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Report: State Medicaid Enrollment Cuts Would Be Steep Under House Bill

June 19, 2017 at 1:00 PM

Thirty states (including Washington, D.C.) could cut their Medicaid enrollment by up to 20 percent or more due to huge Medicaid cuts in the House bill to repeal the Affordable Care Act (ACA), and twenty of them could each cut theirs by up to 30 percent, new Urban Institute estimates show (see table). The emerging Senate Republican health bill is expected to largely adopt as-is the House’s Medicaid provisions, which would effectively end the ACA’s Medicaid expansion and radically restructure Medicaid by converting it to a per capita cap or block grant. (The Senate may actually be considering deepening the House’s Medicaid cuts.) The Urban estimates, thus, offer a good picture of what’s at stake for individual states and millions of low-income Medicaid recipients under either the House or Senate ACA repeal legislation.

All told, states could cut Medicaid enrollment by as much as 14.8 million or nearly 25 percent by 2022 if they dropped the Medicaid expansion and made other enrollment cuts due to the per capita cap or block grant. Eliminating the Medicaid expansion could cause 12 million newly eligible adults to lose coverage; the per capita cap could wipe out coverage for another 2.8 million. Kentucky could experience the biggest percentage enrollment cut of any state, at 48 percent.

To avoid cutting enrollment in the face of such large Medicaid cuts, states would have to raise their own Medicaid spending by $371 billion or 13.2 percent over ten years, compared to projected spending under current law. The necessary spending increase would be as high as 49 percent in New Mexico. That, however, would require states to either significantly raise taxes or deeply cut other parts of their budget (like education) by those amounts. States would far likelier drop the expansion and cut eligibility, benefits, and provider payments in the rest of their Medicaid programs.

While states could try to avoid deep enrollment cuts by focusing their Medicaid cuts mainly on provider payments and optional benefits, that would prove highly challenging, Urban explains. Provider payments in Medicaid are already relatively low. Dropping dental or vision coverage would produce few savings, and dropping prescription drug coverage would likely raise costs in such other areas as hospital inpatient care and emergency room care. As a result, states would likely have no choice but to significantly cut Medicaid eligibility, driving enrollment losses of the size that Urban projects.

In fact, as Urban notes, its estimates may understate the harmful impact of the House bill’s Medicaid provisions. For example, if new drugs, treatments, or other technological innovations fuel faster growth in per-beneficiary Medicaid spending than is now projected, the federal funding cuts needed to comply with a per capita cap (and the resulting coverage losses) would be even greater. Also, the per capita cap doesn’t account for the continued aging of the elderly population — as more seniors move from “young-old” to “old-old” age (85 and older) and their health and long-term care costs rise — and that, too, would increase the size of the funding cuts over the long run. Moreover, once the per capita cap were enacted into law, federal policymakers could easily lower its annual growth rate in the future to achieve additional savings. In addition, the Urban estimates don’t account for expected variation in states’ Medicaid per-beneficiary spending growth, which would fuel disproportionately larger cuts in some states.

Finally, Urban does not account for the fact that other states could adopt the Medicaid expansion in the future, which would further increase the enrollment losses (relative to current law) if the President and Congress subsequently ended the expansion.

TABLE 1
1 in 4 Medicaid Enrollees Could Lose Coverage Under House Bill (American Health Care Act)
  Number of Enrollees Who Could Lose Coverage Share of All Nonelderly Enrollees Who Could Lose Coverage
United States 14,803,300 24.9%
Alabama 54,500 7.0%
Alaska 17,600 16.7%
Arizona 463,500 27.9%
Arkansas 313,300 42.8%
California 3,381,400 35.9%
Colorado 444,200 43.6%
Connecticut 179,600 27.1%
Delaware 47,200 26.5%
District of Columbia 51,100 33.4%
Florida 131,500 4.3%
Georgia 110,800 6.6%
Hawaii 65,200 25.9%
Idaho 19,900 8.3%
Illinois 711,700 29.6%
Indiana 443,000 39.4%
Iowa 191,100 38.1%
Kansas 12,900 3.8%
Kentucky 535,400 47.9%
Louisiana 386,700 26.9%
Maine 15,100 6.0%
Maryland 312,700 34.1%
Massachusetts 355,400 26.0%
Michigan 737,400 36.1%
Minnesota 305,900 29.7%
Mississippi 48,100 7.9%
Missouri 39,800 4.7%
Montana 86,700 31.5%
Nebraska 6,900 3.4%
Nevada 257,400 45.4%
New Hampshire 74,000 39.0%
New Jersey 587,100 43.7%
New Mexico 318,100 46.6%
New York 738,700 19.0%
North Carolina 107,500 6.2%
North Dakota 31,900 41.6%
Ohio 814,700 35.4%
Oklahoma 35,000 5.7%
Oregon 422,000 47.2%
Pennsylvania 612,700 31.1%
Rhode Island 63,800 29.0%
South Carolina 49,300 6.9%
South Dakota 4,600 4.0%
Tennessee 83,900 6.9%
Texas 224,000 5.4%
Utah 26,500 8.2%
Vermont 42,500 27.0%
Virginia 28,200 3.2%
Washington 593,700 37.6%
West Virginia 195,400 47.2%
Wisconsin 22,500 2.6%
Wyoming 1,500 2.6%
Source: Urban Institute analysis.  Assumes that states drop their ACA low-income adult Medicaid expansion population and cut Medicaid enrollment among other non-elderly adults to fully compensate for federal Medicaid funding cuts due to reduction in expansion matching rate and to per capita cap.

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