Mitt Romney has argued that he could lower federal spending on Medicaid by transferring control of the program to the states and transforming the current matching-rate funding structure into block grants that would pay states pre-determined funding amounts. The so-called “blocks” would not reflect actual costs of the program or automatically increase during economic downturns.
“I’ve laid out a plan that balances our budget,” Romney told Sean Hannity last month by taking “Medicaid and giving it back to the states and growing it only 1 to 2 percent a year.” Accepting Romney at his word, ThinkProgress concluded that the former governor’s cuts to Medicaid could be even more draconian than the reductions outlined in Paul Ryan’s budget, which aims to grow the federal contribution 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). Yesterday, during an appearance in Dubuque, Iowa, Romney brought his growth rate in line with Ryan’s proposal, promising to increase the federal block grants to the states by inflation plus 1 percent:
ROMNEY: Medicaid alone, by being sent back to the states, and growing the funding by inflation — CPI — plus 1 percent a year, will save a $100 billion.
The Congressional Budget Office (CBO) estimates CPI at 2.3 percent, meaning that CPI + 1 percent, would boost Romney’s growth rate to 3.3 percent. Comparatively, Ryan’s annual inflator — population growth plus CPI — stands at about 3 percent each year. Thus, Romney’s Medicaid plan appears more generous than he has previously suggested, but as the CBO’s analysis of Ryan’s proposal has indicated, it would significantly strain the program.
Under Ryan, federal spending for Medicaid would be “35 percent lower in 2022 and 49 percent lower in 2030 than current projected federal spending” and as a result “states would face significant challenges in achieving sufficient cost savings through efficiencies to mitigate the loss of federal funding.” “To maintain current service levels in the Medicaid program, states would probably need to consider additional changes, such as reducing their spending on other programs or raising additional revenues. Alternatively, states could reduce the size of their Medicaid programs by cutting payment rates for doctors, hospitals or nursing homes; reducing the scope of benefits covered; or limiting eligibility,” the budget office concluded. As a result, enrollees could “face more limited access to care,” higher out-of-pocket costs, and “providers could face more uncompensated care as beneficiaries lost coverage for certain benefits or lost coverage altogether.”
* Via Center on Budget and Policy Priorities (CBPP), this percentage normalizes the growth rate to take out the effects of 2014.