Advocates Warn Against Medicaid Cuts in Ryan's ACA Replacement

By Nathaniel Weixel

June 24 — Medicaid would face radical changes under House Speaker Paul Ryan's (R-Wis.) Affordable Care Act replacement plan, patient advocates tell Bloomberg BNA.

The 37-page House Republican health-care plan would repeal all of the ACA's mandates and penalties while embracing some of the law's foundation: Americans should have a chance to buy health insurance regardless of whether they’re sick, and the government should have a role in setting some regulations and helping people pay for it. The plan proposes to provide states a choice of either a per capita allotment, or a block grant, for their Medicaid programs beginning in 2019. Depending on their unique set of circumstances, states could choose the block grant option, or otherwise default into a per capita allotment approach.

But advocates say the changes to Medicaid would effectively eliminate the ACA's Medicaid expansion, imposing costly burdens on low-income Americans. The changes would also allow states to cut provider payments because of a smaller federal payment. The policy is built around the assumption that federal Medicaid spending can be reduced to improve efficiencies in the program.

Whether a state chooses a block grant or a per capita cap approach, the end result is a reduction in federal money, Judy Solomon, vice president for health policy at the Center on Budget and Policy Priorities, told Bloomberg BNA June 22. The Republican argument, Solomon said, is “that’s not a problem,” because states would have increased flexibility and would be able to live within the newly limited amounts.

“Medicaid, though, is already efficient,” Solomon said, and states are using strategies like switching to managed care and cost-containment on drug spending to keep the growth rate low.

Saving Money

Under the Republican plan, the federal government would no longer pay a fixed share of states’ Medicaid costs. Instead, it would pay its share of those costs only up to a fixed amount per beneficiary (if the state elected the per capita cap) or up to a single overall amount (if the state chose a block grant). The state would be responsible for all costs above the per beneficiary cap or block grant allotment.

“Instead of a structure that drives innovation and increases quality for the most vulnerable, the status quo is full of incentives for state politicians and bureaucrats to maximize the share of Medicaid funded by federal taxpayers. In order to drive innovation that benefits patients and lowers costs, reforms are needed to financially align payments to states,” the plan said. “A per capita allotment reform achieves three inter-related aims: reforming Medicaid’s financing, restoring Medicaid’s focus on the most vulnerable, and restoring federalism by empowering states with new freedoms and flexibilities to run their Medicaid programs.”

The allotments would be determined based on each state's total Medicaid spending for each group—aged, blind and disabled, children, and adults—for full-year enrollees in 2016, adjusted for inflation. The plan was designed to reduce federal spending but didn't provide any budget targets.

Ron Pollack, executive director of the consumer advocacy group Families USA, told Bloomberg BNA June 24 the vagueness of the plan prevents detailed analysis. “We don’t know how much money will be in the block grant, or how the per capita cap will be designed so it reduces federal funding to states. What will the reductions be in the short term and long term? My assumption is it will be very substantial,” Pollack said.

Unlike with the per capita cap, the plan does not provide any details on how a state’s block grant amount would be set or adjusted annually.

Beneficiary Impact

The House Republicans on Ryan's task force said they expected states would be able to use their added flexibility under the plan to cut costs without putting beneficiaries at risk of losing coverage.

But Pollack said that argument is a myth.

“Paul Ryan is in effect saying to states, we’ll allow you to make changes to the program.” But those changes would come in the form of reduced income eligibility thresholds, and enrollment freezes or caps, Pollack said. “You save money, but what’s it's ultimate impact? More and more beneficiaries are priced out of health care and more people who have coverage will lose it.”

According to Solomon and the CBPP, states could establish work requirements, and terminate coverage for those who are deemed to be noncompliant. The Obama administration will refuse to approve any state Medicaid expansion plan that institutes a work requirement, but Republicans view it as a way to reduce waste and fraud.

To contact the reporter on this story: Nathaniel Weixel in Washington at

To contact the editor responsible for this story: Brian Broderick at

For More Information

A copy of the plan is at

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