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Soon after narrowly passing a major health care bill, Republican House members took to the airwaves to put a positive spin on a bill that critics say will roll back coverage for America’s poorest and most vulnerable.
"We’re not taking a benefit away. Nobody on Medicaid is going to be taken away," Rep. Kevin McCarthy, R-Calif., told CNN May 4.
Compared with current law, the Republican plan is projected to reduce federal Medicaid spending by $880 billion, or 25 percent, over the next decade and reduce enrollment by 14 million, or 17 percent, according to the an analysis of an early version of the bill from the nonpartisan Congressional Budget Office, or CBO.
When we asked McCarthy’s office whether these steep cuts would cause any states to pare down their Medicaid programs, his spokesman Matt Sparks replied, "That is a decision that states will have to make."
Sparks added, "Regarding Medicaid, there are no changes until 2020. Then states will continue to receive the enhanced federal match for current enrollees."
Given the dramatic financing and enrollment changes contemplated in the bill, we decided to look into McCarthy’s claim, with a focus on the bill’s impact on state Medicaid enrollment. We found the changes will almost certainly result in reduced enrollment.
Ending more generous federal cost-sharing
A key feature of the the Affordable Care Act, or Obamacare, is the option for states to expand Medicaid with generous federal cost-sharing. Thirty-one states plus D.C. have opted to make Medicaid benefits more widely available to their residents. Obamacare allowed states to extend Medicaid benefits to all adults making up to 138 percent of the federal poverty line.
In exchange, the federal government covers 90 percent or more of the cost of newly-eligible Medicaid recipients. The portion of funding shouldered by the federal government is known as the "federal match rate."
Critics have pounced on the Republican bill for choking off the Obamacare Medicaid expansion by lowering the federal match rate for those who are new to the program.
Under the bill, the 90 percent federal match rate drops to its pre-Obamacare average of about 57 percent in 2020 for new applicants. The bill "grandfathers in" the higher match rate for those who enrolled under Obamacare and maintain continuous coverage. But based on historical data, the CBO estimates more than two-thirds of this group would lose coverage due to churn within two years, and that 95 percent would lose their grandfathered-in status by the end of 2024.
McCarthy spokesman Sparks was careful to note that the congressman was only referring to "current enrollees." But the fact is about 10.5 million of the the roughly 11 million low-income enrollees who now enjoy enhanced federal matching would lose it by 2025.
Impact on states
If the House bill becomes law, expansion states would immediately face the thorny question of whether to continue expanded coverage without the federal government’s added boost -- at an average cost increase of 33 percent.
Some states actually have trigger laws on the books -- that predate the Republican bill’s passage -- that say federal cuts would legally force the state to end Medicaid expansion.
According to the liberal Center on Budget and Policy Priorities, lowering the federal match rate would automatically end or curtail expansion in seven states -- Arkansas, Illinois, Indiana, Michigan, New Hampshire, New Mexico, and Washington.
"Laws in these states either explicitly require the expansion to end if the federal Medicaid matching rate decreases, or they require the state to take action to prevent an increase in state Medicaid costs," according to a paper by the center. The group said that some 2.6 million newly-eligible adults would immediately lose coverage under this scenario.
Other states might curtail coverage even without state law. Health policy experts in Pennsylvania, West Virginia, New Jersey and Ohio quoted in a May 4 article in Modern Healthcare magazine predicted that their states would end their coverage expansions if the current Republican plan became law.
"It's almost beyond imagination that Pennsylvania's Medicaid expansion could survive the reduction in enhanced federal funding," Andy Carter, CEO of the Hospital and Healthsystem Association of Pennsylvania, told Modern Healthcare, adding that Pennsylvania, which already faces a $3 billion budget deficit, would have to come up with $2 billion to $3 billion just to replace lost federal funding.
Additionally, a chorus of governors have expressed uneasiness about the proposed changes to Medicaid, with some warning that federal cuts are tantamount to ending the Medicaid expansion.
"They are going to eliminate Medicaid expansion," Ohio Gov. John Kasich told CNN May 7. "In Medicaid, you are going to knock all these people off after 2020, which is just a few years away, these people who now are getting covered across the country."
McCarthy said, "We’re not taking a benefit away. Nobody on Medicaid is going to be taken away."
Technically, the bill passed in the House would not directly strip Medicaid coverage from people who currently have it. It would ultimately be up to states to take away Medicaid coverage from current beneficiaries.
But the House bill, if enacted in its present form, would at the very least force some states to pull out of Medicaid expansion due to trigger laws that would go into effect if the federal contribution dries up. Blaming the states rather than the House bill for the loss of Medicaid coverage amounts to an exercise in blame-shifting.
More broadly, the CBO, health policy experts and governors have warned that the federal Medicaid cuts in the Republican plan would start a domino effect that ends with millions of people covered under expanded Medicaid losing their benefits.
We rate the statement False.
Congressional Budget Office, "American Health Care Act," March 13, 2017
Kaiser Family Foundation, "Status of State Action on the Medicaid Expansion Decision," Jan. 1, 2017
Kaiser Family Foundation, "Medicaid Expansion Enrollment"
Center on Budget and Policy Priorities, "House Republican Proposals to Radically Overhaul Medicaid Would Shift Costs, Risks to States," Feb. 24, 2017
Modern Healthcare, "If GOP repeal bill becomes law, most states likely to end their Medicaid expansion," May 4, 2017
CNN, "Governors uneasy over Medicaid changes in GOP health care bill," May 5, 2017
CNN transcript, "State of the Union," May 7, 2017
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