By Stephanie Kelly
| NEW YORK, June 28

The now-delayed U.S. Senate
healthcare overhaul bill would boost state spending on Medicaid
by $565 million in 2022, according to an independent report
issued on Wednesday, while credit agencies said it would cause
states to face downward pressure on their credit ratings.

Senate Republican leaders on Tuesday postponed the vote on
the bill, which they hoped would take place before their July 4

According to credit rating agencies Moody’s Investors
Service and Fitch Ratings, the legislation would negatively
impact states because of changes to the core funding of Medicaid
and the phasing out of the Medicaid expansion plan.

The Urban Institute, a Washington, D.C.-based think tank,
issued a report on Wednesday estimating state Medicaid spending
would increase by $565 million in 2022 under the proposed
legislation. It also estimated federal funding for Medicaid,
which funds medical care for the poor and indigent, would be
$102.2 billion lower in that year.

The National Governor’s Association, which on Monday
advocated for more time to review the financial impact of the
bill, welcomed the delay.

Members of the Senate Republicans’ own party resisted the
measure, which the non-partisan Congressional Budget Office said
would cause 22 million Americans to lose insurance over the next
decade and reduce federal outlays for Medicaid by $772 billion
over that time.

Moody’s senior analyst Genevieve Nolan told Reuters the
legislation in its current form would be a credit negative for
states, mainly because of reduced federal funding for Medicaid.

“Obviously this bill is ACA (Affordable Care Act) repeal and
replace, but even more than that, it’s Medicaid repeal and
replace. Medicaid is a more than 50-year-old program, a
partnership between states and the federal government, and both
the Senate bill and the House bill propose really fundamental
restructuring of how that program is funded,” Eric Kim, Fitch’s
director of U.S. Public finance, told Reuters.


A mix of Republican and Democratic governors criticized or
strongly opposed the bill, including Connecticut Governor Dannel
Malloy, Colorado Governor John Hickenlooper and Ohio Governor
John Kasich.

Connecticut’s Office of Policy and Management said in a
report on Tuesday the bill could cost the state about $2.9
billion per year by 2026.

The report also said the cap to federal payments would
“force” states, including Connecticut, to assume costs, limit
benefits, decrease the number of people served or reduce rates
to providers.

In Virginia, the bill would cost the state’s Medicaid
program at least $1.4 billion over seven years, according to
Governor Terry McAuliffe’s office. It would “blow a hole in
Virginia’s budget,” McAuliffe said in a statement.
(Reporting by Stephanie Kelly; Editing by Daniel Bases and Dan

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States’ Medicaid spending to increase under Senate bill -report