Earlier this week, the House passed the Republican budget resolution. One goal is to slash $2 trillion over a decade from the federal budget, which could bring significant cuts to Medicaid.
Medicaid is a joint federal and state health insurance program for disabled and low-income Americans. The Centers for Medicare & Medicaid Services works with state programs to administer Medicaid, which enrolls more than 72.1 million people.
Medicaid offers benefits including nursing home care, personal care services and assistance paying for premiums and other costs, according to CMS.
Health policy experts say Medicaid provides vital services to many vulnerable Americans and cuts to the program could put them at risk of losing medical care, either by taking away their coverage or by closing the centers that provide such care.
“The Medicaid program provides this life-saving coverage for the most vulnerable individuals in our country,” Mariana Socal, an associate professor of health policy and management at Johns Hopkins Bloomberg School of Public Health, told ABC News. “The uncertainty surrounding coverage in the Medicaid program moving forward … is a big stressor in the lives of these individuals who depend on the program.”
“I think we should all agree that protecting the health of vulnerable individuals should be a priority in this country, not seen as an opportunity for savings,” she continued. “You can save dollars, but then we are not saving lives.”
Fewer people on Medicaid or fewer services
One of the proposals being considered by the GOP to cut down on Medicaid costs includes getting rid of the Medicaid match rates. Under the Affordable Care Act’s expansion of Medicaid, the government finances 90% of the costs of those who were made newly eligible under the program.
This could change to the government paying states the same it does for everyone else in the program, which is about two-thirds of total costs.
Additionally, the federal government could implement per capita grants. Currently, the federal government matches what the states spend on payment — at different levels for different states — without a budget cap.
The per capita cap would see the federal government set a limit on how much states can be reimbursed per enrollee.
“What that means then is, in order to live within that fixed budget, you would have to find either individuals to cut out of the program or services that you would not provide to people in the program,” Dennis Shea, a professor of health policy and administration at Penn State College of Health & Human Development, told ABC News.
Impacts on the health care system
Mark Peterson, a professor of public policy at UCLA Meyer and Renee Luskin School of Public Affairs, said the issue is not just cuts in federal spending but also how states would respond if there was a shortfall in funding.
He said Medicaid is currently the single largest expenditure of the states, on average, and dramatic cuts in funding from the federal government would be an enormous hole for the states to fill.
“If they were to try to fill in, they either have to raise taxes significantly, which is not likely to happen, or they would have to cut, say, their next major spending category, which is also not likely,” Peterson told ABC News. “And even very wealthy states, like California, for instance, have been going through their own budget struggles. So, it’s not as though they’re sitting on a pile of money that’s ready to reallocate. There would be extremely serious budgetary consequences.”
The experts say Medicaid cuts would also impact the health care system. Medicaid provides a great deal of funding for hospitals, long-term care facilities, nursing homes and services for children with special needs.
Shea said one example is that Medicaid pays for more than 60% of nursing home residents. If funds are slashed, then residents won’t have money to pay for nursing home care and nursing homes won’t receive that revenue, which could lead to the closure of nursing homes.
Rural residents could receive less care
Rural Americans would also be at risk of losing services. Shea said many rural hospitals and community health centers have already closed and the ones that remain open already face funding challenges.
If they were to lose Medicaid funding, they could face closures, which could deprive rural Americans of vital health services, he explained.
“In rural areas, Medicaid coverage tends to be a larger proportion of the coverage, so it’s not unusual for 30, 40, 50% of people in a rural area to be covered by Medicaid,” he said. “And if that source of revenue is not coming into the hospitals or the nursing homes or the physician practices in those areas, it makes it that much harder for those businesses to survive.”
“And so, we would probably see thousands of nursing homes close in rural areas … and you would see hundreds of hospitals closing too,” he added.
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