Top Five Threats to Child Welfare from the Senate Health Care Repeal Proposal

The Senate’s proposal to repeal the Affordable Care Act (ACA) and to sharply cut Medicaid payments to states through so-called per capita caps can sound very abstract to social workers and policymakers coping with the day-to-day tragedies and crises of child welfare. But these disastrous changes could take a major step toward becoming law after the July 4 recess when the Senate will return to its bill. The dangers of these changes are very real to abused and neglected children, their birth, adoptive, and foster parents, as well as state agencies and providers.

The following are the five top threats to child welfare in the latest repeal bill:

#5 –  Threatens coverage for young adults aging out of foster care, up to age 26. Under the ACA, states are required to provide Medicaid coverage for young adults who were in foster care within the state, have now aged out, and are under age 26—just as young adults who are not in foster care can stay on their parents’ plans until age 26.

The Senate bill threatens this common-sense policy to help young adults overcome the emotional and physical effects of childhood trauma by undercutting Medicaid. Deep federal cuts under the proposed per capita caps in Medicaid—a total of more than $772 billion in cuts over the next 10 years according to the independent Congressional Budget Office (CBO)—will force states to ration care and pull back on coverage of needed services, like the behavioral and mental health services so needed by former foster care youth. In addition, the Senate bill gives states the option to place groups of non-disabled adults, including former foster youth, under a block grant financing structure, leading to even deeper cuts. In turn, former foster care youth under 26 would be even more at risk of cuts to coverage and services in states taking the block grant option.

#4 – Undermines health coverage for children in foster care by ending the guaranteed financing structure in Medicaid. Child welfare agencies have always been able to count on Medicaid coverage for children in foster care who are entitled to the full array of health and mental health prevention and treatment services. That’s because under Medicaid’s current structure, states are guaranteed federal financial help to pay for the care foster children need. They don’t need to trade off that help against (say) the needs of a growing population of low-income seniors.

But under the Senate bill’s Medicaid per capita cap, federal contributions would be capped, removing the federal guarantee in place today. States would have to find space within a fixed, insufficient amount of money for everyone helped by Medicaid. This includes low-income seniors, adults, and children, including foster children. And foster children, like other groups with above-average costs because of high medical and mental health needs, would likely be at heightened risk of cuts in coverage and benefits. The CBO estimates the bill’s cuts would contribute to a reduction of 15 million people covered in Medicaid by 2026—meaning these very vulnerable groups will be competing to have any coverage at all. To make it worse, the Senate bill worsens the reduction in federal Medicaid resources to states over time, creating a squeeze that only tightens every year.

In addition, historical evidence suggests the squeeze could well get worse, not better, if this drastic change in structure away from full Medicaid reimbursement to federal caps is enacted: Block grants generally decrease sharply in value over time—like the TANF block grant, which is worth 30 percent less than when it was enacted—because the Congress can use them as a piggy-bank for ever-increasing federal “savings” just by changing the formula a little.

#3- Threatens health and mental health coverage for parents, a key to prevention and reunification. In states that have expanded Medicaid under the ACA to cover low-income adults, including birth parents, the program provides a funding stream for the substance abuse, mental health, and medical services that parents need to help them provide a safe and nurturing home. Repealing the ACA turns back the clock to the days when there was no steady way for child welfare agencies to support behavioral health and medical treatment of parents.

The Senate bill ends the Medicaid expansion by phasing out coverage for parents and other adults in states that took up the option. Immediately on passage of the bill, deep cuts will occur in all states and even during the phase-out of expansion coverage. Participants will no longer be guaranteed access to a full package of key “essential benefits” like mental health and substance abuse services or even some other basic medical services.

In addition to turning back the clock for parents and rolling back efforts to treat families together, ending the expansion also ends coverage for former foster youth who move between states after aging out, for example for a job or to go to college, and are therefore not covered by the targeted provision—today, they can get the full package of medical and mental health services under Medicaid in the new state if it is one of the 31 and D.C. that have expanded coverage.

#2 – Endangers the commitment to health coverage through Medicaid for children with special needs who are adopted with federally supported subsidies, potentially destabilizing adoptions. A key element of the nation’s success in providing permanent adoptive families for abused and neglected children in foster care with special needs who cannot safely go home has been the national commitment to Medicaid health coverage through age 18, or 21 at state option.

States that offer state-funded adoption assistance payments for children with special needs may also make them eligible for Medicaid. Because of the medical fragility and behavioral health challenges of many children adopted from state child welfare systems, this guarantee is important to the ability of adoptive families to make a permanent commitment to children.

Just as with foster children, in a capped financing system where states have to fit more and more needs into a shrinking pot of money, adoptive children, too, could end up taking their chances in annual state budget debates—potentially destabilizing the nation’s adoption successes. And even if they maintain their insurance through Medicaid, the scope of services offered to these vulnerable children will be ratcheted back as the states scale back their Medicaid programs and implement deep cuts.

#1 – And the top threat to child welfare: state budgets as a whole will be destabilized by the sharp cuts to Medicaid. The cuts represent an unprecedented step backward from the core federal commitment to help states take care of vulnerable people, capping and cutting payments to states even when increasing needs—the opioid epidemic and its effects on families, for example, or an aging population—sharply ratchet health care demands up. As a result, state investments in prevention, in nonprofit providers and the services they offer to children and families, and in state staff and capacity could all be casualties of the broad-based budget cuts.

We should not impose risks like these on any of our children—but most of all, we must not damage children who need us the most.

Olivia Golden is executive director of the Center for Law and Social Policy (CLASP).