Proposed Medicaid Cuts from President Trump’s Administration

04 Jun Proposed Medicaid Cuts from President Trump’s Administration

Medicaid could receive funding cuts due to Trump’s 2018 budget proposal and this may fundamentally change how the Medicaid program operates. The proposals aim is to give individual states flexibility. According to the budget, states will have a choice between receiving a block grant in the fiscal year 2020 or they can choose to receive Medicaid funds as a per-capita cap grant. This is the foundation of the American Health Care Act, which, if passed in the Senate, would replace the Affordable Care Act.

Richard Frank, a Harvard Medical School professor, believes this will fundamentally change how Medicaid would operate. “It’s no longer an open-ended matching program” and the proposal “fundamentally changes the kind of contract that exists between the states and the federal government.” The CBO estimates that 14 million people will no longer have access to Medicaid by 2026 as a result of the AHCA eligibility requirements.

Historically, states receive money for Medicaid for:

New treatments

Treatment expenses

An increase in healthcare needs

In addition to the federal government match, states themselves fund a considerable amount for their Medicaid programs. This is beginning to exhaust resources locally and federally because Medicaid has always been an open-ended entitlement program.

The possible passage of the proposed budget plan has states on their feet to expand their Medicaid programs. Since the implementation of the ACA, eligibility requirements became relaxed and contributed in broadening access to a larger percentage of the population. To compensate for the increased amount of enrollees, states received enhanced federal funds. States such as North Carolina, Virginia, and Kansas made efforts to expand in March but failed.

No Medicaid Plan is Perfect

Richard Frank is concerned with the proposal’s two funding options because the medical care CPI does not account for changes in the population or unexpected crises. For instance, overall improved health and longer life spans have increased in recent years. People are healthier and living longer. This means in the near future, the amount of eligible enrollees to the program will increase and create a larger demand on Medicaid. Dr. Frank believes that the costs for elderly people’s healthcare would jump at a faster rate than the medical care CPI.

In addition, the per-capita funding option would organize people into groups based on age or disabilities. This is problematic because the groups would be too broad and would not allow for effective distribution of available funds. The Harvard medical professor estimates there will be a 9% shortfall, which translates into $10 billion annually that states would have to satisfy. On the other hand, the CBO estimates that spending will be reduced 25% by 2026 compared to the ACA.

State’s Options

In the current landscape, states will need to either cut costs or invest in their programs. If they cut costs, beneficiaries will lose coverage and the eligibility requirements will become stricter for future enrollees. It’s believed that substance abuse and mental illness treatment would be the first to be terminated. This is problematic given that opioid deaths increased 15% between 2014 and 2015. The medical care CPI doesn’t account for that growing rate.

At this point, there is a tremendous amount of criticism as to what should be done and how it should implemented. What is clear is that the demand for Medicaid is increasing and there are many opinions on the best course. Currently, a majority of the public thinks the program should remain the same.