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CRFB: Senate Bill Cuts Medicaid $2.6 Trillion in Second Decade

July 11, 2017 at 12:00 PM

The Congressional Budget Office (CBO) estimates that the Senate Republican health bill’s Medicaid cuts would deepen significantly in the second decade, with the cuts growing from 26 percent in 2026 to 35 percent in 2036, relative to current law. Now, based on CBO estimates and data, the Committee for a Responsible Federal Budget (CRFB) estimates that the Senate bill would cut Medicaid by roughly $2.6 trillion over the second decade (2027-36), on top of Medicaid cuts of $772 billion in the first decade.

That’s because the Senate bill, like the House-passed health bill, would: (1) effectively end the Medicaid expansion, and (2) convert Medicaid to a per capita cap. Rather than continue to pay a set share of state Medicaid costs each year, the per capita cap would limit annual federal funding for each state’s Medicaid program to a set amount per beneficiary, which would rise each year at a rate slower than health care costs generally and the expected growth in Medicaid costs per beneficiary.

As we’ve written, the Senate bill would lower the annual adjustments in its per capita cap even below the House bill’s inadequate adjustment rate, starting in 2025. Even if Senate leaders modify their bill to conform to the House’s somewhat less severe adjustment rate, CRFB estimates that the Senate bill would still generate a federal Medicaid spending cut of roughly $2.1 trillion between 2027 and 2036 (see graph).

Consequently, over the second decade under the Senate bill, CBO expects that “enrollment in Medicaid would continue to fall relative to what would happen under” current law. That’s on top of the 15 million reduction in the number of people enrolled in Medicaid that would already occur by 2026. And, because the per capita cap would squeeze down federal Medicaid funding further with each passing year, relative to costs, the cuts would continue to get deeper with each decade after that.