States face tough choices over whom to insure if Congress approves Medicaid cuts, UMass Medical School expert says

June 01, 2017

States across the country will face agonizing choices over who gets health coverage and who doesn't if proposed deep cuts to Medicaid clear Congress, notes Terry Dougherty, MPH, executive director of Health Systems Transformation at UMass Medical School.

The American Health Care Act (AHCA), which was approved by the House on May 4, would slash $1 trillion in federal funding for state Medicaid programs across the country over the next 10 years, Dougherty warns. The Congressional Budget Office on May 24 released a report outlining the AHCA’s impact.

While supporters of the Republican-backed bill, which aims to repeal and replace key parts of the Affordable Care Act, have argued states can make up the difference, Dougherty questions whether this is a realistic expectation.

“Well, some people say ‘we remove money at the federal level, the states can make up the difference,’ but a trillion dollars over the next decade? I don’t know of any state that can come up with that kind of funding,” notes Dougherty, a former director of the Massachusetts Medicaid program, MassHealth.

Bearing the brunt of the cuts will be the poor, mothers and children, the disabled, and the elderly for whom Medicaid has provided health coverage since it was launched nearly 50 years ago as a joint federal/state program, he explains.

Maybe the only comparable situation was federal welfare reform legislation passed in the 1990s, which eliminated a third of the federal money that had gone to state assistance programs. States, in turn, were never able to make up the difference.

“Obviously, the welfare system changed dramatically,” he notes.

The magnitude of the proposed Medicaid cuts is of a much larger scale, though, Dougherty points out.

Having lost $1 trillion in funding, states will be left with some extremely difficult choices.

The least expensive to insure is the low-income population, a group that includes many children and their mothers, Dougherty says. By contrast, disabled and elderly populations are in the minority, but cost more.

“It’s a real quandary for states to figure out, what's this balancing act I'm going to do?” Dougherty says.

As a result, states could be faced with an unpleasant choice: take health coverage away from some people or reduce benefits for everyone.

“Do I care for the elders and disabled? Again, I'm going to lose a significant portion of my funding, so that means I'm going to have to cut coverage off for other folks,” Dougherty says regarding potential scenarios. “Or do I skinny coverage down for everybody?”

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