GOP Budget To Slash Federal Medicaid Budget By One Quarter

House Republicans are preparing to unveil their much-anticipated budget next Tuesday and early reports suggest that the party is ready to embrace Rep. Paul Ryan’s (R-WI) Roadmap proposal, which would slash billions of dollars out of the Medicare and Medicaid programs and transfer the risk and burden of health insurance from the federal government to the individuals and the states.

“Ryan’s budget will propose that the federal share of Medicaid be converted into a block grant,” the Hill’s Erik Wasson reports. “This would save the federal government money because the share of costs would be converted to a fixed dollar amount that rises according to inflation, rather than automatically to match healthcare costs.” Politico reports that the cuts could total up to $1 trillion over 10 years:

HUDDLE THEFT: MEDICAID CUTS OF $1 TRILLION- PULSE’s cousin, Huddle’s Jon Allen, is reporting that the House GOP’s fiscal 2012 budget will likely contain Medicaid cuts of about $1 trillion over 10 years, according to GOP insiders. Medicare cuts are also certain to be assumed by the budget, though the figures for that are still more in flux. Medicaid would generally be changed to cut overall federal dollars while giving greater flexibility to states to spend the money they get.

To put this number into some perspective, the current Medicaid baseline is about $4 trillion over the next 10 years, so Republicans are proposing cutting Medicaid by one-quarter with changes that would repeal the Medicaid expansion found in the Affordable Care Act (saving about $438 billion) and giving states fixed block grants that are below projected federal expenditures. As a result, states would either have to make up the difference by increasing spending for the program or “provide less extensive coverage” to their beneficiaries. An analysis of the consequences of a block grant proposal from 1995 found that giving states a fixed amount of funds would have reduced national federal Medicaid funding for FY 2002 by 15 percent and could have led some 6 million Americans to lose their health coverage.


Keep in mind that Medicaid pays for 40 percent of all births and that children comprise half its beneficiaries. But the real cost drivers are older Americans. Medicaid provides financing for 60 percent of nursing-home residents and pays 43 percent of America’s long-term care bill. Ryan’s reform would stick states with the bill and would likely leave many of the most vulnerable without coverage.