Congressional Republican leaders have directed the committee overseeing Medicaid to cut $880 billion from their next budget. They say these cuts aren't necessarily aiming for Medicaid, an insurance program for the 72 million poor and Americans with disabilities. For example, the cuts can come from Medicare. But Trump vowed not to touch on that extremely popular program. And this big sum can't come from anywhere else.
The Republican process is just beginning, and it's still unclear how lawmakers will change the program. Since most Medicaid is sent to the state, the best way to think about proposals is to cut back on the state's budget. State lawmakers can respond by dropping coverage, raising taxes, or cutting other parts of the budget. Today's newsletter covers some possible scenarios.
Who's covered?
Medicaid is designed to split patient healthcare costs. The federal government and states each pay set shares. (The state's contribution depends on how poor it is.)
The law is accurate about what Medicaid has to cover – for example, screening cancer or kidney transplants, rather than prosthetic legs – Republicans cannot change it in the budget bill. All states need to cover a specific population, such as poor children, pregnant women, people with disabilities, and patients in nursing homes who have run out of money.
Also, most states choose to cover a group of options added in 2014 as part of Obamacare. Anyone who makes a certain income (about $21,000 per person). Republicans want to impose work requirements on this group for people without disabilities. The idea is popular among the public, but it only saves about $100 billion on the federal government, and is not enough to meet its GOP goals.
Bigger targets
Anything more to reduce federal market share will put a burden on the state. And lawmakers were able to deal with the issues in their own way. They were able to cut back on populations of options like the Obamacare group. Twelve states have laws that do this automatically if federal funds fall. If they don't want to drop people, the state can drop the benefits of options, such as prescription drug coverage.
After those cuts, the state faces tough choices.
They were able to pay less for care to doctors, hospitals and nursing homes. However, there are restrictions. If Mississippi suddenly starts paying $50 for an echocardiogram rather than about $160, cardiologists may stop seeing Medicaid patients. (Many Medicaid patients already have a hard time finding care, as the program pays little for doctors.) Such a cut can also shut down some nursing homes and rural hospitals.
Still, states still need more money for Medicaid. This is usually the second largest post-education cost.
Where could they get it? They have to sacrifice other priorities. One option is to cut back on education. The other is to raise taxes. None of these are required under federal law. It depends on the state how they deal with it. This allows Congressional Republicans to say they have not reduced Medicaid benefits or eligibility, even in the inevitable effects of most places.
Too big to fail
Republicans point out that the original agreement between Washington and the state is worn out, and the Fed covers more than their share. it's true. Through various accounting gimmicks, states have reduced Medicaid contributions, and now on average pays about a third of the bill. Additionally, Washington took on almost the entire 2014 Obamacare expansion.
However, its expansion made Medicaid popular. More than half of Americans say someone in their family is using the program, with only 17% supporting budget cuts. And local lawmakers probably won't beat voters by crafting education or raising taxes to save Medicaid. That's why Democrats have settled on Medicaid as the top topic of the GOP budget plan.
Republicans also tried to cut Medicaid budgets in 2017. Grassroots opposition helped defeat the effort, as extensive lobbying by Republican governors did.
The unpopularity of the bill and its failure helped Democrats seize the House the following year.
Related: Medicaid cuts, taxation of scholarships, murder of invasive plants: A guide to the Republican wish list.
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