Medicaid—Slash or Expand?


This week’s health policy news roundup curated by Jane Orient M.D.

President Trump’s budget proposes cutting $800 billion from Medicaid over the next decade, or about $80 billion on average per year. Democrats are outraged, and the Kaiser Family Foundation says that Medicaid is cost-effective. Its costs, however, are staggering, devouring nearly 20 percent of state budgets, and spending is accelerating nearly twice as fast as overall medical spending. A Government Accountability Office (GAO) report from January found that 10.5 percent of the program’s 2016 budget ($36 billion) went toward “improper payments”—mostly stemming from waste, fraud, and abuse. Enrollees have no better and perhaps worse health outcomes, writes Sally Pipes.

There was no “Democratic per-capita cap freakout” when Bill Clinton initially proposed this method of containing Medicaid expenditures, states Avik Roy. The Congressional Budget Office (CBO) has declined to tease out the impact of this provision from the other effects of the American Health Care Act (AHCA) on outlays. Roy estimates its impact would be 1.6 percent or less of approximately $6.7 trillion of federal spending on the legacy Medicaid program from 2017 to 2026. “This is what progressives are calling the ‘radical’ and ‘reckless’ reform that could ‘doom’ Medicaid insurers and threaten states’ ‘survival.’”

It is possible that no savings will occur from AHCA’s per capita Medicaid allocations, based on a comparison of projected AHCA expenditures with baseline projections by the Centers for Medicare and Medicaid Services (CMS), writes Doug Badger. He cautions lawmakers about uncritical acceptance of CBO figures because of the assumptions about effects on enrollment.

“Estimating the coverage effects of big and complex legislation is treacherous work and CBO can hardly be faulted for getting it wrong every time,” write Doug Badger and Grace-Marie Turner. “But the agency’s errors are not only massive—one of their predictions of 2016 exchange-based enrollment missed by 140%—they also are consistent: the agency has repeatedly over-estimated the number of people who would get insurance through the Obamacare exchanges.”

Instead of cuts, some promote allowing everyone to buy into the program, or Medicaid-for-all. Features such as no deductibles and low or no copays look attractive, but access to care is problematic, according to Devon Herrick.

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