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Baucus: Medicaid Cuts Are Still On The Table In Debt Ceiling Negotiations

By Igor Volsky on July 8, 2011 at 1:10 pm

"Baucus: Medicaid Cuts Are Still On The Table In Debt Ceiling Negotiations"

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McKnight’s is reporting that Senate Finance Committee Chairman Max Baucus (D-MT) — who has long supported instituting greater entitlement cuts — “said Wednesday that a proposal to implement ‘blended’ payment rates for Medicaid is ‘on the table‘ in negotiations over raising the federal debt limit.” The comments come on top of Baucus’ claims last month that negotiators are also considering repealing the Affordable Care Act’s maintenance of effort provision and allowing states to purge certain beneficiaries from their Medicaid rolls.

The blended rate plan, which also has the backing of the White House, would simplify the current Medicaid reimbursement system by converting the various rates the federal government pays for different Medicaid populations into a single “blended rate.” But because the new rate would be “set at a level that provided the state with less federal funding than under current law,” states, which face their own budget problems, would likely “compensate for the reduction in federal funding by scaling back” services. The Center for Budget and Policy Priorities (CBPP) predicts:

A related concern is that the blended rates could be “dialed down” as federal policymakers assemble a deficit-reduction package, in order to maintain the overall level of federal savings as other spending or tax proposals that negotiators have tentatively agreed upon come to light and ignite opposition from powerful interest groups. At the behest of interest groups, policymakers could face strong temptation to drop or scale back savings from, for example, reforming farm subsidies — and to dial down the Medicaid/CHIP blended rates instead. Such actions would increase the cost shift to states.

The bottom line is that policy makers looking to Medicaid for savings must realize that the program is already run fairly efficiently — provider reimbursement rates are already too low — and any additional cuts in the federal government’s contribution would only achieve “savings” by throwing lower income beneficiaries off their health insurance plans and severely inhibiting their access to health providers.

As Kellan Baker added yesterday, such an outcome would also have a disproportionate effect on certain minority communities — including LGBT Americans — who rely heavily on Medicaid for their health care needs.

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