House Budget Committee Chairman Paul Ryan and various other health reform opponents have been warning governors and state legislators not to adopt health reform’s Medicaid expansion, contending the federal government will renege on its financial commitment to pick up nearly all the costs of the expansion.
There is no evidence to support this claim. President Obama had previously supported two Medicaid savings proposals that would shift some costs to states, which health reform opponents cited as showing that federal deficit reduction almost certainly will force states to bear a greater cost of the expansion. But, he dropped those proposals from his latest budget and the Administration has made clear that it now opposes them. Since the Supreme Court made the Medicaid expansion a state option, the Administration recognized that such proposals could deter states from adopting the expansion — and it has now reaffirmed the federal government’s commitment to financing nearly all expansion costs under health reform without new cost shifts to states.
Ironically, some of the same members of Congress who oppose the Affordable Care Act (ACA) and would like to repeal it — or, if they can’t achieve that goal, impede and limit it — are proposing cost-shift proposals of their own. Last week, House Energy and Commerce Chairman Fred Upton and Senator Orrin Hatch, the Finance Committee’s top Republican, proposed a “per capita cap” on federal Medicaid funding, which would limit each state to a fixed dollar amount per beneficiary. As we explain in a new Center analysis, federal funds under this proposal would likely become increasingly inadequate over time. States would either have to devote more of their own funds to Medicaid or, as is more likely, cut their Medicaid programs deeply. Earlier, as part of his budget plan, Chairman Ryan himself proposed to convert Medicaid into a block grant and cut federal funding for states by nearly one-third by 2023, in addition to proposing health reform’s repeal.
From the standpoint of their proponents, these proposals to significantly scale back Medicaid would advance two goals. First, they would help secure major federal savings by cutting federal programs (especially programs targeted on people of modest means, who have only modest political influence) without having to scale back anytax breaks for high-income households. Second, they would undermine a key element of health reform.
State officials should view the Upton-Hatch and Ryan Medicaid proposals in this light. And, they should understand that such proposals face intense opposition — they cannot secure 60 votes in the Senate or a presidential signature.
The federal commitment to fund nearly all of the costs of the Medicaid expansion — as the ACA promises — stands.