This week, the House is scheduled to vote on a budget resolution that would require the House Energy and Commerce Committee to make at least $880 billion over ten years in mandatory spending cuts as part of budget reconciliation legislation, most or all of which would come from Medicaid.  The draconian Medicaid cuts under consideration largely involve severe cost shifts to states through per capita caps, reductions in federal support for the Medicaid expansion and other changes to federal Medicaid matching rates, and restrictions on state use of provider taxes, as well as proposals such as work reporting requirements that add onerous red tape that would substantially cut enrollment among millions of eligible people.

There has been a lot of talk over the last few months about how House Republican leadership have learned their lesson from the failed effort to repeal and replace the Affordable Care Act (ACA) in 2017 and do not plan to use budget reconciliation to make another attempt this year.  But in the case of Medicaid, the major Medicaid cuts in the two leading repeal bills from eight years ago — the Senate’s Better Care Reconciliation Act (BCRA) and the House-passed American Health Care Act (AHCA) — are strikingly similar to several of the damaging proposals now under active consideration by House Republican leadership (see table).  This includes:

• Imposing per capita caps.  Both BCRA and AHCA included proposals which would have radically restructured federal Medicaid financing through per capita caps.  Instead of the federal government financing a fixed percentage of states’ Medicaid costs, per capita caps would provide only an arbitrary amount of federal funding on a per beneficiary basis, with the amounts becoming increasingly inadequate and the resulting cost-shifts to states becoming increasingly large over time.  One difference from what House Republican leadership is currently proposing is that BCRA and AHCA also gave states the option to have their federal funding be instead converted to a block grant.

• Eliminating the 90 percent matching rate for the Medicaid expansion.  Notably, neither BCRA nor AHCA would have outright repealed the Medicaid expansion.  Instead, they both would have phased out or eliminated the current, permanent 90 percent expansion matching rate over several years, with the intent of causing all states to drop the expansion over time due to the massive shift in expansion costs to states.  In fact, section 112 of AHCA, which would have eliminated the expansion matching rate, was entitled “Repeal of Medicaid Expansion.”  House Republican leadership is similarly proposing to eliminate the expansion matching rate.   

• Restricting state use of provider taxes.  States use taxes on hospitals, nursing homes, managed care plans and other health care providers to help finance their share of the cost of Medicaid.  BCRA included a proposal to restrict provider taxes, phasing down permissible taxes from 6 percent of patient revenues to 5 percent of patient revenues over several years.  What is now being proposed by House Republican leadership would actually go farther and phase down the threshold to 3 percent of patient revenues, which for nearly all states would restrict the use of existing provider taxes, leaving them with sharply reduced funding and substantial budget shortfalls that necessitate Medicaid cuts.

• Instituting Medicaid work requirements.  Both BCRA and AHCA would have given states the option to establish work reporting requirements for Medicaid beneficiaries, which would impose onerous red tape and result in disenrollment of many eligible individuals even if they are working or should otherwise be exempt.  House Republicans leaders today are considering an even more extreme proposal based on a provision in a House-passed debt ceiling bill in 2023: a mandatory work requirement for all states effectively applying to all Medicaid beneficiaries including people with disabilities.  (While the 2023 provision made available exemptions for certain groups, there was actually no requirement that states automatically exclude such groups or have systems in place to facilitate automatic exemptions.) 

House Republican leaders and some outside organizations that support these Medicaid cuts are making misleading claims that these proposals are somehow only about curbing fraud, waste and abuse.  My colleague Andy Schneider soundly refutes these weak arguments (here and here).  Instead, these claims can be viewed as a smokescreen for the tired, harmful playbook to gut the Medicaid program that was tried and failed in 2017 as part of the highly unpopular effort to repeal the ACA.  House Republican leaders have not really moved on.  Today, they are still pursuing the same kind of draconian Medicaid cuts that would take away coverage and access from tens of millions of low-income children, parents, pregnant women, people with disabilities, seniors and other adults.