It is a truth universally acknowledged that states don’t get sick, people get sick. But in a program like Medicaid, where the federal government and the states share in the cost of medical and long-term care services that people need, the fiscal fortunes of states and the health of beneficiaries are inextricably linked.
If the federal government were to cap its Medicaid payments to states, as would happen under the bill that narrowly passed the House of Representatives on May 4, state budgets and health coverage for children and families would both be fundamentally changed.
(You may be asking yourself, “I thought the House bill was to repeal and replace Obamacare. What does capping federal Medicaid payments to states have to do with that?” Nothing).
Last week, the Kaiser Family Foundation posted an important issue brief on the implications of a federal Medicaid cap for states, and therefore children and families.
The Kaiser analysts identified the factors that affect states’ ability to respond to a federal Medicaid cap and the accompanying cuts in federal payments to states.
They then ranked states based on these factors and found 11 at greatest risk: Alabama, Arizona, Florida, Georgia, Kentucky, Louisiana, Mississippi, New Mexico, South Carolina, Texas, and West Virginia. As we found in our recent report on Medicaid in Small Towns and Rural America, in each of these states, Medicaid is the largest insurer for children in rural areas (ranging from 46% in Texas to 60% in Mississippi), and the share of children covered by Medicaid in rural areas is higher than in metropolitan areas.
Other analysts, using different factors, have found somewhat different states at highest risk under a Medicaid cap. For example, the Center on Budget and Policy Priorities, found that the cap will lock Alabama, Texas, Missouri, Idaho, and Mississippi into low Medicaid eligibility limits for parents.
Due to these low eligibility levels, Medicaid is not as important an insurer for non-elderly adults as for children; nonetheless, our research found that Medicaid is a more important insurer for adults in rural areas in these states than in metropolitan areas.
Don’t breathe a sigh of relief if your state is not on one of these “top 11” or “top five” lists. All states—and all Medicaid-eligible children and families in all states—are at great risk. The states with lower risk can run, but as the cap is dialed down over time to generate more federal “savings,” they can’t hide. Neither can their children and families, or the providers that now serve them.
Vern Smith, who ran the Michigan Medicaid program and is widely regarded as the Dean of State Medicaid Directors, recently did an analysis of the House-passed bill asking the question, “Can states survive the per-capita Medicaid caps in the AHCA?”
His short answer is “no.” Here’s his long answer:
“Given that Medicaid is already lean, as a result of a perennial state focus on Medicaid cost controls, it is impossible to imagine how states could respond to the challenge of massive reductions in federal Medicaid support to states proposed in the AHCA without harming current beneficiaries. The proposed shift in fiscal responsibility from the federal government to the states is so large, no amount of new flexibility could allow a response that wouldn’t include large state tax increases or severe reductions in coverage that would affect the medical services needed by the children, pregnant women, persons with disabilities, the elderly, and other adults now served by Medicaid.”
‘Nuff said.
