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Thursday, November 1, 2012

The Ryan Budget’s Impact on Medicaid

Dee Mahan

The Kaiser Family Foundation and the Urban Institute just published a study re-examining the impact that the 2012 Republican budget plan would have on state Medicaid programs. This is the budget plan developed and championed by Vice Presidential candidate Paul Ryan. The plan—voted for by all House Republicans—calls for ending Medicare as we know it, making deep cuts in federal support for Medicaid, and turning Medicaid into a block grant program.

This is a particularly good time to take another look at the Ryan budget plan and what it would mean if it became law. That’s because Paul Ryan’s plan is essentially the same as Mitt Romney’s. Governor Romney’s plan lacks many details, he has frequently praised the Ryan budget, and his choice of Paul Ryan as a running mate signaled his support of the plan. Like Congressman Ryan, Governor Romney calls for block granting Medicaid, coupled with a cap on Medicaid spending that, like the Ryan plan, would deeply cut federal support.

What would the Ryan plan mean for states?  It would reduce the federal support states receive for their Medicaid programs by nearly 40 percent from 2013 to 2022. It does this by eliminating the opportunity for states to expand coverage in January 2014 and by cutting existing Medicaid funding by more than 20 percent. That means state would have to shoulder a lot more of the cost of Medicaid—or make drastic cuts to the program.

It would also change the structure of Medicaid. Today, people who meet state eligibility are entitled to Medicaid coverage; federal support increases if more people in a state need help. That makes Medicaid a reliable safety net in tough economic times. The Ryan plan would change that. It would turn Medicaid into a block grant, or fixed federal allocation, with an annual inflation adjustment that is less than medical inflation. That means that, over time, states will get less and less federal support to cover Medicaid costs.

How this would affect people across the country will vary from state to state because states will differ in the way they deal with drastic funding cuts. But there are a few things that are certain. Health care costs for people who rely on Medicaid won’t go away just because federal support is cut. Realistically, states won’t be able to make up such a huge loss in federal support, so they will be left deciding what and who to cut. What might this look like?

  • Cuts in health care for seniors and people with disabilities. Seniors and people with disabilities make up 25 percent of the people who rely on Medicaid and account for nearly two-thirds of Medicaid costs.
  • Cuts in nursing home care. Medicaid pays for a larger percent of nursing home care than any other payer.
  • Cuts in home- and community-based care. Medicaid makes it possible for millions of seniors and people with disabilities who need long-term care to keep living in their homes or outside of nursing homes. Without this help, many would have to move into a nursing home.
  • A greater burden on middle-class families. Cuts to long-term care would mean that more of the costs and the responsibility for caregiving would fall on patients’ families—people whose parents or other relatives need long-term care, parents of children with disabilities, and spouses, who might be aging and frail themselves.  
  • Cuts in health care for children. Children make up nearly half of all Medicaid enrollees. Medicaid helps them stay healthy so that they can do better in school and better later in life.

Would states really have to make such tough choices? You bet. To give people a sense of the size of the cuts in the Ryan plan, the Kaiser report looks at how many people would lose coverage under the existing Medicaid program in 2022 if states made up for all the lost federal funds by reducing program eligibility. They found that more than 20 million people would lose coverage. That’s the magnitude of the cuts we’re talking about.

That’s the future we’d have under the Ryan plan.  Medicaid’s safety net, in place for more than 40 years, would be ripped apart. And its children, seniors, people with disabilities, and their families who would be falling through the cracks.