Budget Bills Pose Even Larger Threats to Medicaid

We all know that in a horror movie the villain that has been threatening death or destruction will appear to die, only to miraculously come back to life for one or more final attempts on the life of the heroic protagonist who was prematurely enjoying his or her apparent victory. Because we sometimes see the same thing in politics, few health care advocates have dared turn their backs on the severely wounded “repeal and replace” legislation that could cause more than 20 million Americans to lose their health insurance.

Perhaps the Senate votes last week have finally delivered a mortal blow to the bill that Senator McConnell, Speaker Ryan and President Trump kept resuscitating. But even if that’s the case, the defeat of “Trumpcare” is by no means the end of the story; this drama has a long way to run before we can feel safe about the future of quality, affordable health care.

While McConnell was working behind closed doors like Dr. Frankenstein on his frightening creation, he and Speaker Ryan were also cloning a major part of it. The Medicaid cuts that the Trumpcare bill proposed – which many health care advocates think were the most dangerous part of that legislation – have been included and expanded in the House budget bill, as well as the President’s budget proposal. Those cuts might also emerge as a financing mechanism in tax cut bills. In other words, even if Congress has now driven a stake in the heart of the extremely unpopular TrumpCare bill, there may be a hoard of zombie bills threatening the future of Medicaid.

At this point the House budget plan is just a general blueprint, but the savings target it contains is substantially larger than that of the House and Senate “repeal and replace” bills. In addition to $487 billion of cuts to Medicare over the next 10 years, the House blueprint would require cuts to Medicaid and other health programs of $1.5 trillion between now and 2027.  An analysis by the Center on Budget and Policy Priorities (CBPP) estimated that the President’s budget would cut Medicaid spending by 45% in 2026.

Comparatively speaking, the Medicaid cut from the Senate repeal and replace bill (BCRA) would have been much smaller – but BCRA still would have slashed Medicaid by $756 billion over the next 10 years, according to the Congressional Budget Office, and 26% in 2026. Even so, a cut of that magnitude would have dramatic effects, with cuts growing rapidly after 2024: 

Another CBPP report zeroes in on the portion of the cut attributable to the proposed cap on increases in federal Medicaid funding.  It concludes that most of the cut to Medicaid over the first 10 years would be from the phase-out of enhanced federal financing for expansion states, but they estimate that in 2026 the annual effect of the proposed caps on Medicaid spending nationally would be a $41 billion federal cut. (That’s slightly less than the Manatt estimate, which is illustrated in the bar graph.)  The CBPP report examines the potential consequences for Medicaid participants of a cut of that magnitude:

“If the $41 billion cut in 2026 were to fall proportionately based on each population’s relative share of expected federal spending outside the expansion:

• Seniors would face a $7 billion cut, equivalent to the cost of covering 720,000 seniors; 
• People with disabilities would face a $17 billion cut, equivalent to the cost of covering about 990,000 people with disabilities;
• Children would face a $10 billion cut, equivalent to the cost of covering about 3.2 million children; and
• Parents and other non-expansion adults would face a $7 billion cut, equivalent to the cost of covering 1.1 million non-expansion adults.” 

A report issued on July 22 by the Kaiser Family Foundation estimated the state-by-state effects of the Medicaid caps in BCRA. Even though that bill would have cut Medicaid substantially less than the House and Trump budget bills propose cutting, the Kaiser report concluded that:

• During a 10-year period, 2020-2029, Wisconsin would receive almost $2.6 billion less in federal Medicaid funding under BCRA, compared to current law.
• Because the effect of the caps would snowball over time, the cut for Wisconsin in the last year of that period is estimated to be $760 million, or 29% of the 10-year total.

Fortunately, both the repeal and replace legislation and the cloned Medicaid cuts have the same potentially fatal weakness; they cannot survive in a spotlight of public scrutiny. But while that spotlight was on Trumpcare, the zombie bills that had been lurking in the shadows began gaining ground in their assault on the Medicaid budget.  Considering that these bills could have even more frightening consequences for the future of the Medicaid program than Trumpcare, it’s time to shift the spotlight onto the budget cuts that threaten the Medicaid coverage of about 70 million Americans, including more than 1 million Wisconsinites.

Jon Peacock