Republicans revealed their latest ACA repeal bill roughly two weeks prior to the Sept. 30 budget reconciliation deadline. This latest effort includes a Medicaid repeal-and-replace approach that could result in significantly less federal funding for states, according to Fitch Ratings.
The agency said in its report most states would also experience "more disruption" than with previously proposed ACA repeal legislation due to the latest bill's repeal of certain ACA provisions. Fitch said Medicaid expansion states would especially face risk.
"In the short term, nonexpansion states may see gains under the bill given redistribution of ACA-related spending streams. But over time even nonexpansion states will face budgetary challenges given the proposed changes to Medicaid, which will likely accelerate for all states over time," the agency added.
Under the proposed ACA repeal bill, Medicaid expansion would be rolled back. Additionally, the proposed ACA repeal bill would eliminate federal premium subsidies and instead distribute the money spent on these programs to states in the form of block grants. A per-capita Medicaid cap would also be imposed.
Fitch considers these Medicaid provisions "a fundamental restructuring of the more than 50-year-old federal-state partnership." The agency also said "establishing a growth cap on Medicaid spending opens the program up to further reductions through legislative tightening of the growth factor." Overall, the proposed ACA repeal bill's imposition of per-capita caps would reduce federal spending on Medicaid by $175 billion over a decade, according to an estimate from the Center on Budget and Policy Priorities cited by Fitch.
Moving forward, Fitch said it will keep an eye on the legislative process.
Read the full Fitch report here.
Leo Vartorella contributed to this story.