The House Republicans’ Health Care Outline Would Eviscerate Medicaid

House Republican leadership has just released their plan for health care “reform.” The plan includes sweeping changes to Medicaid that would end the Medicaid expansion’s extra payments to states, effectively ending the program. It also ends traditional Medicaid, replacing the current funding structure with per capita caps.

The framework the proposed Medicaid changes is Speaker Ryan’s  “A Better Way” plan released last summer–a plan that would cut Medicaid funding and shift costs to states.

We wrote about Ryan’s plan and the implications for states and state residents who rely on Medicaid when the plan came out last summer. We’re re-posting that blog here.  At that time, we called it Paul Ryan’s Stealth Attack on Medicaid. Well, the attack has become pretty direct. Here it what we said in July.

Here’s what we wrote when Paul Ryan released his Medicaid plan in the summer of 2016

The health plan that House Speaker Paul Ryan released on June 22 would radically restructure and cut federal funding for Medicaid.  Ryan calls his plan “A Better Way,” but it would be anything but better for states, patients, and health care providers.

While the plan contains mostly repackaged old ideas and is missing absolutely critical budget details, it is important for advocates to pay attention both to the plan itself, as a roadmap of Republican leadership’s objectives for Medicaid, and to the rhetoric it uses.

Ryan castigates Medicaid and the people who benefit from Medicaid using language that we’re hearing more often and more loudly from conservatives.

There’s ample evidence to refute Ryan’s assertions. Advocates must point out the flaws in Ryan’s plan and challenge his language and his critiques of Medicaid and Medicaid enrollees head on.

The Ryan Plan shifts Medicaid costs to states

The proposal would let states choose whether to accept federal Medicaid funding as a per capita cap or block grant. While the plan is short on details, like the level of federal funding, it’s clear that federal funding would be well below levels under current law. The budget approved by the Republican controlled House Budget Committee and supported by Ryan is a good window into the level of federal cuts envisioned. That proposal would cut state federal Medicaid funding by $1 trillion over 10 years.

Cuts of that magnitude would pass significant health care costs to states—costs that states will not be able to make up.

Ryan’s per capita cap plan would set a limit for federal Medicaid payments per enrollee

The plan assumes per capita caps as the default way states would receive federal Medicaid dollars:

• The federal funding for each enrollee would be “capped” based on a state’s Medicaid matching rate and adjusted for different types of enrollees: seniors, blind and disabled people, adults, and children.
• There would be no Medicaid expansions allowed after January 1, 2016.
• For existing expansions, the enhanced federal match would be gradually phased out (no details provided).
• Caps would begin in 2019, with federal funding based on 2016 spending adjusted to 2019 based on general inflation. The federal share would increase annually, based on general inflation.

Ryan states that this approach would provide “certainty for states.” It would—states would certainly see more and more health care costs land directly on them as the federal part of Medicaid’s traditional state and federal partnership got smaller and smaller over time.

The problem with tying spending to general inflation rather than medical inflation: One reason that states would feel such a pinch is that federal funding is pegged to general, not medical, inflation. Nearly every year since 1935—the first year that the Bureau of Labor Statistics started tracking medical inflation separately—medical inflation has exceeded general inflation. It’s a trend that’s been pretty consistent for 80 years.

Medical costs increase more than the general basket of goods and services. There are some good reasons why.  Advances in medical technology can increase costs (and improve people’s lives). Because of those advances, people are surviving illnesses and accidents that used to be fatal, but they often require ongoing care. People are living longer, and generally, the older someone is, the more health care they consume.

Tying federal Medicaid spending to general inflation wouldn’t erase the longstanding gap between medical and general inflation. It would mean that states will have to absorb more health care costs as federal payments make up an ever-shrinking percent of costs. That ensures that all states, whether they expanded Medicaid or not, would have no choice but to cut enrollees from the program, cut benefits, cut provider payments, or all of the above.

Turning Medicaid into a block grant program would result in cuts in services

States could opt out of the per capita cap payment and instead receive federal funding as a block grant.  Details on the federal funding for this approach are sketchy, except that there’s no added funding for the Medicaid expansion from the outset. Presumably the federal share would shrink over time, as it does under the per capita cap scheme, and more costs would fall on states.

States couldn’t innovate their way out of the funding hole the plan would create

Speaker Ryan blithely talks about how this approach will “empower states,” “foster innovation,” and increase “state flexibility.” Such empty phrases seem like window dressing and wishful thinking. It is impossible to see how cuts approaching the magnitude that Speaker Ryan likely has in mind would “improve the quality of care and access to vital services” as the plan claims.

Under both approaches—per capita caps or block grants—Medicaid consumer protections and federal standards seem to be left at the wayside. The Ryan approach would let states impose more costs on Medicaid enrollees, use waiting lists and caps, and set up other program requirements and terminate enrollees who don’t comply. In short, the flexibility envisioned seems to focus on giving states more latitude to decide whom—and which services and provider payments—to cut and when.

How much states would have to cut depends on the missing details, details that would clarify the depth of federal cuts planned and the level of fiscal pain that states will feel. But it is clear that massive federal funding cuts would fall squarely on states, providers, and patients.

Using evidence to counter Ryan’s unfounded attacks on Medicaid matters

While the plan is short on fundamental details, it is long on rhetoric. The bulk of the six-page Medicaid discussion is used to paint the program as a failure, pit enrollee groups against each other, and infer that many adults who depend on Medicaid for health insurance just aren’t trying hard enough.

There’s ample evidence to show that Medicaid and the Medicaid expansion has:

• Helped low-income people get critical health and long-term care
• Improved enrollees’ financial health, which can help them get out of poverty
• Contributed to a healthier workforce
• Made health systems stronger for everyone

The research also shows that the current funding structure based on matching state spending protects states and allows them to best serve their residents’ health care needs.

In addition to countering the specifics of Speaker Ryan’s plan, it is equally important for advocates to gear up to counter its rhetoric.

It’s easy to say that the plan won’t go anywhere right now and let it slide. But the ideas and the language used aren’t going away any time soon.  And as we’re seeing a lot these days, when bad ideas get repeated often enough, whether they are backed up by facts or not, they take hold.  It’s time to fight back with the facts.