Medicaid, which is funded jointly by the states and the federal government, provides health coverage to approximately 53 million lower income Americans. The federal government matches state spending on a per-claim basis and pays a percentage of each state’s Medicaid costs (anywhere between 50 and 75 percent). Conservatives like House Budget Chairman Paul Ryan and the GOP presidential contenders have proposed reducing the federal government’s commitment to the program by block granting Medicaid and paying states pre-established grants that may not reflect actual costs. The reduction in federal spending would require states to either appropriate additional funding towards Medicaid or lower program expenditures by cutting provider payment rates, limiting eligibility, and reducing benefits, the CBO has concluded.
Former Gov. Mitt Romney (R-MA) has endorsed Ryan’s block grant proposal, and yesterday, during a radio interview with Sean Hannity, he revealed that his cuts to Medicaid could be even more draconian than Ryan’s. Ryan already aims to shrink the federal government’s contribution to Medicaid by 35 percent in 2022, converting the existing federal matching rate for each state into a block grant and growing the grant by approximately 3 percent annually (as compared to the estimated 6.5 percent to 7 percent annual growth* in federal expenditures that would occur under current law). Romney told Hannity that he would grow his Medicaid block grants by just 1 to 2 percent per year:
ROMNEY: It’s mathematically pretty straight forward how you hold down costs, which is you say, we’re going to cut it by a certain amount and then comes the hard work of saying where you’re going to cut it. And that why I’ve laid out a plan that balances our budget…taking Medicaid and giving it back to the states and growing it only 1 to 2 percent a year.
Comparatively, Romney’s reductions would result in even steeper cuts that would affect tens of millions of low-income Medicaid beneficiaries — seniors in nursing homes, people with disabilities, children — for whom the program has become a critical source of coverage. A very rough back-of-the envelope calculation using the CBO’s projected federal Medicaid expenditures for 2012 as a baseline (and then growing that number by 1.5 percent annually through 2021) demonstrates the sheer magnitude of Rommey’s cuts as compared to current law and Ryan’s plan. The results show that Romney could reduce the size of the program by more than 40 percent over that period:
* Via Center on Budget and Policy Priorities (CBPP), this percentage normalizes the growth rate to take out the effects of 2014.