WASHINGTON – Pennsylvania Sen. Pat Toomey, a key lawmaker in the Republicans effort to forge a consensus health care plan, said Tuesday he’s open to slowly phasing in reduced federal payments to Medicaid expansion states.

The comment, made in a conference call with Pennsylvania news media, was a nod to moderate Republicans, including Ohio’s Sen. Rob Portman and West Virginia Sen. Shelley Moore Capito. They fear the funding cut consequences of the House health bill before the Senate.

Toomey and Portman have been tasked by Senate Majority Leader Mitch McConnell to come up with a middle ground solution that will gain support from moderate and conservative lawmakers.

About 20 million individuals receive health insurance under Medicaid expansion in the 31 states and the District of Columbia that signed up for the program under the Affordable Care Act, also known as Obamacare. Low-income recipients made slightly too much to qualify for traditional Medicaid or not eligible because they were considered able-bodied adults.

The House bill would not change funding for those already in the expanded program. But starting in 2020, federal funding would scale back from 90 percent to 57 percent for new recipients.

Capito, Portman and others worry that states such as West Virginia, which faces a $500 million budget deficit, could not make up the difference, and fewer people would be able to get affordable health insurance.

With Republicans holding only a two-vote majority in the Senate, GOP leaders are faced with writing a bill that can bridge differences between conservatives and moderates in order to win approval. 

Toomey, a member of the select 13-senator group working on a compromise bill, said reducing the funding in 2020 is “probably too sudden and problematic for some state budgets.” He said the talk now has turned to phasing the reduction in federal funding of Medicaid expansion.

It wasn’t immediately clear if that’s enough to ease the fears of moderate Republicans or governors, who have opposed the federal government shifting more Medicaid costs to the states. A spokesman for Portman declined comment. Capito and Pennsylvania Gov. Tom Wolf’s offices didn’t respond immediately to a request for comment.

Despite the concerns, Toomey said Medicaid spending — $338 billion this fiscal year — is growing at an unsustainable rate. “What have we accomplished if governors are thrilled they got a ton of money but Medicaid is on the way to bankruptcy?” he asked. If states believe expanded Medicaid is worth keeping, he added, they should be willing to chip in less than half the cost.

In addition to reducing federal spending on expanded Medicaid, the House health care bill caps federal spending growth for traditional Medicaid program as well.

Currently, the federal government spends its share of Medicaid costs no matter how quickly it grows. The House plan curbs future increases to the medical inflation rate.

Health policy groups say that approach will not keep up with costs if expensive new drugs or treatments results in health care expenses accelerating quickly, something Republicans say hasn’t happened in the last 15 years.

Pre-existing medical conditions is another issue dividing Republicans, and Toomey said the GOP working group is striving to ensure that sick and disabled individuals continue to get insurance coverage. The House plan preserves the Obamacare ban against insurers denying coverage to people with medical conditions. But the plan also gives states authority to allow insurers to charge them higher rates. 

Toomey said Obamacare has driven up premiums to young, healthy people, who are refusing to buy insurance because of the cost. He said that means insurers are losing money on older people with medical conditions, causing them to refuse to participate in the government health care program. That, in turn, leaves states such as Iowa in danger of having no insurance company offering subsidized coverage.

 “There’s a full-blown death spiral underway,” Toomey said. But he said Senate Republicans are looking at other ways to deal with the issue than the House’s approach.

Meanwhile, a group of Democratic senators from states like West Virginia, Massachusetts and New Hampshire hit hard by the opioid epidemic said the proposed Medicaid cuts will make it more difficult for the addicted to get treatment.

They also criticized a provision of the House plan allowing states to abandon the Obamacare provision guaranteeing coverage for essential health benefits, including drug treatment.

Sen. Joe Manchin, D-W.V. said at a press conference “it’s callous to say you’re going to cut back on people for the first time being able to get treatment. That’s absolutely unconscionable.”

Sen. Ed Markey, D-Ma., accused Republicans of proposing to cut health benefits to pay for tax cuts for higher-income people. “You can’t say on one hand you care about the issue and (then) slash the funding for the access families’ need for treatment,” he said.

Contact CNHI Washington reporter Kery Murakami at kmurakami@cnhi.com.