Sounding the Alarm: The New Senate Health Care Bill Could Cut $3.2 Trillion from Medicaid by 2036

Sounding the Alarm: The New Senate Health Care Bill Could Cut $3.2 Trillion from Medicaid by 2036


The latest Senate health reform bill, known as Graham-Cassidy-Heller-Johnson, puts Medicaid back on the chopping block. The proposal would change the way the federal government currently funds Medicaid by limiting federal funding and shifting cost over time to both states and Medicaid enrollees, and their families.  New AARP Public Policy Institute projections find that the per enrollee cap proposal in Graham-Cassidy-Heller-Johnson will cut between $1.2 trillion and $3.2 trillion from total (federal and state) Medicaid spending over the 20-year period between 2017 and 2036 (see table 1 below).

How Graham-Cassidy-Heller-Johnson Cuts Medicaid

The Graham-Cassidy-Heller-Johnson bill has many of the same harmful provisions that were in the Better Care Reconciliation Act that the U.S. Senate rejected this past summer. For example, beginning in 2020, the bill would subject the traditional Medicaid eligibility groups- aged, disabled, and children[1] to mandatory caps on a per-person basis. States would have the option to choose between block grants and per capita caps for adults without disabilities.[2]

The Graham-Cassidy-Heller-Johnson bill would start out using the medical care component of the Consumer Price Index (M-CPI)—a measure of the average out-of-pocket cost of medical care services used by an average consumer—as the growth rate for adults and children. It would use M-CPI plus one percentage point (M-CPI+1) for older adults and individuals with disabilities. However, beginning in 2025, it would slash the growth rate for adults and children to the Consumer Price Index for all urban consumers (CPI-U)—a measure of general inflation that examines out-of-pocket household spending on goods and services used for everyday living. CPI-U does not tie closely to medical costs and will not reflect population growth.  For the older adults and individuals with disabilities, the growth rate would decrease to M-CPI starting in 2025.

To be clear, none of the proposed growth factors—M-CPI, M-CPI+1, and CPI-U— keep pace with the growth in Medicaid spending. The proposed Medicaid cuts will grow deeper over time.

AARP Public Policy Institute’s Projections

The Graham-Cassidy-Heller-Johnson bill ties the growth rates for per enrollee caps to M-CPI and CPI-U, and these growth rates are variable and highly uncertain.  The AARP Public Policy Institute models this uncertainty by highlighting three scenarios for M-CPI and CPI-U, based on reasonable projections (see tables 1 and 2 below for full details).

We present the high, middle, and low case for M-CPI/CPI-U growth rates based on the following:

  • Low Case. Based on historical growth rates. Over the last five years (2012-2016), the M-CPI growth rate has averaged 3.0 percent per year, and the CPI-U growth rate has averaged 1.32 percent per year.
  • Middle Case. Based on projections from the Congressional Budget Office. CBO projects M-CPI to grow by 3.7 percent per year, and CPI-U by 2.4 percent per year.
  • High Case. Based on projections from 2016 Centers for Medicare and Medicaid Services Medicaid Actuarial Report. From 2019 onward, this report projects M-CPI to grow by 4.2 percent per year, and CPI-U by 2.6 percent per year.

 

The AARP Public Policy Institute projects that by choosing per capita cap growth factors that are lower than projected Medicaid cost growth and dramatically reducing these rates beginning in 2025, Graham-Cassidy-Heller-Johnson would cut $1.2 trillion to $3.2 trillion from total (federal and state) Medicaid spending, including up to $402 billion in Medicaid cuts for older adults.

 

 

 

 

 

 

These cuts could be as much as 14 percent of total Medicaid spending in 2026 and 33 percent in 2036 across all populations. For older adults, per enrollee cuts could be as high as 6 percent in 2026 and 21 percent in 2036 (see Table 2 below). The projections do not include the proposed cuts to the adult Medicaid expansion population, which would also be considerable for those states that expanded coverage.

New graphs from the AARP Public Policy Institute illustrate Graham-Cassidy-Heller-Johnson’s proposed cuts to Medicaid and show that for all affected populations—older adults, adults with disabilities, children, and non-expansion adults—the proposed cuts to Medicaid are, in fact, a cut—and one that will hurt.

These significant cuts to Medicaid will have negative impacts on older adults, adults with disabilities, and individuals and families who rely on Medicaid to meet their health care and long-term services and supports needs. Limiting the amount of federal dollars will force states to make some difficult choices—like cutting benefits or further limiting provider reimbursements. The result is clear: access to services for some of the most vulnerable populations in our society, guaranteed for over a half-century, would be in jeopardy.

 

 

 

 

[1] Children with disabilities are not subject to the caps.

[2]  Medicaid expansion adults are dealt with separately in the bill and are not referenced in this report.

Brendan Flinn is a policy research senior analyst for the AARP Public Policy Institute. He works on Medicaid, long-term services and supports, and family caregiving issues.

 

 

 

Lynda Flowers is a Senior Strategic Policy Adviser with the AARP Public Policy Institute, specializing in Medicaid issues, health disparities and public health.

 

 

 

Jean Accius is vice president of livable communities and long-term services and supports for the AARP Public Policy Institute. He works on Medicaid and long-term care issues.

 

 

 

 

Ari Houser is a Senior Methods Adviser at AARP Public Policy Institute. His work focuses on demographics, disability, family caregiving, and long-term services and supports (LTSS).

 

 

 



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The Senate Health Reform Bill Slashes Medicaid in North Dakota: State Could Face Cuts Up to $7 Billion

The Senate Health Reform Bill Slashes Medicaid in North Dakota: State Could Face Cuts Up to $7 Billion


The Better Care Reconciliation Act (BCRA) now under consideration in the Senate would drastically alter North Dakota’s Medicaid program. The proposed Senate bill would change the way the federal government currently funds Medicaid by limiting federal funding and shifting cost over time to both states and Medicaid enrollees. The BCRA would subject older adults, adults with disabilities, Medicaid expansion adults, and non-disabled children under age 19 to mandatory per enrollee caps beginning in 2020. State Medicaid programs would have the option to choose between block grants and per enrollee caps for non-elderly, non-disabled, non-expansion adults.

The Senate bill would start out using the medical care component of the Consumer Price Index (M-CPI)—a measure of the average out-of-pocket cost of medical care services used by an average consumer—as the growth rate for per enrollee caps through 2020. Between 2020 and 2024, a growth rate of M-CPI plus one percentage point would be used to trend costs for older adults and adults with disabilities. All other groups would have a growth rate of M-CPI. However, beginning in 2025, the BCRA would slash the growth rate for all populations by switching to the Consumer Price Index for all urban consumers (CPI-U)—a measure of general inflation that examines out-of-pocket household spending on goods and services used for everyday living. Importantly, CPI-U does not tie closely to medical costs—it’s common knowledge that such costs are increasing much faster than general inflation—and will not reflect population growth or the impact of aging. To be clear, none of the proposed growth factors—M-CPI, M-CPI+1, and CPI-U—keep pace with the growth in Medicaid spending. The cut would hit North Dakota precisely at the time its aging population will be experiencing additional cost growth due to increasing need for services and supports. The projections do not include the proposed cuts to the adult expansion population, which would also be considerable for the state of North Dakota.

By dramatically reducing the per capita cap growth factor beginning in 2025, we project that the Senate bill would cut between $3 billion and $7 billion from total (federal and state) Medicaid spending in North Dakota over the 20-year period between 2017 and 2036 for the four non-expansion Medicaid enrollment groups: older adults, adults with disabilities, non-disabled children under age 19, and non-expansion adults (children with disabilities are excluded because the BCRA does not subject them to capped funding). A cut of this magnitude threatens the viability of North Dakota’s Medicaid program in unprecedented ways and will likely increase the number of people who no longer have access to essential healthcare services and critical supports.

Previous analysis by the AARP Public Policy Institute discusses why capping Medicaid is flawed and would leave states—and the poorest and sickest Americans—holding the bag for the shortfalls that will most certainly occur.

Table 1 shows the cumulative 20-year cuts to Medicaid by eligibility group in North Dakota under the Senate health reform bill for three growth rate projections.  The bill would cap per enrollee cost growth using two measures of inflation (M-CPI and CPI-U), which are highly variable and uncertain, though will fall well short of what is needed to maintain the integrity of North Dakota’s Medicaid program.  It is difficult to plan for such uncertain growth rates, and reasonable projections are far apart.

We present the high, middle, and low case for M-CPI/CPI-U growth rates based on the following:

  • Low Case. Based on historical growth rates. Over the last five years (2012-2016), the M-CPI growth rate has averaged 3.0% per year, and the CPI-U growth rate has averaged 1.32% per year.

 

  • Middle Case. Based on projections from the Congressional Budget Office. CBO projects M-CPI to grow by 3.7% per year, and CPI-U by 2.4% per year.

 

  • High Case. Based on projections from 2016 CMS Medicaid Actuarial Report.  From 2019 onward, this report projects M-CPI to grow by 4.2% per year, and CPI-U by 2.6% per year.

 

In short, the lower the cap growth rate, the more severe the Medicaid cuts will be.

Table 1 above  demonstrates that for any projection of the bill’s cap growth rates, the BCRA will lead to significant funding shortfalls for older adults, adults with disabilities, and non-disabled low-income children under age 19  in North Dakota. The end result is that the state will be left with severe funding shortages, forcing North Dakota to cut eligibility, provider rates, or covered services—or very likely all three. Moreover, many of North Dakota’s most vulnerable citizens will be left without access to the critical health care and long-term services and supports—like help with toileting, bathing, dressing, and eating—they rely on. Cutting between $3 billion and $7 billion from North Dakota’s Medicaid program is not the way to go.

 

Susan Reinhard is a senior vice president at AARP, directing its Public Policy Institute, the focal point for AARP’s public policy research and analysis. She also serves as the chief strategist for the Center to Champion Nursing in America, a resource center to ensure the nation has the nurses it needs.

 

 

 

Jean Accius is vice president of livable communities and long-term services and supports for the AARP Public Policy Institute. He works on Medicaid and long-term care issues.

 

 

 

 

Lynda Flowers is a Senior Strategic Policy Adviser with the AARP Public Policy Institute, specializing in Medicaid issues, health disparities and public health.

 

 

 

 

Ari Houser is a Senior Methods Adviser at AARP Public Policy Institute. His work focuses on demographics, disability, family caregiving, and long-term services and supports (LTSS).

 

 

 



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The Senate Health Reform Bill Slashes Medicaid Severely: Alaska Takes a Big Hit

The Senate Health Reform Bill Slashes Medicaid Severely: Alaska Takes a Big Hit


The Better Care Reconciliation Act (BCRA) now under consideration in the Senate would drastically alter Alaska’s Medicaid program. The proposed Senate bill would change the way the federal government currently funds Medicaid by limiting federal funding and shifting cost over time to both states and Medicaid enrollees. The BCRA would subject older adults, adults with disabilities, Medicaid expansion adults, and non-disabled children under age 19 to mandatory per enrollee caps beginning in 2020. State Medicaid programs would have the option to choose between block grants and per enrollee caps for non-elderly, non-disabled, non-expansion adults.

The Senate bill would start out using the medical care component of the Consumer Price Index (M-CPI)—a measure of the average out-of-pocket cost of medical care services used by an average consumer—as the growth rate for per enrollee caps through 2020. Between 2020 and 2024, a growth rate of M-CPI plus one percentage point would be used to trend costs for older adults and adults with disabilities. All other groups would have a growth rate of M-CPI. However, beginning in 2025, the BCRA would slash the growth rate for all populations by switching to the Consumer Price Index for all urban consumers (CPI-U)—a measure of general inflation that examines out-of-pocket household spending on goods and services used for everyday living. Importantly, CPI-U does not tie closely to medical costs—it’s common knowledge that such costs are increasing much faster than general inflation—and will not reflect population growth or the impact of aging. To be clear, none of the proposed growth factors—M-CPI, M-CPI+1, and CPI-U—keep pace with the growth in Medicaid spending. The cut would hit Alaska precisely at the time its aging population will be experiencing additional cost growth due to increasing need for services and supports.

By dramatically reducing the per capita cap growth factor beginning in 2025, we project that the Senate bill would cut between $7 billion and $13 billion from total (federal and state) Medicaid spending in Alaska over the 20-year period between 2017 and 2036 for the four non-expansion Medicaid enrollment groups: older adults, adults with disabilities, non-disabled children under age 19, and non-expansion adults (children with disabilities are excluded because the BCRA does not subject them to capped funding). A cut of this magnitude threatens the viability of Alaska’s Medicaid program in unprecedented ways and will likely increase the number of people who no longer have access to essential healthcare services and critical supports.  The projections do not include the proposed cuts to the adult expansion population, which would also be considerable for the state of Alaska.

Previous analysis by the AARP Public Policy Institute discusses why capping Medicaid is flawed and would leave states—and the poorest and sickest Americans—holding the bag for the shortfalls that will most certainly occur.

Table 1 shows the cumulative 20-year cuts to Medicaid by eligibility group in Alaska under the Senate health reform bill for three growth rate projections.  The bill would cap per enrollee cost growth using two measures of inflation (M-CPI and CPI-U), which are highly variable and uncertain, though will fall well short of what is needed to maintain the integrity of Alaska’s Medicaid program.  It is difficult to plan for such uncertain growth rates, and reasonable projections are far apart.

We present the high, middle, and low case for M-CPI/CPI-U growth rates based on the following:

  • Low Case. Based on historical growth rates. Over the last five years (2012-2016), the M-CPI growth rate has averaged 3.0% per year, and the CPI-U growth rate has averaged 1.32% per year.

 

  • Middle Case. Based on projections from the Congressional Budget Office. CBO projects M-CPI to grow by 3.7% per year, and CPI-U by 2.4% per year.

 

  • High Case. Based on projections from 2016 CMS Medicaid Actuarial Report.  From 2019 onward, this report projects M-CPI to grow by 4.2% per year, and CPI-U by 2.6% per year.

 

In short, the lower the cap growth rate, the more severe the Medicaid cuts will be.

Table 1 above  demonstrates that for any projection of the bill’s cap growth rates, the BCRA will lead to significant funding shortfalls for older adults, adults with disabilities, and non-disabled low-income children under age 19  in Alaska. The end result is that the state will be left with severe funding shortages, forcing Alaska to cut eligibility, provider rates, or covered services—or very likely all three. Moreover, many of Alaska’s most vulnerable citizens will be left without access to the critical health care and long-term services and supports—like help with toileting, bathing, dressing, and eating—they rely on. Cutting between $7 billion and $13 billion from Alaska’s Medicaid program is not the way to go.

 

Susan Reinhard is a senior vice president at AARP, directing its Public Policy Institute, the focal point for AARP’s public policy research and analysis. She also serves as the chief strategist for the Center to Champion Nursing in America, a resource center to ensure the nation has the nurses it needs.

 

 

 

Jean Accius is vice president of livable communities and long-term services and supports for the AARP Public Policy Institute. He works on Medicaid and long-term care issues.

 

 

 

 

Lynda Flowers is a Senior Strategic Policy Adviser with the AARP Public Policy Institute, specializing in Medicaid issues, health disparities and public health.

 

 

 

Ari Houser is a Senior Methods Adviser at AARP Public Policy Institute. His work focuses on demographics, disability, family caregiving, and long-term services and supports (LTSS).

 

 



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The Senate Health Reform Bill Slashes Medicaid Severely: Colorado Takes a Big Hit

The Senate Health Reform Bill Slashes Medicaid Severely: Colorado Takes a Big Hit


The Better Care Reconciliation Act (BCRA) now under consideration in the Senate would drastically alter Colorado’s Medicaid program. The proposed Senate bill would change the way the federal government currently funds Medicaid by limiting federal funding and shifting cost over time to both states and Medicaid enrollees. The BCRA would subject older adults, adults with disabilities, Medicaid expansion adults, and non-disabled children under age 19 to mandatory per enrollee caps beginning in 2020. State Medicaid programs would have the option to choose between block grants and per enrollee caps for non-elderly, non-disabled, non-expansion adults.

The Senate bill would start out using the medical care component of the Consumer Price Index (M-CPI)—a measure of the average out-of-pocket cost of medical care services used by an average consumer—as the growth rate for per enrollee caps through 2020. Between 2020 and 2024, a growth rate of M-CPI plus one percentage point would be used to trend costs for older adults and adults with disabilities.  All other groups would have a growth rate of M-CPI. However, beginning in 2025, the BCRA would slash the growth rate for all populations by switching to the Consumer Price Index for all urban consumers (CPI-U)—a measure of general inflation that examines out-of-pocket household spending on goods and services used for everyday living. Importantly, CPI-U does not tie closely to medical costs—it’s common knowledge that such costs are increasing much faster than general inflation—and will not reflect population growth or the impact of aging. To be clear, none of the proposed growth factors—M-CPI, M-CPI+1, and CPI-U—keep pace with the growth in Medicaid spending. The cut would hit Colorado precisely at the time its aging population will be experiencing additional cost growth due to increasing need for services and supports.

By dramatically reducing the per capita cap growth factor beginning in 2025, we project that the Senate bill would cut between $23 billion and $45 billion from total (federal and state) Medicaid spending in Colorado over the 20-year period between 2017 and 2036 for the four non-expansion Medicaid enrollment groups: older adults, adults with disabilities, non-disabled children under age 19, and non-expansion adults (children with disabilities are excluded because the BCRA does not subject them to capped funding). A cut of this magnitude threatens the viability of Colorado’s Medicaid program in unprecedented ways and will likely increase the number of people who no longer have access to essential healthcare services and critical supports.  The projections do not include the proposed cuts to the adult expansion population, which would also be considerable for the state of Colorado.

Previous analysis by the AARP Public Policy Institute discusses why capping Medicaid is flawed and would leave states—and the poorest and sickest Americans—holding the bag for the shortfalls that will most certainly occur.

Table 1 shows the cumulative 20-year cuts to Medicaid by eligibility group in Colorado under the Senate health reform bill for three growth rate projections.  The bill would cap per enrollee cost growth using two measures of inflation (M-CPI and CPI-U), which are highly variable and uncertain, though will fall well short of what is needed to maintain the integrity of Colorado’s Medicaid program.  It is difficult to plan for such uncertain growth rates, and reasonable projections are far apart.

We present the high, middle, and low case for M-CPI/CPI-U growth rates based on the following:

  • Low Case. Based on historical growth rates. Over the last five years (2012-2016), the M-CPI growth rate has averaged 3.0% per year, and the CPI-U growth rate has averaged 1.32% per year.

 

  • Middle Case. Based on projections from the Congressional Budget Office. CBO projects M-CPI to grow by 3.7% per year, and CPI-U by 2.4% per year.

 

  • High Case. Based on projections from 2016 CMS Medicaid Actuarial Report.  From 2019 onward, this report projects M-CPI to grow by 4.2% per year, and CPI-U by 2.6% per year.


In short, the lower the cap growth rate, the more severe the Medicaid cuts will be.

Table 1 above  demonstrates that for any projection of the bill’s cap growth rates, the BCRA will lead to significant funding shortfalls for older adults, adults with disabilities, and non-disabled low-income children under age 19  in Colorado. The end result is that the state will be left with severe funding shortages, forcing Colorado to cut eligibility, provider rates, or covered services—or very likely all three. Moreover, many of Colorado’s most vulnerable citizens will be left without access to the critical health care and long-term services and supports—like help with toileting, bathing, dressing, and eating—they rely on. Cutting between $23 billion and $45 billion from Colorado’s Medicaid program is not the way to go.

 

Susan Reinhard is a senior vice president at AARP, directing its Public Policy Institute, the focal point for AARP’s public policy research and analysis. She also serves as the chief strategist for the Center to Champion Nursing in America, a resource center to ensure the nation has the nurses it needs.

 

 

 

Jean Accius is vice president of livable communities and long-term services and supports for the AARP Public Policy Institute. He works on Medicaid and long-term care issues.

 

 

 

 

Lynda Flowers is a Senior Strategic Policy Adviser with the AARP Public Policy Institute, specializing in Medicaid issues, health disparities and public health.

 

 

 

Ari Houser is a Senior Methods Adviser at AARP Public Policy Institute. His work focuses on demographics, disability, family caregiving, and long-term services and supports (LTSS).

 

 

 



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The Senate Health Reform Bill Slashes Medicaid Severely: West Virginia Takes a Big Hit

The Senate Health Reform Bill Slashes Medicaid Severely: West Virginia Takes a Big Hit


The Better Care Reconciliation Act (BCRA) now under consideration in the Senate would drastically alter West Virginia’s Medicaid program. The proposed Senate bill would change the way the federal government currently funds Medicaid by limiting federal funding and shifting cost over time to both states and Medicaid enrollees. The BCRA would subject older adults, adults with disabilities, Medicaid expansion adults, and non-disabled children under age 19 to mandatory per enrollee caps beginning in 2020. State Medicaid programs would have the option to choose between block grants and per enrollee caps for non-elderly, non-disabled, non-expansion adults.

The Senate bill would start out using the medical care component of the Consumer Price Index (M-CPI)—a measure of the average out-of-pocket cost of medical care services used by an average consumer—as the growth rate for per enrollee caps through 2020. Between 2020 and 2024, a growth rate of M-CPI plus one percentage point would be used to trend costs for older adults and adults with disabilities.  All other groups would have a growth rate of M-CPI. However, beginning in 2025, the BCRA would slash the growth rate for all populations by switching to the Consumer Price Index for all urban consumers (CPI-U)—a measure of general inflation that examines out-of-pocket household spending on goods and services used for everyday living. Importantly, CPI-U does not tie closely to medical costs—it’s common knowledge that such costs are increasing much faster than general inflation—and will not reflect population growth or the impact of aging. To be clear, none of the proposed growth factors—M-CPI, M-CPI+1, and CPI-U—keep pace with the growth in Medicaid spending. The cut would hit West Virginia precisely at the time its aging population will be experiencing additional cost growth due to increasing need for services and supports.

By dramatically reducing the per capita cap growth factor beginning in 2025, we project that the Senate bill would cut between $16 billion and $29 billion from total (federal and state) Medicaid spending in West Virginia  over the 20-year period between 2017 and 2036 for the four non-expansion Medicaid enrollment groups: older adults, adults with disabilities, non-disabled children under age 19, and non-expansion adults (children with disabilities are excluded because BCRA does not subject them to capped funding).

One provision of the BCRA—called an equity adjustment —would further cut Medicaid for older people and low-income non-disabled adults in West Virginia by 0.5 to 2 percent per year on top of the draconian cuts imposed on all states. The intent of the equity adjustment is to address disparities in state Medicaid spending. However, a cut of this magnitude threatens the viability of West Virginia’s Medicaid program in unprecedented ways and will likely increase the number of people who no longer have access to essential healthcare services and critical supports.  The projections do not include the proposed cuts to the adult expansion population, which would also be considerable for the state of West Virginia.

Previous analysis by the AARP Public Policy Institute discusses why capping Medicaid is flawed and would leave states—and the poorest and sickest Americans—holding the bag for the shortfalls that will most certainly occur.

Table 1 shows the cumulative 20-year cuts to Medicaid by eligibility group in West Virginia under the Senate health reform bill for three growth rate projections.  The bill would cap per enrollee cost growth using two measures of inflation (M-CPI and CPI-U), which are highly variable and uncertain, though will fall well short of what is needed to maintain the integrity of West Virginia’s Medicaid program.  It is difficult to plan for such uncertain growth rates, and reasonable projections are far apart.

We present the high, middle, and low case for M-CPI/CPI-U growth rates based on the following:

  • Low Case. Based on historical growth rates. Over the last five years (2012-2016), the M-CPI growth rate has averaged 3.0% per year, and the CPI-U growth rate has averaged 1.32% per year.

 

  • Middle Case. Based on projections from the Congressional Budget Office. CBO projects M-CPI to grow by 3.7% per year, and CPI-U by 2.4% per year.

 

  • High Case. Based on projections from 2016 CMS Medicaid Actuarial Report.  From 2019 onward, this report projects M-CPI to grow by 4.2% per year, and CPI-U by 2.6% per year.


In short, the lower the cap growth rate, the more severe the Medicaid cuts will be.

Table 1 above  demonstrates that for any projection of the bill’s cap growth rates, BCRA will lead to significant funding shortfalls for older adults, adults with disabilities, and non-disabled low-income children under age 19  in West Virginia. The end result is that the state will be left with severe funding shortages, forcing West Virginia to cut eligibility, provider rates, or covered services—or very likely all three. Moreover, many of West Virginia’s most vulnerable citizens will be left without access to the critical health care and long-term services and supports—like help with toileting, bathing, dressing, and eating—they rely on. Cutting between $16 billion and $29 billion from West Virginia’s Medicaid program is not the way to go.

Susan Reinhard is a senior vice president at AARP, directing its Public Policy Institute, the focal point for AARP’s public policy research and analysis. She also serves as the chief strategist for the Center to Champion Nursing in America, a resource center to ensure the nation has the nurses it needs.

 

 

 

Jean Accius is vice president of livable communities and long-term services and supports for the AARP Public Policy Institute. He works on Medicaid and long-term care issues.

 

 

 

 

Lynda Flowers is a Senior Strategic Policy Adviser with the AARP Public Policy Institute, specializing in Medicaid issues, health disparities and public health.

 

 

 

Ari Houser is a Senior Methods Adviser at AARP Public Policy Institute. His work focuses on demographics, disability, family caregiving, and long-term services and supports (LTSS).

 

 

 



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The Senate Health Reform Bill Slashes Medicaid Severely: Maine Takes a Big Hit

The Senate Health Reform Bill Slashes Medicaid Severely: Maine Takes a Big Hit


The Better Care Reconciliation Act (BCRA) now under consideration in the Senate would drastically alter Maine’s Medicaid program. The proposed Senate bill would change the way the federal government currently funds Medicaid by limiting federal funding and shifting cost over time to both states and Medicaid enrollees. The BCRA would subject older adults, adults with disabilities, Medicaid expansion adults, and non-disabled children under age 19 to mandatory per enrollee caps beginning in 2020. State Medicaid programs would have the option to choose between block grants and per enrollee caps for non-elderly, non-disabled, non-expansion adults.

The Senate bill would start out using the medical care component of the Consumer Price Index (M-CPI)—a measure of the average out-of-pocket cost of medical care services used by an average consumer—as the growth rate for per enrollee caps through 2020. Between 2020 and 2024, a growth rate of M-CPI plus one percentage point would be used to trend costs for older adults and adults with disabilities.  All other groups would have a growth rate of M-CPI. However, beginning in 2025, the BCRA would slash the growth rate for all populations by switching to the Consumer Price Index for all urban consumers (CPI-U)—a measure of general inflation that examines out-of-pocket household spending on goods and services used for everyday living. Importantly, CPI-U does not tie closely to medical costs—it’s common knowledge that such costs are increasing much faster than general inflation—and will not reflect population growth or the impact of aging. To be clear, none of the proposed growth factors—M-CPI, M-CPI+1, and CPI-U—keep pace with the growth in Medicaid spending. The cut would hit Maine precisely at the time its aging population will be experiencing additional cost growth due to increasing need for services and supports.

By dramatically reducing the per capita cap growth factor beginning in 2025, we project that the Senate bill would cut between $13 billion and $26 billion from total (federal and state) Medicaid spending in Maine over the 20-year period between 2017 and 2036 for the four non-expansion Medicaid enrollment groups: older adults, adults with disabilities, non-disabled children under age 19, and non-expansion adults (children with disabilities are excluded because the BCRA does not subject them to capped funding). A cut of this magnitude threatens the viability of Maine’s Medicaid program in unprecedented ways and will likely increase the number of people who no longer have access to essential healthcare services and critical supports.

Previous analysis by the AARP Public Policy Institute discusses why capping Medicaid is flawed and would leave state—and the poorest and sickest Americans—holding the bag for the shortfalls that will most certainly occur.

Table 1 shows the cumulative 20-year cuts to Medicaid by eligibility group in Maine under the Senate health reform bill for three growth rate projections.  The bill would cap per enrollee cost growth using two measures of inflation (M-CPI and CPI-U), which are highly variable and uncertain, though will fall well short of what is needed to maintain the integrity of Maine’s Medicaid program.  It is difficult to plan for such uncertain growth rates, and reasonable projections are far apart.

We present the high, middle, and low case for M-CPI/CPI-U growth rates based on the following:

  • Low Case. Based on historical growth rates. Over the last five years (2012-2016), the M-CPI growth rate has averaged 3.0% per year, and the CPI-U growth rate has averaged 1.32% per year.

 

  • Middle Case. Based on projections from the Congressional Budget Office. CBO projects M-CPI to grow by 3.7% per year, and CPI-U by 2.4% per year.

 

  • High Case. Based on projections from 2016 CMS Medicaid Actuarial Report.  From 2019 onward, this report projects M-CPI to grow by 4.2% per year, and CPI-U by 2.6% per year.


In short, the lower the cap growth rate, the more severe the Medicaid cuts will be.

Table 1 above  demonstrates that for any projection of the bill’s cap growth rates, the BCRA will lead to significant funding shortfalls for older adults, adults with disabilities, and non-disabled low-income children under age 19  in Maine. The end result is that the state will be left with severe funding shortages, forcing Maine to cut eligibility, provider rates, or covered services—or very likely all three. Moreover, many of Maine’s most vulnerable citizens will be left without access to the critical health care and long-term services and supports—like help with toileting, bathing, dressing, and eating—they rely on. Cutting between $13billion and $26billion from Maine’s Medicaid program is not the way to go.

Susan Reinhard is a senior vice president at AARP, directing its Public Policy Institute, the focal point for AARP’s public policy research and analysis. She also serves as the chief strategist for the Center to Champion Nursing in America, a resource center to ensure the nation has the nurses it needs.

 

 

 

 

 

Jean Accius is vice president of livable communities and long-term services and supports for the AARP Public Policy Institute. He works on Medicaid and long-term care issues.

 

 

Lynda Flowers is a Senior Strategic Policy Adviser with the AARP Public Policy Institute, specializing in Medicaid issues, health disparities and public health.

 

 

 

Ari Houser is a Senior Methods Adviser at AARP Public Policy Institute. His work focuses on demographics, disability, family caregiving, and long-term services and supports (LTSS).

 

 

 



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