November 23, 2017
What the AHCA Would Mean for Medicaid

What the AHCA Would Mean for Medicaid

by Nancy Metcalf  

Medicaid has been around since 1965 and insures 20 percent of Americans. It’s the second-biggest source of health coverage for Americans, after employer insurance—meaning it serves even more people than Medicare. The American Health Care Act that has passed the House of Representatives (but not the Senate) would for the first time ever cap spending on this program.

“That would end Medicaid as we know it,” says Judith Solomon, a Medicaid expert at the Center on Budget and Policy Priorities, a Washington think tank.

A safety net for long-term care and more

Until the Affordable Care Act came along, Medicaid was available almost exclusively to several broad categories of low-income Americans: the elderly, the disabled, children, pregnant women, and near-destitute parents of young children. And it still covers about half of all births. At the other end of people’s lifespan Medicaid pays 53 percent of the total national bill for long-term care, including community services that help frail elderly Americans stay in their homes.It is, in effect, the safety-net insurer for nursing home care, given that Medicare’s nursing home benefits are extremely limited.

Starting in 2014 the ACA expanded Medicaid, and about 11 million low-income adults in 31 states who were previously ineligible for any form of Medicaid qualified for coverage. Another 3 million people were eligible all along but didn’t realize it until they applied for coverage under the ACA. But 19 states, mostly in the South and West, decided not to expand Medicaid.

What would change under the AHCA

Right now, anyone who is eligible for Medicaid can get it, with no cap on enrollment. States have to pay somewhere between 25 and 50 percent of its costs and the federal government pays the rest, with one exception—through 2016, the feds paid 100 percent of the cost of the ACA Medicaid expansion but this year will pick up 95 percent, dropping to 90 percent in 2020.

Contrary to popular assumption, people who get Medicaid are as satisfied with it as people who get coverage through a job. Although low reimbursement rates mean that not all doctors accept Medicaid patients, enough do so that recipients see doctors just about as often as privately insured patients.

The AHCA would change this system dramatically by cutting roughly $840 billion out of Medicaid over the next 10 years. First, it would drastically cut funds available for Medicaid expansion, starting in 2020. States that have expanded Medicaid could continue to cover this “expansion population,” but would only be reimbursed an average of about 40 cents on the dollar instead of 90 cents. Second, the AHCA would cap the amount of federal money that states get for each Medicaid beneficiary, based on what they were spending in 2016.

In coming years, the per-person cap would only be allowed to increase at the rate of overall medical inflation. The result is that by 2026 states would be receiving 26 percent less Medicaid money than they do today. “This won’t keep up with needed expenses,” Solomon says. “It’s a devastating hit on the program.” The likely result is cuts to benefits, eligibility, or both. First to go, she predicts, would be optional programs like home-based supports for disabled and elderly people.

Also at risk are those formerly covered by Medicaid expansion. “If people don’t have a significant disability and aren’t taking care of a child, they’re not going to have a pathway to coverage,” Solomon says. There won’t be any flexibility in the system to respond to public health emergencies like the Zika virus or the opioid epidemic, she says, or the aging of the baby boom population and the enormous health costs that group will incur.

Also see 6 Things to Know About the AHCA.

"If Medicaid Pays Your Bills, Here's What to Know" first appeared on HealthAfter50.