The House of Representatives approved Budget Committee Chairman Paul Ryan's (R-WI) Budget Resolution for Fiscal Year 2014, H. Con. Res. 25 on March 21, 2013 (221-207). The Ryan budget calls for significant reductions to Medicaid funding, potentially jeopardizing access to nursing home care and long-term services and supports (LTSS) in the community, rationing health benefits, and impairing low-income seniors' ability to pay for Medicare benefits. The Senate rejected the Ryan budget on March 21, 2013 (40-59).
The Medicaid program provides funding for health care to our nation’s most vulnerable, including low-income seniors, people with disabilities, children and some families. The Ryan budget would end the current joint federal/state financing partnership and replace it with fixed dollar amount block grants, giving states less money than they would receive under current law. In exchange, states would be given additional flexibility to design and manage their Medicaid programs. The proposed block grants would cut federal Medicaid spending by $810 billion over the next 10 years (2014-2023). This is about a 21 percent reduction compared to current law.
Jeopardizing Access to Nursing Homes and Long-Term Services and Supports
Medicaid is the primary payer of long-term care in the country, and covers a range services such as nursing home care and LTSS. Spending for nursing homes and other institutional care accounted for almost two-thirds (62.2 percent) of all LTSS in 2010. The average annual cost for nursing home care is over $80,000 for a semi-private room. Under today's federal/state partnership, additional federal funds can be provided to states to accommodate actual needs, such as increased enrollment during an economic recession. Currently, the federal government pays for 57 percent of Medicaid costs on average.
However, under a block grant system, the federal government would provide each state with a fixed dollar amount. States must find additional funding if they do not have resources to pay for an increase in the number of patients enrolled in Medicaid or the cost of medical treatments. States could address their funding shortfalls in any number of ways, including:
- Scaling back nursing home quality, service and safety protections, endangering the lives of vulnerable seniors.
- Asking patients' spouses, children or other family members to cover the cost of nursing home care, exhausting much or all of their savings. Potential loss of current spousal impoverishment protections.
- Tightening eligibility criteria to home and community-based services, resulting in more individuals moving into nursing homes.
Rationing Health Benefits
Seniors and people with disabilities comprise one-quarter of Medicaid enrollees, but account for about two-thirds of Medicaid spending. Research shows that per-beneficiary costs have risen more slowly in Medicaid than in the private sector. Turning the program into block grants likely would require states to make additional reductions in services that would negatively affect beneficiaries. States could resort to options, such as:
- Placing caps on the number of individuals who could enroll in Medicaid and defer people to waiting lists once the cap is reached, leaving many people with no health benefits.
- Reducing payments to providers, such as doctors and hospitals, resulting in providers no longer accepting Medicaid patients and possibly leaving the program. Medicaid already pays providers less than Medicare or private health insurance.
Impairing Low-income Seniors Ability Pay for Medicare
Among Medicaid's elderly and disabled beneficiaries, there are more than 10 million low-income beneficiaries who also receive Medicare benefits. These individuals are often referred to as the "dual eligible" population. Medicaid pays the Medicare premiums, deductibles or copayments for millions of these individuals. If states do not have money to cover these payments, many seniors could face:
- Diminishing Medicaid benefits and a loss of their Medicare coverage if they are unable to pay the premiums.
- Foregoing necessary care if they are unable to afford the deductible or the copayment.
NATIONAL COMMITTEE POSITION
Transforming the Medicaid program from a federal/state partnership to a block grant program will result in arbitrary cuts to vulnerable seniors and other individuals. Medicaid is already underfunded. Giving states additional flexibility in managing and designing their programs will in no way compensate for the significant reductions that beneficiaries will face if Medicaid is turned into block grants as proposed in the Ryan Republican budget.
Government Relations and Policy, March 2013