Why The Senate GOP’s Medicaid Cuts Are Even More Cynical Than The House’s

Senate Majority Leader Mitch McConnell R-Ky., speaks to a gathering of the Jeffersontown Chamber of Commerce luncheon, Wednesday, Feb. 22, 2017, in Louisville, Ky. (AP Photo/Timothy D. Easley)
Timothy D. Easley/FR43398 AP
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Senate Republicans, in their recently unveiled bill to dismantle the Affordable Care Act, included cuts to Medicaid funding that are even more cynical than what the House version of the legislation imposed—on both a political and policy level.

To shore up the support of Senate conservatives, who might balk at how the Senate bill softened the phaseout of Medicaid expansion, Majority Leader Mitch McConnell (R-KY) made even more draconian cuts to the traditional Medicaid program in the long-term.

The way the Senate bill balances the interests of the GOP’s hard-right and more centrist factions is by allowing moderates to claim that they were able to at least cushion some of the Medicaid cuts in the near term, while hiding from the political impact of the long-term slashing.

“2025 is a long time off,” Sen. Bill Cassidy (R-LA) told reporters Thursday, referring to when the harsher form of the cuts would go into effect under the Senate GOP plan.

The changes Senate Republicans made to the House bill has to do with growth rate formulas for the traditional program. It’s a complicated aspect of how their plan works, but it’s essential in understanding why it would put the social safety net at risk.

Both the House and Senate  GOP plans propose ending the current form of Medicaid as we know it. Currently, Medicaid operates as a state-federal partnership, where the federal government offers an unlimited match rate to state spending that varies state to state for an average of about 57 percent. Beginning in 2020, under the Republican proposals, the feds for the first time would put a cap on how much funding they’d offer states on a per enrollee basis (with the option for states to instead take a lump sum payment, known as a block grant).

The rate at which the caps rise over time is incredibly important in terms of how much federal spending this would represent. Because Medicaid spending increases at rates higher than other common measures of inflation, pegging the rise in the caps to a lower inflation level compounds as time goes on. The federal government would contribute an increasingly smaller portion of the total amount.

Under the House bill, the American Health Care Act, the inflation metric chosen was the consumer price index for medical care. (Older, blind and disabled enrollees would see their caps rise at a slightly more generous rate, because they’re the programs most expensive enrollees to cover.) Brookings predicted, by running the numbers on Medicaid spending as if the proposal had been implemented in 2004, it would result in an average 11 percent cut in funding by 2011, but vary widely by state. One state would see a 77 percent cut, and eight others at least 25 percent less in federal spending by the end of that period.

The Senate legislation follows that model until 2025, at which point it introduces an even slower, broader inflation metric, consumer price index for urban consumers.

The upshot of introducing this slower growth rate five years after the cap system is first introduced is that 2025 is at the end of the budget window that the Congressional Budget Office will be analyzing in its coming score of the bill. That means most of the additional coverage losses due to that change will not be included in their report.

But, as part of the so-called “reconciliation” process Senate Republicans are using to avoid a Democratic filibuster, how much money their bill saves in the “out years,” meaning the period after the first decade of its implementation, plays a role in determining if it saves the government enough money to be eligible for the reconciliation process.

In essence, that means Senate Republicans will be able reap all of the budgetary benefits of these late-in-the-game additional Medicaid cuts, without having to weather the ugly headlines of the increased coverage losses.

ABOUT THE AUTHOR

Tierney Sneed is a reporter for Talking Points Memo. She previously worked for U.S. News and World Report. She grew up in Florida and attended Georgetown University.

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