Impact of Medicaid Per-Capita Cap Cuts Underestimated by Many

The American Health Care Act, passed by the House and now currently being considered by the Senate, significantly cuts Medicaid in two ways. First, the AHCA rolls back the expansion of Medicaid to adults with incomes below $16,643 (138% FPL). Second, the AHCA institutes a “per-capita cap” or limit on how much the federal government will contribute to states for everyone on their Medicaid program – this includes children, parents, people with disabilities and the elderly.  This cut will affect everyone on Medicaid. For example, my colleague Joan Alker just wrote about how children with special health care needs are particularly at risk.

An earlier version of the AHCA contains these same Medicaid cuts and was analyzed by the nonpartisan Congressional Budget Office (CBO). (Expect a new CBO analysis of the bill that passed the House next week.) The CBO found not only that people would lose their Medicaid coverage because of the elimination of the expansion but also current people on Medicaid in the states could expect cuts and limitations in services because of the large federal funding “per-capita” funding cut to the entire Medicaid program. The CBO wrote:

With less federal reimbursement for Medicaid, states would need to decide whether to commit more of their own resources to finance the program at current-law levels or whether to reduce spending by cutting payments to health care providers and health plans, eliminating optional services, restricting eligibility for enrollment, or (to the extent feasible) arriving at more efficient methods for delivering services. CBO anticipates that states would adopt a mix of those approaches, which would result in additional savings to the federal government. 

Unfortunately, when asked directly about Medicaid cuts, either at town halls or in public across the country, some policymakers have not leveled with their constituents about the effect of these large cuts to Medicaid. They have either claimed that Medicaid isn’t going to change at all or, in one case in North Dakota, actually claimed more resources were provided to the Medicaid program by the bill they passed.  These claims are simply not correct and are directly contradicted by the federal government’s own non-partisan Congressional Budget Office and multiple other independent analyses concluding, for example: “Due to the “one-sided” nature of the AHCA’s per capita cap, there would have been no winners among the states, only losers.” And just today consulting firm Avalere estimated that all 50 state Medicaid programs (and DC) will be cut by $43 billion in funding just for non-disabled children writing:

New research from Avalere finds that funding for non-disabled children could decrease by $43 billion over 10 years if recent proposals to limit federal spending on Medicaid by using per capita caps are passed into law.

Here is a video of four policymakers directly denying to their own constituents that the Medicaid cuts they supported would impact children, parents, the elderly and people with disabilities:

Adam Searing is an Associate Professor at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.