House Republicans Try Another Tack To Cut Medicaid Spending

Seems that House Republicans have decided their proposal to block grant Medicaid isn’t going anywhere. So they’ve come up with another way to cut the program.

The new plan is mainly a gift to states that are struggling to cover their Medicaid costs — a major budget item that’s grown due to recession-driven caseload increases and rising health care costs.

In Fiscal Year 2011, 33 states acted to control them by reducing provider payments, freezing them and/or eliminating or putting new limits on optional benefits, e.g., dental care, home health care.

Governors in 39 states proposed one or more of these actions for Fiscal Year 2012.

But there’s only so much they can do by cutting payments and benefits because Medicaid rules require them to provide eligible state residents access to at least a basic package of benefits.

So House Republicans have seized on what seems to be their favorite solution Give states more flexibility.

In mid-May, the Republican majority on the House Energy and Commerce Subcommittee on Health approved a bill that would repeal two related provisions in the Affordable Care Act — the maintenance of effort requirements for Medicaid and CHIP (the Children’s Health Insurance Program).

The Medicaid MOE provision prohibits states from reducing their caseloads by changing their eligibility standards before 2014, when the Affordable Care Act expands nationwide eligibility to 133% of the federal poverty line.

But states do have some flexibility. If they’ve got a budget deficit, they can stop covering certain not-quite-so-poor adults. The Affordable Care Act also includes an accommodation for CHIP funding shortages, plus an alternative health insurance option, effective 2015.

The federal government will cover most of the additional costs states will incur when they have to raise the Medicaid eligibility ceilings — initially 100% for new beneficiaries, tapering off to 93% in 2019 and then holding constant at 90%.

But the Republican Governors Association wants relief from the MOE requirement now. Says states can’t afford the current Medicaid program — that governors have been forced to cut other critical programs like education because their hands are unconscionably tied.

The nonpartisan Congressional Budget Office reports that repeal of the MOE requirements would leave an estimated 300,000 or so low-income individuals with no health insurance. Effects, it says, would be temporary.

But two years is a long time to go without health care, prescription drugs, oxygen tanks, etc.

The Center on Budget and Policy Priorities notes that some low-income populations are at especially high risk.

Children in working poor families, for example, could get kicked out of CHIP because, in most states, the eligibility ceiling is higher than the regular Medicaid cut-off.

Large numbers of poor people with severe disabilities could lose nursing home care and community-based health services.

Close to half of all the nearly 6.3 million seniors enrolled in Medicaid could also get dumped from the program. No home health care for them and no affordable alternatives either.

And for what? So the federal deficit might be a piddling $2.1 billion less over the 2012-21 period.

So Republican governors could deliver — or continue delivering — on their promises to cut state taxes. ThinkProgress reports that a dozen have corporate and/or income tax cuts in the works.

Small wonder they feel constrained to cut critical programs — or that House Republicans have responded with the tellingly titled State Flexibility Act.

One might think it’s nothing to worry about. Why should the new attack on Medicaid stand a better chance than the out-and-out block grant?

The answer, according to some savvy policy-watchers, is that Medicaid could well become a trade-off in the deficit cut negotiations that we’re told will sooner or later avert a default on the federal debt.

Everyone agrees that rising health care costs are major drivers of the long-term projected deficit. But new controls on Medicare spending are contentious — and politically dicey, as House Republicans are swiftly learning.

So, the thinking goes, negotiators might agree to set them aside and repeal the Medicaid MOE requirements instead. So much easier to compromise when the cuts would harm only low-income people.

Would the President agree? The White House says no comment.

2 Responses to House Republicans Try Another Tack To Cut Medicaid Spending

  1. Kent Pitman says:

    I quoted you in my recent blog article, Prenatal Murder and Unjustified Miscarriages. The article pulls together several issues that have been in the media, funding cuts to health programs for women and children among them. I hope if you have a few minutes, you’ll peek in.

  2. Kathryn Baer says:

    Thank you for alerting me to your posting, Kent. It pulls together major issues, both state and federal, that really are, as you say, part of the same big picture.

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