As Senate Republicans struggle to repeal and replace the Affordable Care Act (ACA), one thing they can agree on is cutting federal spending on Medicaid.
The program was expanded under the ACA as a way of extending coverage to more people, mostly school-age children and adults who previously weren’t eligible. There are 37 million kids, the biggest group of Medicaid enrollees, who would be hit hard by cuts to coverage and benefits.
The two leading GOP proposals, the Better Care Reconciliation Act and the Graham-Cassidy-Heller proposal (named for the sponsoring senators), rely on reduced funding to Medicaid to rein in health care spending.
The BCRA failed in the Senate and is likely dead. The Congressional Budget Office, the nonpartisan office that scores legislation, estimated 22 million people would lose their insurance coverage by 2026 under the BCRA.
So the Republican’s eggs are now in the Graham-Cassidy-Heller basket, and that bill also includes deep cuts to Medicaid. The bill is intended to give states more flexibility in health care spending, but according to the nonpartisan Center on Budget and Policy Priorities, the amendment would make drastic cuts to both Medicaid and marketplace financial assistance. The CBO has yet to score the proposal.
Both proposals hand states the authority to decide how to use their funding—and where to trim the program—which means the impact of such cuts is still uncertain. “It’s a laundry list of bad choices,” said Kelly Whitener, associate professor of professional practice at Georgetown University’s Center for Children and Families.
Under the BCRA, Medicaid spending would be reduced by 26 percent by 2026 and by about 35 percent after 2026, according to the CBO. Enrollment in Medicaid would fall about 16 percent by 2026 for people under 65.
Both proposals include federal per capita spending caps that limit federal funding for each enrollee, with states footing the bill for the rest. Both proposals also include block grants, which fund states’ costs at a specific level with the intent of giving flexibility to states. The overall financial impact is unknown, but it is clear that cuts will have to be made.
The first place states would likely look to cut is optional benefits, Whitener explained. Things like wraparound coverage that picks up where employer coverage stops or home-based services that allow children with special medical needs to get care at home could be on the chopping block. Tightening eligibility requirements could be another way to reduce spending, Whitener said. The end results are fewer children covered and fewer options available.
However states choose to handle their smaller Medicaid budgets, some people will lose coverage and benefits under any plan that includes the per capita caps and block grants employed by the BCRA and the Graham-Heller-Cassidy proposal.
“[These cuts] will create a race to the bottom for states to make sure they’re not left holding the bag,” Whitener said.
First Focus, a nonprofit children’s advocacy group, called the proposed cuts “draconian” and said Medicaid cuts would be hard on children.
“Children don’t vote, but they are the foundation of America’s future. There is nothing in this bill that improves the health coverage of children, but at the very least, Congress should at least protect children from harm. This bill fails that simple test, and the next generation deserves much better,” said First Focus President Bruce Lesley in a statement.
Conversely, a report published by the Manhattan Institute, a free market think tank, suggests per capita caps could actually shift a greater percentage of federal Medicaid funds toward poorer families because it bases funding levels on the number of enrollees.
The current matching funds system favors wealthier states, so shifting to a per capita system could help focus funds in low-income communities that need the most assistance.
“By [shifting to per capita caps] they establish regular scrutiny and a conversation about priorities, purposes, and opportunity costs in the Medicaid program, so that its future growth is better focused on the nation’s most pressing unmet health-care needs,” the report said.
Whether these plans make it into the final health care reforms remains to be seen, since nothing has been able to pass a sharply divided Senate. However, it’s clear that both Republican plans would hurt American children by not providing them with the health care they need.