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Once Congress both changes Medicaid's basic structure and enacts large annual savings, those cuts are highly unlikely to be reversed. (Photo: LaDawna Howard/flickr/cc)
Despite promises that the emerging Senate health bill will moderate the health coverage cuts in the House-passed American Health Care Act (AHCA), the Senate not only is retaining the House bill's fundamental restructuring of the Medicaid program -- a "per capita cap" on federal funding -- but is deepening the cuts under the per capita cap beginning around 2025.[1] Because the per capita cap wouldn't take effect until 2020 and the Senate's furthe
Despite promises that the emerging Senate health bill will moderate the health coverage cuts in the House-passed American Health Care Act (AHCA), the Senate not only is retaining the House bill's fundamental restructuring of the Medicaid program -- a "per capita cap" on federal funding -- but is deepening the cuts under the per capita cap beginning around 2025.[1] Because the per capita cap wouldn't take effect until 2020 and the Senate's further cuts wouldn't kick in until five years after that, some suggest that policymakers might later undo the per capita cap itself or indefinitely delay the deeper cuts under pressure from state leaders, the public, providers, and others. This confidence is unwarranted; it ignores both recent history and the legislative constraints that would make it difficult or impossible to undo the deep Medicaid cuts.
Those structural changes would create a political dynamic that could lead to even larger cuts in the future. Once Congress both changes Medicaid's basic structure and enacts large annual savings, those cuts are highly unlikely to be reversed. In fact, those structural changes would create a political dynamic that could lead to even larger cuts in the future:
Indeed, the history of block grants (the closest analogy to a per capita cap) is that this structure enables deep cuts over time. Since 2000, funding for the 13 major housing, health, and social services block grants has fallen by 27 percent, after adjusting for inflation (and 37 percent after adjusting for inflation and population growth).[3]Â
Indeed, while canceling the planned SGR cuts was highly popular and supported by a vocal and powerful interest group, for nearly 20 years -- almost without exception -- Congress either offset the cuts with other cuts (frequently other health cuts) or let them take effect. The automatic "sequestration" cuts passed in 2011 to force further deficit reduction are another example: a significant share of the cuts have taken effect, and sequestration relief has required substantial offsets.
Reversing Medicaid cuts would require both a political consensus that they shouldn't have been enacted and sufficient congressional support to either waive budget rules or find painful offsets to achieve them. To be sure, Medicaid has broad-based support and affects a wide range of seniors, people with disabilities, and families with children. But reversing these cuts would require mobilizing support not just for a low-income program but also for the revenue increases to pay for it.
Finally, it's worth noting that the Senate's changes illustrate another serious problem with a per capita cap: it gives policymakers an easy way to make deeper cuts to Medicaid whenever they need budget savings. Just as the Senate dialed down the growth rate of future Medicaid spending in order to meet the AHCA's overall deficit targets, future Congresses would have a strong incentive to make seemingly technical tweaks to the cap that generate large savings by further lowering the growth rate. Indeed, Congress may find it especially appealing to enact cuts that take effect several years down the line in order to offset more immediate costs, as the Senate is effectively doing with its changes.
Thus, while pundits may be right that the bill's Medicaid cuts will unfold differently over time than anticipated today, the cuts would likely end up bigger, not smaller, than those enacted now.
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Despite promises that the emerging Senate health bill will moderate the health coverage cuts in the House-passed American Health Care Act (AHCA), the Senate not only is retaining the House bill's fundamental restructuring of the Medicaid program -- a "per capita cap" on federal funding -- but is deepening the cuts under the per capita cap beginning around 2025.[1] Because the per capita cap wouldn't take effect until 2020 and the Senate's further cuts wouldn't kick in until five years after that, some suggest that policymakers might later undo the per capita cap itself or indefinitely delay the deeper cuts under pressure from state leaders, the public, providers, and others. This confidence is unwarranted; it ignores both recent history and the legislative constraints that would make it difficult or impossible to undo the deep Medicaid cuts.
Those structural changes would create a political dynamic that could lead to even larger cuts in the future. Once Congress both changes Medicaid's basic structure and enacts large annual savings, those cuts are highly unlikely to be reversed. In fact, those structural changes would create a political dynamic that could lead to even larger cuts in the future:
Indeed, the history of block grants (the closest analogy to a per capita cap) is that this structure enables deep cuts over time. Since 2000, funding for the 13 major housing, health, and social services block grants has fallen by 27 percent, after adjusting for inflation (and 37 percent after adjusting for inflation and population growth).[3]Â
Indeed, while canceling the planned SGR cuts was highly popular and supported by a vocal and powerful interest group, for nearly 20 years -- almost without exception -- Congress either offset the cuts with other cuts (frequently other health cuts) or let them take effect. The automatic "sequestration" cuts passed in 2011 to force further deficit reduction are another example: a significant share of the cuts have taken effect, and sequestration relief has required substantial offsets.
Reversing Medicaid cuts would require both a political consensus that they shouldn't have been enacted and sufficient congressional support to either waive budget rules or find painful offsets to achieve them. To be sure, Medicaid has broad-based support and affects a wide range of seniors, people with disabilities, and families with children. But reversing these cuts would require mobilizing support not just for a low-income program but also for the revenue increases to pay for it.
Finally, it's worth noting that the Senate's changes illustrate another serious problem with a per capita cap: it gives policymakers an easy way to make deeper cuts to Medicaid whenever they need budget savings. Just as the Senate dialed down the growth rate of future Medicaid spending in order to meet the AHCA's overall deficit targets, future Congresses would have a strong incentive to make seemingly technical tweaks to the cap that generate large savings by further lowering the growth rate. Indeed, Congress may find it especially appealing to enact cuts that take effect several years down the line in order to offset more immediate costs, as the Senate is effectively doing with its changes.
Thus, while pundits may be right that the bill's Medicaid cuts will unfold differently over time than anticipated today, the cuts would likely end up bigger, not smaller, than those enacted now.
Despite promises that the emerging Senate health bill will moderate the health coverage cuts in the House-passed American Health Care Act (AHCA), the Senate not only is retaining the House bill's fundamental restructuring of the Medicaid program -- a "per capita cap" on federal funding -- but is deepening the cuts under the per capita cap beginning around 2025.[1] Because the per capita cap wouldn't take effect until 2020 and the Senate's further cuts wouldn't kick in until five years after that, some suggest that policymakers might later undo the per capita cap itself or indefinitely delay the deeper cuts under pressure from state leaders, the public, providers, and others. This confidence is unwarranted; it ignores both recent history and the legislative constraints that would make it difficult or impossible to undo the deep Medicaid cuts.
Those structural changes would create a political dynamic that could lead to even larger cuts in the future. Once Congress both changes Medicaid's basic structure and enacts large annual savings, those cuts are highly unlikely to be reversed. In fact, those structural changes would create a political dynamic that could lead to even larger cuts in the future:
Indeed, the history of block grants (the closest analogy to a per capita cap) is that this structure enables deep cuts over time. Since 2000, funding for the 13 major housing, health, and social services block grants has fallen by 27 percent, after adjusting for inflation (and 37 percent after adjusting for inflation and population growth).[3]Â
Indeed, while canceling the planned SGR cuts was highly popular and supported by a vocal and powerful interest group, for nearly 20 years -- almost without exception -- Congress either offset the cuts with other cuts (frequently other health cuts) or let them take effect. The automatic "sequestration" cuts passed in 2011 to force further deficit reduction are another example: a significant share of the cuts have taken effect, and sequestration relief has required substantial offsets.
Reversing Medicaid cuts would require both a political consensus that they shouldn't have been enacted and sufficient congressional support to either waive budget rules or find painful offsets to achieve them. To be sure, Medicaid has broad-based support and affects a wide range of seniors, people with disabilities, and families with children. But reversing these cuts would require mobilizing support not just for a low-income program but also for the revenue increases to pay for it.
Finally, it's worth noting that the Senate's changes illustrate another serious problem with a per capita cap: it gives policymakers an easy way to make deeper cuts to Medicaid whenever they need budget savings. Just as the Senate dialed down the growth rate of future Medicaid spending in order to meet the AHCA's overall deficit targets, future Congresses would have a strong incentive to make seemingly technical tweaks to the cap that generate large savings by further lowering the growth rate. Indeed, Congress may find it especially appealing to enact cuts that take effect several years down the line in order to offset more immediate costs, as the Senate is effectively doing with its changes.
Thus, while pundits may be right that the bill's Medicaid cuts will unfold differently over time than anticipated today, the cuts would likely end up bigger, not smaller, than those enacted now.