Under the Senate healthcare bill, an oil crash could eventually influence poor Americans’ healthcare

Under the Senate healthcare bill, an oil crash could eventually influence poor Americans’ healthcare

mitch mcconnnells office bcra healthcare obamacare repeal protestJacquelyn Martin/AP

Senate Republican leadership on Thursday released a draft of its long-awaited healthcare bill, the Better Care Reconciliation Act of 2017.

Like the American Health Care Act, passed by the House in May, the bill proposes a fundamental restructuring and deep cuts to Medicaid, the government-run health program that provides insurance primarily to pregnant women, single mothers, people with disabilities, and seniors with low incomes.

But the BCRA, the Senate’s bill, makes even more drastic changes to Medicaid in the long run.

One major change could result in global economic shifts, with no relation to healthcare, having a profound impact on the level of funding to the program — like an oil crash.

Here’s how:



A fundamental change
Alex Wong/Getty Images

While the BCRA and the AHCA would phase out the Medicaid expansion established by the Affordable Care Act — which extended the program to those making 100% to 138% of the federal poverty limit — both proposals call for a fundamental change in how Medicaid operates. 

Since its establishment in 1965, Medicaid has been an open-ended entitlement program. Anyone who meets the eligibility requirements has a right to enroll, and if costs go up because of new, expensive treatments or increasing healthcare needs, states receive more federal money. While states fund a big portion of their individual Medicaid programs, the federal government matches up to a certain percentage, with bigger matches for poorer states.

Both bills would change Medicaid to a program where funding would be set on a per-capita basis — meaning the federal government would send states a fixed amount of money per Medicaid enrollee, regardless of whether that would cover needs or care — and then peg funding growth to a rate related to inflation.

“It’s no longer an open-ended matching program,” Richard Frank, a professor at Harvard Medical School professor, told Business Insider in May. He added that changing funding to per-capita cap grants “fundamentally changes the kind of contract that exists between the states and the federal government.”

The BCRA would take it a step further.

The AHCA called for growing funding by consumer price index for medical care (CPI-M), generally a figure between 2% and 5% each year. The Senate’s bill, meanwhile would grow the figure initially by CPI-M before switching to the CPI for all goods (CPI-U)— a significantly lower level of growth — in 2025.

The switch from CPI-M to CPI-U would mean far more restrictive growth for Medicaid funding.

The difference between CPI-M and CPI-U since 2000:
Andy Kiersz/Business Insider

The CPI-U is subject to more economic movements than CPI-M as well, most of which have nothing to do with the cost of healthcare. 

In September 2015, the year-over-year CPI-U was -0.008%. If the BCRA had been in effect then, funding would have actually gone down.

And the CPI-U was below zero due in no small part to a major oil crash that was holding down inflation at the time. The CPI-M in September 2015 was 2.44%.

It’s no stretch to think that, if the BCRA passes, future decisions made by OPEC or major conglomerates could have a major effect on the quality of healthcare for impoverished Americans.

AXIR Consulting

Diane Yukari/Business Insider
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