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Deep Medicaid Cuts Would Harm Already-Lean Program

As the President and congressional leaders seek a deal to raise the debt limit while also reducing deficits, a number of troubling proposals have emerged, some of which would put at risk health insurance for children, seniors, and people with disabilities by making deep cuts to Medicaid.

Proponents claim that we can make deep cuts without hurting people by trimming the fat from Medicaid.  But Medicaid is already lean.  Medicaid actually costs less per beneficiary than private insurance to cover people with similar health issues.

While Medicaid provides more comprehensive benefits than private insurance and charges significantly lower out-of-pocket costs, its lower payment rates to health care providers and lower administrative costs help make Medicaid very efficient.

And, Medicaid costs per beneficiary grew much more slowly over the past decade than costs for job-based insurance, according to a recent Urban Institute study conducted for the Kaiser Family Foundation.

Because there’s so little fat in Medicaid, sharp cuts in federal funding would likely hurt children, parents, people with disabilities, and senior citizens (including those in nursing homes).

We recently found that one proposal before budget negotiators would essentially shift costs to states.  In turn, many states likely would likely scale back the health services that Medicaid covers, leaving beneficiaries without needed care.  Many states also would likely cut payments to doctors, hospitals, and other health care providers.  This would exacerbate the problem that some Medicaid beneficiaries already face accessing physician care, particularly from specialists.

Reducing our long-term deficits is important.  But, we need to take a balanced approach that doesn’t put the burden on the very people who can least bear it.