating the uninsured because the state did not expand Medicaid. But they also still had to absorb the reduction in federal Medicare payments, which put many hospitals under financial strain, especially in small communities and rural areas.

According to the Kansas Hospital Association, the amount of uncompensated care that hospitals provided did decline slightly under Obamacare, but not nearly as much as it would have if the state had expanded Medicaid.

In 2015, according to KHA statistics, Kansas hospitals provided just over $1 billion in uncompensated care, down only about 11 percent from 2013.

KHA was among several groups that have lobbied strongly in favor of expanding Medicaid, and lawmakers did pass a bill this year to do just that. But Gov. Sam Brownback vetoed that bill, and an override attempt narrowly failed in the House.

“There has been very good evidence from other states that expanding Medicaid significantly reduced uncompensated care being provided by hospitals,” St. Peter of the Kansas Health Institute said.

Under the Senate plan, states like Kansas that have not expanded their Medicaid programs would be barred from doing so in the future. And for those that have expanded, the Senate plan would phase out the expansion starting in 2020.

“From our perspective, it’s a retroactive statement to the Kansas Legislature that your desire to take advantage of this program, that all that work has gone for nothing,” KHA’s Bell said. “And to retroactively do that, to take that decision away from a state legislature, from our perspective isn’t fair.”

Coverage gap

One thing the Senate plan would do would be to make subsidized coverage through the exchange markets available to people currently in what is called a “coverage gap” — those who make too much to qualify for traditional Medicaid, but not enough to qualify for subsidized policies on the exchange markets.

The Kaiser Family Foundation has estimated there are roughly 56,000 such individuals in Kansas. Most of them do not qualify because they do not have children, and Kansas does not offer Medicaid to childless adults who are not disabled.

Under Obamacare, subsidies on the exchange markets are available to people with incomes between 100 percent and 400 percent of the federal poverty level.

St. Peter said the Senate plan would lower the upper limit to 350 percent, but it would eliminate the lower threshold so that anyone not on Medicaid could qualify for subsidies on the exchange markets.

Other Medicaid changes

Because Kansas never expanded its Medicaid program, St. Peter said the Senate plan would not affect this state as much as it would those that did expand. However, the Senate plan also contains what he called a “complete, fundamental rewriting of how Medicaid is paid for between the states and the federal government.”

“Even for states that haven’t expanded Medicaid, that is a big deal,” he said.

Currently, Medicaid is jointly funded by the state and federal government. In Kansas, the federal government pays about 55 percent of the roughly $3 billion a year the state spends through its Medicaid program.

The Senate plan offers states two options for managing Medicaid in the future, St. Peter said, both of which are meant to control future cost increases.

The first would be to convert the federal matching funds into a block grant, allowing states more flexibility in the types of coverage plans it offers through Medicaid. The second option would be for the federal government to provide a fixed amount of funding per person enrolled in Medicaid, with future increases tied to inflation.

“One of the criticisms of Medicaid is, for the people who get it, it’s incredibly generous. It covers a lot of things,” St. Peter said. “And for the people who don’t get it, they get nothing.”

The block grant system, he said, would shift a lot of the financial risk of Medicaid onto states’ shoulders because it would make them responsible for covering any costs above the amount of the block grant, which could be a problem if enrollment suddenly spikes beyond what is expected. But it would also presumably give them flexibility to change eligibility guidelines, benefit packages or provider reimbursement rates.

The fixed per-person rate system, he said, would account for increased enrollment, but it would require states to control costs by tying federal funding at historical averages for different categories of patients, such as elderly, disabled, children and pregnant women.

Next steps

Within the next few days, the Congressional Budget Office is expected to issue its “score” of the bill, detailing how much it would cost the government, the impact it would have on the federal deficit and the effect it would have on insurance markets and health coverage in the U.S.

Republican leaders in the Senate have said they hope to bring it to the floor of the Senate soon after that score is released, possibly as early as Thursday, before Congress leaves for its July 4 holiday recess.