CBO: More Medicaid Cuts, Fewer Enrollees, by 2026 Under Senate Than House Bill

The Senate bill to repeal the Affordable Care Act (ACA), which would effectively end the ACA’s Medicaid expansion starting in 2021 and convert the program to a per capita cap starting in 2020, would cut federal Medicaid spending and enrollment more in 2026 than the House-passed bill, Congressional Budget Office (CBO) estimates show.

All told, the bill would cut federal Medicaid spending by $772 billion over ten years. By 2026, the annual spending cut would grow to $158 billion — or 25 percent — relative to current law, CBO finds. That’s $8 billion larger than under the House bill. As a result, Medicaid enrollment would fall by 15 million in 2026, 1 million more than under the House bill, relative to current law. (The Senate bill’s cuts in 2026 are bigger than the House’s, even though it ends enhanced funding for the Medicaid expansion more gradually than the House, most likely because it lowers the growth rate for federal funding under the per capita cap below even the House bill’s inadequate level starting in 2025.)

CBO’s other key findings on the Senate bill’s Medicaid provisions include:

• Federal funding cuts would mean damaging Medicaid cuts that would leave many beneficiaries uninsured or without needed care. As CBO notes, the funding cuts would force states either to raise their own spending to maintain their programs or to cut eligibility, benefits, and provider payments. As CBO explains, such program cuts would have harmful consequences for beneficiaries:

  [If] states reduced payment rates, fewer providers might be willing to accept Medicaid patients, especially given that, in many cases, Medicaid’s rates are already significantly below those of Medicare or private insurance for some of the same services. If states reduced payments to Medicaid’s managed care plans, some plans might shrink their provider networks, curtail quality assurance, or drop out of the managed care program altogether. If states reduced covered services, some enrollees might decide either to pay out of pocket or to forgo those services entirely. And if states narrowed their categories of eligibility or used administrative procedures that make it more difficult to enroll, some enrollees would lose access to Medicaid coverage….

• Most low-income people losing Medicaid coverage with the end of the Medicaid expansion and the per capita cap would likely end up uninsured. While they would be eligible for the bill’s tax credits to help them purchase private insurance in the individual market, CBO concludes that “because of the expense for premiums and the high deductibles, most of them would not purchase insurance.”
• Similarly, while some people who aren’t eligible for Medicaid now due to their state’s failure to adopt the expansion could newly receive the bill’s tax credits, coverage still would be unaffordable in many cases. As CBO explains:

  People with income below 100 percent of the FPL [federal poverty level] who were not eligible for Medicaid could generally receive premium tax credits under this legislation and not under current law. However, even with the net premium of $300 shown in the illustrative examples for a person with income at 75 percent of the FPL ($11,400 in 2026), the deductible would be more than half their annual income. The net premium of a silver plan for a 40-year-old would be about 15 percent of their annual income, and the deductible would be more than one-third of their annual income. Many people in that situation would not purchase any plan, CBO and JCT estimate….

• The Medicaid cuts would “continue to grow” after 2027. That, CBO predicts, is because 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.
• The large and growing federal funding cuts would fuel increasingly draconian cuts to state Medicaid programs, including growing enrollment cuts. CBO notes that over the long term, more states would face financial pressure to cut eligibility, benefits, and provider payments — and to a greater extent. While CBO can’t quantify the bill’s long-term effects on enrollment, it expects “that after 2026, enrollment in Medicaid would continue to fall relative to what would happen under current law.”