June 5, 2017

A Perilous Path ahead for Medicaid? 

Proposed Medicaid Cuts Would Grow to 45 Percent in 2026

Medicaid is at a crossroads.  Changes proposed by the President and the House of Representatives would put it on a path that leads to continual cuts and sharply reduced health care services for seniors, people with disabilities, and low-income children and families.

Both the House bill and the Trump budget would make massive cuts in federal support for Medicaid and change the fundamental nature of the program — in order to pay for huge tax cuts for corporations and wealthy Americans.  That “Robin Hood in reverse” strategy would gradually force states to ration Medicaid services.

The House-passed bill is projected to cut Medicaid by $834 billion over the next 10 years, which is alarming, yet the Trump budget would cut it by about $1.3 trillion!  An analysis by the Center on Budget and Policy Priorities (CBPP) estimates that:

“By 2026, the cut would equal $279 billion — a 45 percent reduction relative to current law, and would keep growing in subsequent years. “

Trump MA cuts - CBPP

The Trump budget would also affect Wisconsin much faster than the House Republican bill because beginning in October it would make deep cuts in the Children’s Health Insurance Program.  If they are approved, the CHIP cuts could cost our state more than $130 million during the 2017-19 budget period.

WCCF and several other groups participated in a media conference call last week explaining the threats to Medicaid in our state from the House Republican bill, the President’s budget and waivers proposed by the Department of Health Services. Read more here about the concerns raised at that media event.

The proposed changes in Medicaid financing would require states to choose between accepting an amount that is capped per person enrolled, or taking a federal block grant that wouldn’t increase with growth in the number of people who are enrolled in Medicaid.  The new funding system would allow some growth in spending, but it would gradually fall further and further short of what is needed to serve the vulnerable people who rely on Medicaid.

The massive cuts recommended by President Trump vividly illustrate one of the main problems with capping Medicaid or transforming it into a block grant. Once that fundamental change has been made, federal lawmakers will keep cutting Medicaid more – every time they decide to cut taxes for the rich or to fund a new military intervention.

Keep in mind that President Trump promised on many occasions during his campaign — and also after his election — that he would protect Medicaid.  The fact that he would reverse himself and propose such huge cuts in Medicaid spending illustrates the extreme perils of changing the structure of Medicaid in a way that would invite deeper and deeper cuts each year.

The risk of larger and larger cuts to a program after it has been capped or changed into a block grant is also made quite clear by the treatment of existing block grants in the President’s budget:

  • The Social Services Block Grant is slashed by 79%.
  • Funding for the Community Mental Health Services Block Grant is cut by 22%.
  • The Temporary Assistance for Needy Families block grant is being cut by 10%.

Coming back to what’s at stake in Wisconsin — there are currently almost 1.2 million Wisconsinites who participate in Medicaid funded programs, and whose health care will be at risk if the President’s proposals are approved. That includes about 500,000 children, 167,000 people with disabilities, and 65,000 seniors in nursing homes.

A recent WCCF report examines the potential effects and includes county-level data on the number of people who could be affected by cuts to Medicaid, as well as changes to coverage through Marketplace insurance plans.  We have also prepared a one-page fact sheet for every county.

Jon Peacock