Why You Should Care About Medicaid Cuts

Photo by Gage Skidmore on Flickr/Creative Commons

If you’ve been following the Better Care Reconciliation Act (BCRA), the healthcare bill drafted in secret by a small group of Republican senators, you know that a large part of the bill hinges on cuts to Medicaid.

The Congressional Budget Office (CBO) officially scored the bill on Monday, and found that it would cause 22 million more Americans to become uninsured by 2026, as compared to conditions under the Affordable Care Act (ACA). According to CBO analysis, the BCRA would also reduce the federal deficit by $321 billion by 2026, chiefly through cuts to Medicaid. All in all, Medicaid spending would drop by $772 billion over the next decade.

But if you’re not a Medicaid enrollee (or a healthcare expert) the implications of those cuts, both nationally and in Massachusetts, may seem vague. Here’s a primer:

First thing’s first: Medicaid cuts would put the health of millions in jeopardy.

Medicaid is a program funded jointly by the states and the federal government. It covers mainly low-income, elderly, disabled, and pregnant adults, as well as children.

Cuts to Medicaid funding, then, would threaten insurance coverage for some of the country’s most vulnerable residents. CBO estimates Medicaid enrollment under the BCRA would drop by 15 million by 2026. Without that insurance, many families would struggle to pay for necessary medical care, especially in the event of a serious illness or catastrophic event.

Mayor Marty Walsh recently crystallized that concern in an emotional blog post about his own childhood cancer battle. “I can’t imagine what would’ve happened if my family didn’t have insurance,” he wrote. “My treatment would’ve bankrupted us.”

And Massachusetts residents wouldn’t be spared.

Massachusetts is known for its near-universal insurance rate, but Gov. Charlie Baker’s office estimates that 264,000 residents, many of them Medicaid recipients, would lose coverage under the BCRA. “The individuals who will lose health insurance coverage are among our lowest income residents,” Baker, who opposes the bill, wrote in a letter distributed to Massachusetts’ congressional delegation.

Medicaid cuts would also hamper the state’s efforts to fight the opioid crisis, since many of those struggling with substance abuse are MassHealth enrollees. The state’s Medicaid waiver (more on that below) also includes expanded support for mental health and substance abuse treatment—support that would crumble under funding rollbacks.

Planned Parenthood would also be barred from reimbursing Medicaid beneficiaries for one year—a policy that Baker has vocally opposed, but that would be potentially difficult to fight.

The state budget would be strained, too.

Massachusetts’ state budget would be challenged in several ways. Among them:

• Massachusetts is one of 31 states, plus Washington, DC, that expanded Medicaid under the ACA, but that expansion would lose its federal matching by 2023. The state also recently received a hefty Medicaid waiver, which, over the course of five years, provides $6 billion in “safety net” funding for uninsured and underinsured patients. Starting in 2020, that funding would be also be gone.
• The bill would shift federal Medicaid matching to a per capita cap model, meaning the government would pay states a specified amount based on its number of program enrollees and the current Consumer Price Index. If states exceed the designated amount—because of, say, unusually heavy usage, or a public health crisis like the opioid epidemic—it’s on them to make up the difference.
• States with low healthcare costs and low wages already receive more federal Medicaid money than states, like Massachusetts, with higher-than-average healthcare costs and wages. But a provision in the BCRA would shift billions more dollars away from high-wage states and redistribute the money among low-wage states. In his letter, Baker says the shuffling of funds comes with “no justification” and would create “an enormous budget shortfall for higher wage states like Massachusetts, and an enormous windfall for lower wage states.”

All in all, Baker’s office estimates that Massachusetts stands to lose $8.2 billion by 2025. That money would need to be scrounged up from the already-tight state budget—a daunting task—or services would have to be cut.

In March, Stuart Altman, the director of Massachusetts’ nonpartisan Health Policy Commission, ruminated on the difficult choices ahead. “Would [the state] make up the difference, which means it would have a greater impact on our taxpayers?” he wondered. “Or would the state be forced to spend less? Would it impact eligibility, on the kinds of services that are covered, how much [Medicaid] pays providers?”

You could end up paying more even if you’re not on Medicaid.

Massachusetts’ first-rate hospitals—which tend to cost more than the national average, and spend more on research, specialized care, and more—would struggle to balance their budgets in the face of reimbursement reductions, which could raise healthcare costs across the board. “We have a lot of medical innovation, we have a lot of top-class hospitals that are more expensive than average, so the cuts would disproportionately affect Massachusetts,” Brian Rosman, director of policy and government relations at healthcare advocacy group Healthcare for All, told Boston in March.

If more patients are uninsured, hospitals would have to keep up with more uncompensated procedures, potentially charging more for other services to spare the bottom line. “Medicaid cuts of this magnitude are unsustainable and will put pressure on the whole system, compromising care and increasing costs for everyone,” Massachusetts Health and Hospital Association President Lynn Nicholas says in a statement.

So, when will all of this be decided?

The BCRA vote has been delayed until after the Senate’s July 4th recess. Only after that will we know whether Medicaid cuts—and the numerous other changes included in the BCRA—will go forward as written.