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Ryan Budget Cuts Medicaid and Threatens Seniors

The U.S. House of Representatives approved Budget Resolution for Fiscal Year 2015 would destroy the current Medicaid program and slash benefits for low-income individuals. Led by Budget Committee Chair, Representative Paul Ryan (R-WI), H. Con. Res. 96 would make major cuts to Medicaid funding and repeal the Medicaid expansion in the Affordable Care Act (ACA). These changes would be detrimental to seniors and others who rely on Medicaid by potentially jeopardizing their access to nursing homes and long-term services and supports (LTSS), rationing health benefits, and affecting low-income seniors' ability to pay for Medicare benefits.

Medicaid 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 have additional flexibility to design and manage their Medicaid programs. The proposed block grants would cut federal Medicaid spending by $732 billion over the next 10 years (2015-2024). Repealing Medicaid expansion takes away $792 billion over 10 years. Altogether, the Ryan budget cuts Medicaid more than $1.5 trillion over 10 years, 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 this country, and covers a range of services such as nursing home care and LTSS. Spending for nursing homes and other institutional care accounted for almost two-thirds (61 percent) of all LTSS in 2012. The average annual cost for nursing home care is over $81,000 for a semi-private room. Under today's federal/state partnership, states can receive additional federal funds 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.

Under a block grant system, the federal government would provide each state with a fixed dollar amount. States would have to find additional funding if they did 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.  

  • 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 deferring 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.

Affecting 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.

  • Forgoing necessary care if they are unable to afford the deductible or the copayment.

Repealing Medicaid Expansion Under the ACA

Under the ACA, beginning in 2014, states have the option to receive federal funding to expand Medicaid coverage to uninsured adults with incomes up to 133 percent of the federal poverty level ($15,521 for an individual in 2014). Over half of the states plan to expand their Medicaid programs, and some others will likely participate in the future. However, the Ryan budget would repeal Medicaid expansion, hurting states and low-income individuals by: 

·Eliminating billions of federal dollars to states to provide their residents with health care and financial protection. Under the ACA, the federal government will pay 100 percent of the cost for newly eligible low-income adults in Medicaid for the first three years (2014-2016), phasing down to 90 percent by 2020.   

  • Preventing low-income adults from receiving access to health care services. Repealing Medicaid expansion would result in between 13-17 million people losing access to coverage.  

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. Giving states greater flexibility in managing and designing their programs in no way compensates for the significant reductions that beneficiaries will face by turning Medicaid into block grants. In addition, repealing Medicaid expansion will financially hurt states and negatively affect low-income adults who need access to health care services.    

Government Relations & Policy, April 2014



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