A Former State Medicaid Director’s Sobering Take on the Impact of the Senate’s Proposed Medicaid Funding Cuts

https://goo.gl/YT13YX

As soon as tomorrow, the Senate plans to vote on its version of Affordable Care Act “repeal and replace” legislation. However, much of this bill is not actually about changing the ACA itself. Instead, it would radically alter the Medicaid program and its historic financing arrangement between the state and federal government. It would fundamentally change the relationship between the federal government and the states by shifting expenses and the risk of future cost growth onto state budgets.

Medicaid is currently the largest single source of federal revenue to states. The Senate bill aims to trim that significantly by instituting a capped funding arrangement. The Congressional Budget Office estimated that, in the near term, this new financing structure would result in a 26 percent in federal funding which would eventually increase to a sobering 35 percent loss in funding to states in 2036.

These reduced federal funding limits would put pressure on states to demand that the federal government give them much more latitude in operating their Medicaid programs and force states to make substantial changes to the detriment of enrollees. States would also become much more aggressive in trimming costs, including by tightening eligibility, provider rates and benefits. As states struggle to make up for losses in federal Medicaid funding, they will also face pressure to cut other priorities like education.


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