As readers of SayAhhh! already know, the Senate released a discussion draft of their ACA repeal and replace bill last week and updated it today. We’ve already blogged about the implications we see of the Senate draft – like how it is not nice to children and families, how even Jimmy Kimmel says Medicaid caps won’t work, how it exposes families to medical bankruptcy.
But today we got to see what the Congressional Budget Office – the nonpartisan agency tasked with identifying the budget and coverage impacts of the legislation – thinks will happen under the bill. Unfortunately for Senate Republicans trying to move this bill through very quickly and without public input, the CBO report offers only bad news. Here are the lowlights:
- By 2026, 22 million people would lose health coverage overall, including 15 million people losing Medicaid.
- Medicaid spending would be cut by $772 billion over 10 years, in part because of less federal funding for the Medicaid expansion population but also because of the proposed caps on Medicaid.
- The Medicaid savings would be used to offset tax cuts for wealthy people and health insurance companies.
Despite the claims of many Senators that they would improve on the House bill, the bottom line remains very very similar. Coverage losses are very similar and Medicaid’s financing structure is undermined. Medicaid cuts come down a little bit but are even more severe at the end of the budget window. This sets up Medicaid for even deeper cuts after many of these Members of Congress are out of office.
One aspect of the CBO score that will be of particular interest to readers of SayAhhh! is the effect of the growth rate for the Medicaid per capita cap. As we have written previously, the fundamental restructuring of Medicaid into a capped program allows Congress to achieve savings now and dial for more savings later. The CBO shines a light on how that would work – under the Senate bill, some groups (elderly and disabled) get a temporary growth rate of CPI-M plus 1 percentage point. Other groups (children and adults) get a temporary growth rate of CPI-M. And by the end, all groups just get CPI-U. So what difference does that make?
For the elderly and disabled, CBO projects need to grow at about 3.3% and CPI-M plus 1 to grow at about 4.7%. While it looks like they might do okay at first, CBO warns that spending for these groups would still be affected in the near term because states can shift costs from one group to another. Children and parents are hit hard from the very beginning – with need growing at about 4.9% and CPI-M coming in well below at 3.7%. But then come 2025, when the bill adjusts the dial for everyone down to CPI-U, the real squeeze starts – CPI-U only grows at 2.4%. So it’s no wonder that by 2026, the savings have piled up to $772 billion.
The obvious question is – what happens after 2026? Senator Wyden asked CBO this very question in a letter earlier today, and hopefully CBO will respond with more detail, but here’s what we know now from CBO:
“In 2025 and beyond, the differences between spending growth for Medicaid under current law and the growth rate of the per capita caps for all groups would be substantial…”
“…[S]tates would continue to need to arrive at more efficient methods of delivering services (to the extent feasible) and to decide whether to commit more of their own resources, cut payments to health care providers and health plans, eliminate optional services, restrict eligibility for enrollment, or adopt some combination of those approaches.”
“Over the long term, there would be increasing pressure on more states to use all of those tools to a greater extent.”
“…[A]fter 2026, enrollment in Medicaid would continue to fall relative to what would happen under current law.”
So what does this mean for children and families? We know that Medicaid is the MVP for children’s coverage, covering 37 million children and helping us reach historic coverage levels of 95% of children in the US with health coverage. Looks like Congress plans to make a U-turn – undoing coverage for children in order to offset tax cuts for the wealthy.