House Republicans hunting for ways to pay for President Trump’s tax cuts have called for cutting the federal government’s share of Medicaid spending, including a proposal that would effectively gut the Affordable Care Act’s 2014 expansion of the program.
Cutting Medicaid spending, which is central to the budget bill that House Republicans may bring to a vote on Tuesday, could result in millions of Americans across the country losing health coverage unless states decide to play a bigger role in its funding.
Republicans are considering lowering the 90 percent share that the federal government is required to pay to states that enroll participants in the expansion. The change could generate $560 billion in savings over a decade, money that Republicans want to use toward extending Mr. Trump’s 2017 tax cuts, which are set to expire at the end of 2025. Extending the tax cuts is expected to cost $4.5 trillion, meaning Republicans will have to find savings beyond Medicaid from a long menu of options.
A move to lower federal spending on the Medicaid expansion population could effectively gut the program. Around 10 states that have expanded their programs have so-called trigger laws that reverse the Medicaid expansion if the federal government decreases funding for the population.
The change could leave the 40 states that participate in the Obamacare program with a difficult set of choices. They could shoulder the extra costs to preserve Medicaid coverage for millions, make cuts to coverage or look for cuts from other large government programs to offset the reduction in federal funds.
Medicaid, which covers more than 70 million people, is the largest health insurance program in the nation, and the largest single source of funding for states. More than 21 million adults who were not eligible for Medicaid under pre-expansion guidelines received coverage last year. The program had previously restricted enrollment primarily to those who were pregnant, disabled or elderly.
Among those who qualified for Medicaid under the expansion was Jeannie Brown, a 60 year-old part-time bus driver for the public school system in Belgrade, Mont. Ms. Brown went more than five years without health insurance beginning in 2009, avoiding medical care as her health deteriorated and she cared for her disabled granddaughter.
Ms. Brown, who makes around $25,000 each year, had been trapped in the so-called coverage gap, with a salary too high for Medicaid, and too low for a heavily subsidized Obamacare plan.
After Montana lawmakers voted in 2015 to take up the Affordable Care Act’s option to expand Medicaid to cover more adults, Ms. Brown enrolled. She began to see a primary care doctor, and Medicaid paid for hand surgeries, knee replacements, a double mastectomy and her inhaler, she said.
“Being a caregiver is extremely exhausting, especially with someone who has a lot of health needs,” she said last week from a children’s hospital in Colorado, where her granddaughter had been flown for emergency care. “If I didn’t have the preventative care I needed, I’d be in a much worse place physically. I’d probably be disabled.”
Conservative critics of Medicaid expansion have argued that it forces the federal government to spend exorbitantly, and disproportionately, to cover health services for a population Medicaid was not intended to serve.
“The higher federal match for able-bodied adults creates perverse incentives to divert funds from more vulnerable populations,” said Michael Cannon, the director of health policy studies at the Cato Institute, a libertarian think tank.
Republicans have also pointed to what they say is unanticipated runaway Medicaid spending. Some states have seen unexpected surges in Medicaid costs in recent years, in part because many Americans delayed care during the coronavirus pandemic. Gov. Josh Shapiro of Pennsylvania, a Democrat, recently proposed a $2.5 billion increase in state spending on the program.
The move to pare back the federal government’s financial commitments to Medicaid could profoundly reshape how it shares responsibility with states to offer health care to some of the poorest Americans, as well as the providers and nursing homes that care for them.
The change would amount to a “massive transfer of the financial responsibility from the federal government to states,” said Daniel Tsai, who oversaw Medicaid under former President Joseph R. Biden Jr.
“You’d have states having enormous budget holes making decisions between how to do the right thing to keep people covered” and how to preserve other programs, he said. “States are going to be cash strapped.”
Medicaid expansion has become a deeply bipartisan project over the past decade, underscoring the Affordable Care Act’s reach in the American health system and its appeal even to Republican governors and state lawmakers who once opposed it. Much of the additional enrollment comes from Republican-led states where voters passed ballot initiatives to enact the program.
Medicaid now funds almost half of all births in the United States, and represents more than half of spending on long-term care. More than 70 percent of Americans say they want Medicaid to stay as it is, according to a survey conducted last year by KFF, a nonprofit health policy research group.
The program’s influence has led to unusual political alliances. President Trump appeared to sense the political risks in cutting the program, saying last week that he would not touch Medicaid. He later endorsed the House budget that Speaker Mike Johnson negotiated, which called for $880 billion in cuts to programs overseen by the House Energy and Commerce Committee, such as Medicaid.
Senator Josh Hawley, a Missouri Republican, told HuffPost last week that he had filed an amendment to a Senate budget resolution prohibiting cuts from Medicaid. After his state expanded the program in 2021, more than 300,000 low-income residents joined the rolls.
Representative Jim Jordan, an Ohio Republican, said on Sunday that lawmakers may focus on imposing a national work requirement on Medicaid, a controversial proposal that would amount to only a fraction of the cuts congressional Republicans are seeking. Ohio recently asked the Trump administration for permission to test out the policy.
Jon Tester, the former Democratic senator from Montana, said that Medicaid cuts could have a more sweeping effect on rural America than urban areas because of how the program sustains impoverished areas with few health providers. “And that’s an interesting conundrum because most of rural America is a much deeper red than urban America,” he said.
“If you take away health care, you can’t live there,” Mr. Tester said.
Republicans are also considering limiting how much the federal government spends on a state’s Medicaid program, a practice known as block granting or per capita caps. That strategy could save as much as $900 billion over a decade.
If states picked up the costs from the federal government and kept their expansion populations in place, they would spend more than $600 billion to do so over a decade, an increase of almost 20 percent, according to KFF. Many states would be short more than $10 billion over a decade, and some larger states, such as New York and California, would face a shortfall of more than $50 billion.
With Montana’s expansion program set to expire in June, a group of state lawmakers there advanced legislation last week that would extend the program, in part to keep health providers in the heavily rural state solvent. Roughly 80,000 people in the state now have coverage through the state’s expansion, drastically lowering the state’s uninsured rate.
Health policy experts say that the state is effectively a test case that could motivate other Republican-led states to reverse their own programs.
But like in other states, Montana’s Medicaid expansion has been preserved in part because of strong Republican support in the state Legislature. One Republican state senator in favor of Medicaid expansion, Russ Tempel, said that it had increased behavioral health services in the state and was keeping the few hospitals in his rural district afloat.
Matt Regier, the Republican president of the Montana Senate, said that hospitals in the state had become too reliant on Medicaid, and that its expansion was “incentivizing people to not stand on their own two feet.”
“That’s the opposite of what a government safety net should be,” he said.
In Illinois, another state with a trigger law, roughly a quarter of the state’s Medicaid program is part of the expansion population, and the state’s uninsured rate dropped by 44 percent after the expansion took effect, said Alex Gough, a spokesman for Gov. JB Pritzker, a Democrat. The state receives more than $7 billion for that group, Mr. Gough added.
“Threats to coverage would spell catastrophe,” he said. He added that eliminating the Medicaid expansion “would cause major disruption to the state’s health care infrastructure that relies on Medicaid funding and, ultimately, its economy.”
Democratic legislators in Virginia are trying to protect Medicaid by getting rid of the trigger provision. State officials are also girding for a new wave of enrollment from laid-off federal workers.
“I’m not confident Virginia would be able to provide full coverage” with drastically lower federal funding, said Ghazala Hashmi, a Democratic state senator who has proposed a new committee to study the issue. “That is not a burden a state budget could bear.”
The post As G.O.P. Eyes Medicaid Cuts, States Could be Left With Vast Shortfalls appeared first on New York Times.
