Economist Jared Bernstein reminds us that cost shifting is not cost saving — this in connection with Congressman Paul Ryan’s plan to convert Medicare to a voucher system.
I wonder whether the President and his White House advisors have their minds around this obvious fact — or frankly, how much they care.
What’s got me wondering is a new brief from the Center on Budget and Policy Priorities that takes us through the complexities of a proposal for Medicaid savings that the White House has offered up as part of its deficit reduction plan.
It’s called a blended rate because what it would do is create a single rate for the federal match that each state gets to help cover the costs of insuring low-income adults and children under Medicaid and CHIP (the Children’s Health Insurance Program).
Basically, the federal government now pays a fixed percentage of states’ regular Medicaid costs and a higher percentage for their costs of insuring children enrolled in CHIP.
Under the Affordable Care Act, it will initially pick up the full costs of ensuring people who become newly eligible in 2014, when the minimum federal income cut-off rises in 2014 and childless adults gain a right to coverage. It will then cover somewhat lower percentages, bottoming out at 90% in 2020.
States that expanded Medicaid coverage to childless adults before the ACA was passed will still get a match for them, even though they’re not newly eligible. This match phases in, reaching 100% in 2020.
In short, we’ve got a mix of matching rates — some higher than others. The blended rate would replace them with a single match. Which may sound okay until we learn that states would get significantly less than they would under current law.
Back in April, the White House issued its overall framework for deficit reduction. Savings from Medicaid totaled $100 billion over the first 10 years. CBPP President Robert Greenstein says that as much as $65 billion would have to come from the blended rate.
States would apparently realize some modest savings in administrative costs. But they’d be stuck with the rest of the loss from the replacement of their current and prospective matching rates.
This doesn’t mean they’d make up the difference out of their own revenues. Anyone who wonders what they’d do need only look at what they’ve already done to reduce their Medicaid costs.
They’d cut payments to health care providers, though current reimbursement rates are already so low that many physicians, particularly specialists won’t treat Medicaid participants.
They’d scale back benefits they don’t have to provide to get federal funds, e.g., dental care, eyeglasses and hearing aids, home health services, organ transplants (!).
But the impacts of the blended rate could be much the same, though probably less drastic.
The federal government would spend less, but not by reducing the costs of providing the health care that low-income people need. It would save by dumping a bigger portion of the rising costs on the states.
The states would then try to minimize the shifted costs. They too would probably rely more on cuts than on genuine cost-reduction strategies, e.g., better quality control, coordination and preventive care.
Ultimately low-income people, including children, would pay — with their health, in some cases their lives — to reduce the federal deficit.
This, I trust, is not what the President had in mind when he embraced “shared responsibility and shared sacrifice.”
NOTE: This posting and my recent cross-posting from Laura’s Life are part of a Medicaid blog-a-thon organized by MomsRising — a virtual grassroots community that acts on issues that affect mothers and families.