Yesterday, Congressional Republicans unveiled a bill that would allow states to cut their Medicaid rolls without losing any additional funds from the federal government. Under the Affordable Care Act, states that change their Medicaid eligibility rules also forgo federal funding for the program. The provision has placed many governors in a tough fiscal conundrum and has led some to seek leeway in the law. Sen. Orrin Hatch (R-UT) is leading the effort to eliminate the so-called “maintenance of effort” requirement:
“With a $175 billion budget shortfall – the worst state budget crisis since the Great Depression – states are seeking real solutions from Washington that will effectively lower entitlement spending and ensure the solvency of safety-net programs, like Medicaid,” said Hatch, who has led the charge against the expansion of Medicaid in the new health law. [...]
“By rolling back these burdensome, budget-busting constraints, this legislation heeds to the calls of states from across the country and provides a common-sense solution to stem the growth of government and begin to put the states, not Washington, back in charge. Regardless of political affiliation, this initiative has the potential to garner strong, bipartisan support and represents a strong first step in achieving comprehensive Medicaid reform.”
Republicans can cut Medicaid all they want, but people in their states will still become sick and need health care. They will either die early because care was rationed or receive uncompensated care that will be compensated by private insured payers. The bottom line is that cutting budgets doesn’t do anything to lower underlining health care costs, because it doesn’t diminish the demand for services. In fact, it probably increases demand at the most expensive end of the spectrum.
As Judith Solomon at the Center for Budget and Policy Priorities (CBPP) has pointed out, “[r]epealing the maintenance-of-effort provision would almost certainly result in a sharp increase in the number of Americans who are uninsured, as states scale back eligibility for low-income children, parents, seniors, and/or people with serious disabilities.” “During the recession of the early 2000s, some 34 states cut back Medicaid and CHIP eligibility — causing 1.2 million to 1.6 million low-income adults and children to lose coverage.”