House Republicans are putting cuts to Medicaid at the top of their list of budget cuts to help pay for their wide-ranging agenda that spans tax cuts, energy production and border security.
Republicans are eyeing changes to how much the federal government, as opposed to states, will contribute to Medicaid expenditures, an amount called the federal medical assistance percentage, or FMAP.
Republicans see Medicaid as a program rife with fraud and abuse and have long sought to rein in its spending.
The joint federal-state program provides health coverage for more than 70 million people, with the federal government covering anywhere from 50 to about 75 percent of the costs for traditional Medicaid but 90 percent for states that expanded coverage under the Affordable Care Act (ACA).
The House Budget Committee on Thursday considered a plan that would instruct the Energy and Commerce Committee – which has jurisdiction over Medicaid – to find $880 billion in savings over the next 10 years.
Possible changes that Republicans are floating include capping Medicaid spending on a per capita basis at a potential savings of $900 billion per year; rolling back the enhanced federal matching rate for ACA expansion states to save $561 billion; and lowering the 50 percent floor for the traditional Medicaid population, for a savings of up to $387 billion.
The latter change would primarily affect wealthier states like California and New York, but every state would bear the brunt of reduced federal spending, forcing difficult tradeoffs.
Rep. Russ Fulcher (R-Idaho) told The Hill that Republicans have to go after Medicaid for cuts because “that’s where the money is.”
The GOP’s budget reconciliation bill is designed to move much of President Trump’s legislative agenda through special rules that sidestep a Senate filibuster. The bill could add trillions to deficits without off-setting tax hikes or spending cuts to pay for it.
“We got the word that we’ve got to come up with $900 billion [in cuts]. There’s only one place you can go, and that’s Medicaid. That’s where the money is,” Fulcher said. “There’s others – don’t get me wrong. But if you’re going to get to $900 billion, something has to be reformed on the Medicaid front.”
“[FMAP] will clearly be debated,” he added.
Rep. Chip Roy (R-Texas) said his conference was considering how Medicaid “formulas are applied in terms of state-by-state.”
“Whether you have more state administration, you can save money. There are things we can do that don’t go directly touching benefits, but that’s what we’re having conversations about on the spending side,” he said.
Asked during an interview on C-SPAN Tuesday what a Republican re-envisioning of U.S. health insurance programs would look like, Rep. Ralph Norman (R-S.C.), a member of the Freedom Caucus, responded: “Re-envisioning is [to] block granting dollars to the states. Let them decide how it wants to be allocated. [And it’s] getting illegals off any federal program, including Medicaid.”
“It’s not cutting Medicare – it’s reforming it,” he added.
Republicans are also considering establishing work requirements for Medicaid. An expansion of the Child Tax Credit failed to pass last year because it didn’t include work requirements, among other reasons.
Certain groups of people in the Republican proposal wouldn’t have to work in order to get health coverage through Medicaid, including pregnant women, primary caregivers, people with disabilities, and full-time students.
“With respect to Medicaid, we just want to make sure that we’re putting in the reforms that most Americans support – things like able-bodied Americans working if they’re on Medicaid benefits,” Roy told reporters Tuesday.
Critics of work requirements say they’re mostly geared to getting people unenrolled in federal programs rather than increasing work.
“In practice, work requirements result in large levels of unenrollment with no increase in work,” labor economist Kathryn A. Edwards wrote in a recent commentary. “The work requirement is in fact a paperwork requirement, one onerous enough that people forego help.”
No changes have officially been proposed at this early stage of the budget reconciliation process, but Democrats are sounding the alarm.
“Folks, they are coming after your Medicaid. They are coming after your healthcare period in order to pay for their large tax cuts to billionaires,” House Budget Committee ranking member Brendan Boyle (D-Pa.) said Thursday.
The first Trump administration actively encouraged states to implement work requirements, but the plan envisioned by House Republicans would require it nationwide.
In 2018, Arkansas was the first state to implement requirements that people work, volunteer or attend school or job training in order to receive benefits. A federal judge struck the requirement down in 2019, but not before more than 18,000 people lost coverage.
The Congressional Budget Office has found work requirements would save the federal government just $109 billion over a 10-year period while doing little to increase employment. CBO found it would also lead to 1.5 million people losing Medicaid.
A policy brief from the Robert Wood Johnson Foundation, a philanthropy focused on healthcare, found that “work requirements reduce access to healthcare and health-promoting programs, keep eligible people from acquiring assistance, and drive people deeper into poverty.”
Republicans must also face the political reality that not all GOP lawmakers, especially those in competitive districts, will be on board with severe Medicaid cuts.
The GOP attempt to cut Medicaid spending as part of an Affordable Care Act repeal during Trump’s first administration failed, and the ensuing controversy contributed to their loss of the majority in the 2018 midterm elections.
Republicans have only a slim majority in the House and will need every vote to pass the budget resolution on the floor.
They will also face a formidable obstacle in hospitals and health providers who will lobby heavily against any cuts to Medicaid.
“While some have suggested dramatic reductions in the Medicaid program as part of a reconciliation vehicle, we would urge Congress to reject that approach. Medicaid provides health care to many of our most vulnerable populations, including pregnant women, children, the elderly, disabled and many of our working class,” Rick Pollack, president and CEO of the American Hospital Association, said in a statement.
Another potential complicating factor is Trump himself, who recently included Medicaid in the list of programs he vowed not to touch — with a catch.
“We’re not going to do anything with that, unless we can find some abuse or waste,” Trump said, vowing to “love and cherish” Medicaid.
“The people won’t be affected. It will only be more effective and better,” Trump said.
