Governors in Red and Blue States Should be Concerned with Congressional Plans to GUT Medicaid

Time is ticking as Congress has just 31 days to come together on a spending bill that will fund the Federal Government. Last week I met with staffers on Capitol Hill to ask about the reality of massive policy changes to Medicaid and was met with this consensus, "Governors from both sides of the aisle need to be engaged."

For context, last month the House Budget Committee sent out a list of mandatory spending and tax proposals that may be included in budget reconciliation legislation. Among the list of proposed cuts, Medicaid would take the biggest hit with more than a $2.3 trillion proposed reduction in funding. The majority of these cuts coming from the following proposals:

• Impose a per capita cap. This unprecedented move would mean that states would receive a fixed dollar amount from the federal government each year regardless of their costs, forcing them to fill holes in the budget themselves. Additionally, this would mean an inability for states to meet any unexpected needs if enrollment or health costs are higher than expected due to a recession, pandemic, new drugs or new technologies (Center on Budget).

• Reduce the Affordable Care Act (ACA) expansion match rate. This move to shift costs to states would have an immediate impact on at least 12 states who have legal triggers to end Medicaid expansion if the federal contribution rate drops. Others will be forced to drop expanded coverage as well, leaving an unprecedented number of uninsured individuals across the nation.

• Lower the Federal Medical Assistance Percentage (FMAP). FMAP is the rate at which the federal government reimburses states for Medicaid costs. Lowering the FMAP rate would cause states to increase their share of funding, cut important services and/or reduce overall eligibility. Additionally, states with older and lower income residents would suffer most as they currently have a higher rate of reimbursement. According to a recent Politico article, "..cutting payments could exacerbate issues with getting enough providers to take Medicaid patients. Cuts could also hit rural facilities especially hard, with many hospitals in such areas shuttered."