The Wallstreet Journal and other news outlets previously reported that some Republican moderates in the House who expressed concerns about the deep Medicaid cuts in the budget reconciliation bill were reassured by House Republican leaders: “Don’t worry about the Senate. They’ll fix it.” In other words, the Senate would mitigate the draconian Medicaid cuts in the “One Big Beautiful Bill” (OBBB) – which CBO estimated at $863 billion over ten years before accounting for interactions with other provisions. (For background, see CCF’s House budget reconciliation bill explainer here.) But the recently released Senate Finance Committee text outlining its version of OBBB is likely to increase Medicaid cuts – and with the cuts to the Affordable Care Act Marketplace coverage, health care cuts will likely be over one trillion dollars when the Senate bill is officially scored by the Congressional Budget Office (CBO).
The House-passed budget reconciliation bill got worse in significant ways – including most importantly by imposing tighter and more rapid restrictions on provider taxes (discussed below) as well as subjecting a parent of older children (14+) to the work reporting requirement – so the rhetoric that only childless adults will be impacted (which already rang hollow for me) is untrue. CBO projected that 5.2 million people would lose Medicaid coverage before the requirement was expanded to parents – and their number was low compared to that of other analysts.
I’ll indulge myself in a digression for a moment – choosing to add parents of children age 14+ triggered me since 14 is the age at which the Foundation for Government Accountability (FGA) thinks children should start working. FGA has been trying to repeal protective child labor laws around the country, and Brian Blase, reputed architect of many of the Medicaid cuts, is a Visiting Fellow at FGA per their website.
Claims that children covered by Medicaid were protected in the House-passed version of the OBBB were already sorely inaccurate. And, as CBO has explained, when all elements of the House-passed bill are taken into account, including both tax cuts and program cuts, low-income children and families lose resources on net. Things just got worse for children in the Senate bill. Together, Medicaid and CHIP cover 37.3 million children – nearly half of the children in the United States. Children in CHIP lose protections in both the House and Senate versions of the bill as well.
Many of the House and Senate cuts are targeted at the Medicaid ACA expansion group, which includes parents and caregivers such as child care workers. The Senate bill doubles down on attacking expansion – and as Adam Searing and I blogged about last week, it keeps becoming clearer that the bill effectively rolls back much of the Affordable Care Act’s progress. Expansion has improved maternal and infant health; women of reproductive age need to be continuously covered before, during, and after pregnancy for optimal maternal and infant health. Millions of adults in the expansion group will lose coverage as a result of the work requirement and other onerous red tape provisions despite remaining eligible. We’ve explained many times why the Medicaid expansion helps children – most recently here.
But perhaps the most important risk for children in the budget reconciliation process is the massive cost shifts and burdens to state budgets through the Medicaid cuts and SNAP changes that for the first time, require states to pay a share of the cost and lead to the loss of nutrition for an estimated two million children).
On the Medicaid side, there are numerous proposals to restrict how states can raise revenue to pay their share of the costs through the use of provider taxes. All states except Alaska use provider taxes to finance their Medicaid program. The Senate bill proposes to lower the “safe harbor” ceiling from 6 percent to 3.5 percent from 2027 to 2031. In another effort to gut Medicaid expansion, this tightening of the safe harbor only applies to the 40 states and DC that have expanded Medicaid. Restrictions on state directed payment arrangements included in the House bill become even tighter in the Senate bill as well – meaning states will be faced with incredibly difficult choices even more quickly – again differentially targeted at providers in those states that are covering parents and adults under the ACA expansion. (Read Edwin Park’s blog for more details on these complex changes.)
These limitations – along with the huge cost shifts to states from the SNAP cuts and the uncompensated care resulting from the millions of people who will become uninsured as a result of the bill – will put massive pressure on state budgets. Expansion states will be hit much harder than non-expansion states, but no state will be exempt. While inexpensive to cover, children are the largest group of enrollees covered by Medicaid in every state. Rural communities are at extra risk since families are more reliant on Medicaid for their coverage.
Ratcheting up the pressure on state budgets is also especially dangerous for children because the top items in state budgets (counting both federal and state funds” are Medicaid (30%) followed by K-12 education (19%) with higher education next. When you look at just state expenditures, K-12 education is the largest expenditure for states at 33% (see p. 5). Cuts will continue to grow in the out years. As the U.S. population is aging and Medicaid is the primary payor for long term care services and supports, these federal cuts will set up fierce competition for shrinking resources to serve the needs of children, people with disabilities and seniors.
Congress is forcing Governors and state legislatures do the dirty work here – and when they start cutting their budgets, children are everywhere.[1] Both Medicaid and SNAP are essential tools to invest in the health and well-being of America’s children. Yet they are the top targets for cuts and the Senate just made matters worse.
[1] This report from the Commonwealth Fund explains which children and services are most at risk when states start cutting Medicaid budgets.