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CBO Finds Growing, Harmful Impact of Senate GOP Bill’s Medicaid Per Capita Cap

July 22, 2017 at 8:45 AM

As we’ve written, the Congressional Budget Office (CBO) estimates that the July 20 version of the Senate Republican health bill, which the Senate may consider next week, would cut federal Medicaid spending by $756 billion over ten years and cut Medicaid enrollment by 15 million in 2026, relative to current law.  These are similar to CBO’s estimates of an earlier version of the bill, but CBO’s latest analysis is the first to indicate how much of these deep Medicaid cuts are due to the bill’s “per capita cap”: a limit on annual federal funding per beneficiary.  Based on CBO’s estimate, we find that about $180 billion — or nearly one-quarter of the bill’s cuts — are federal Medicaid spending cuts affecting non-expansion populations: seniors, people with disabilities, children, parents and other adults.  All or nearly all of that $180 billion cut is likely attributable to the cap.  In 2026 alone, the cuts attributable to the per capita cap cut would rise to $41 billion, a nearly 9 percent cut to Medicaid spending outside of the expansion, relative to current law (see graph).

 

 

If the $41 billion cut in 2026 were to fall proportionately based on each population’s relative share of expected federal spending outside the expansion:

  • Seniors would face a $7 billion cut, equivalent to the cost of covering 720,000 seniors;
  • People with disabilities would face a $17 billion cut, equivalent to the cost of covering about 990,000 people with disabilities;
  • Children would face a $10 billion cut, equivalent to the cost of covering about 3.2 million children; and
  • Parents and other non-expansion adults would face a $7 billion cut, equivalent to the cost of covering 1.1 million non-expansion adults. 

Moreover, these per capita cap cuts would continue growing over time.  As CBO’s June analysis of an earlier version of the Senate bill found, the “gap [between Medicaid spending under current law and under the Senate bill] would continue to widen because of the compounding effect of the differences in spending growth rates” between the per capita cap and states’ actual Medicaid spending needs. As a result, the total federal Medicaid spending cut under the Senate bill would rise from 26 percent in 2026 to 35 percent by 2036.

That would translate to a total federal Medicaid spending cut of $2.6 trillion in the second decade (2027-2036), according to rough estimates from the Committee for a Responsible Federal Budget.  CBO’s June analysis thus stated that after 2026, “enrollment in Medicaid would continue to fall relative to what would happen under current law.” Because the July 20 version of the Senate bill had no significant changes to the per capita cap and its provisions that effectively would end the Medicaid expansion, these earlier long-term estimates would be “very similar” for the latest version, CBO’s new analysis explains.


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