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Vorys Health Care Advisors

House Republican per-capita cap proposal for Medicaid would decrease funding, increase number of uninsured

Posted in Affordable Care Act, Health Care Reform, Medicaid

A new report from Loren Anthes at The Center for Community Solutions outlines the potential for Ohio’s Medicaid program to lose between $19 to $26 billion between 2019 and 2025 because of the House Republican’s proposed health reform legislation (the American Health Care Act); these predictions closely align with the new Congressional Budget Office (CBO) analysis of the same bill.

As mentioned in a recent Vorys Health Care Advisors blog post, the House Republican Plan would fundamentally change Medicaid’s financing structure from a federally-matched entitlement to a per-capita cap program that would include some funding for states to continue Medicaid expansion (Group VIII enrollment) for a few years.  According The Center for Community Solutions report, this change would leave Ohio policymakers with tough decisions regarding funding for all individuals receiving Medicaid in the state:

  • “Ohio would need to contribute or cut $7.2 – $9.5 billion in state funding through 2025 to maintain projected funding levels for the entire program, with specific population funding changes as follows:
    • Children: Shortfall of $2 – 2.3 billion
    • Adults: Shortfall of $3 – 4.3 billion
    • Disabled: Shortfall of $2.2 – 2.7 billion
    • Aged: Surplus of $1.9 billion
    • Group VIII: Shortfall of $1.7 – 2.1 billion
  • It is unclear if a per capita model would conflict with standards of actuarial soundness, potentially compromising the ability for Ohio to have a privatized delivery system through managed care.”

As widely reported today, the CBO report predicts that the American Health Care Act would cause 14 million fewer individuals to have health insurance in 2018 across the United States, in large part because of the proposal’s repeal of the penalties associated with the Affordable Care Act’s individual mandate.  Moreover, the CBO predicts insurance losses would dramatically increase after 2018 because of changes in Medicaid financing:

“Later, following additional changes to subsidies for insurance purchased in the nongroup market and to the Medicaid program, the increase in the number of uninsured people relative to the number under current law would rise to 21 million in 2020 and then to 24 million in 2026. The reductions in insurance coverage between 2018 and 2026 would stem in large part from changes in Medicaid enrollment—because some states would discontinue their expansion of eligibility, some states that would have expanded eligibility in the future would choose not to do so, and per-enrollee spending in the program would be capped. In 2026, an estimated 52 million people would be uninsured, compared with 28 million who would lack insurance that year under current law.”

The CBO report goes on to state that the proposal would produce “a reduction of $880 billion in federal outlays for Medicaid.”  According to the Center on Budget and Policy Priorities, this considerable cut in federal funding would directly shift Medicaid costs to states, undoubtedly forcing states to to end or limit Medicaid expansion while simultaneously decreasing access and benefits for other (non-expansion) enrolled individuals.