Building on a recent Congressional Budget Office analysis, a new report from the Urban Institute with funding from the Robert Wood Johnson Foundation, finds that the per capita cap—or limited allotment of federal Medicaid contributions per enrollee—in the American Health Care Act (AHCA) could cut $734 billion in federal and state Medicaid spending between 2019 and 2028. Federal spending would fall by $457 billion, or 16 percent, over the period.
Given uncertainty over the Affordable Care Act (ACA) alternative’s final form, Urban researchers modeled predictions based on the AHCA, currently under consideration in the House of Representatives, and House Speaker Paul Ryan’s 2016 “Better Way” approach. The report examines a range of potential implications to overall health coverage rates and government spending.
The report finds that states with the largest coverage gains under the ACA will face larger effects than states that did not expand Medicaid. Under the Better Way approach, 17 states would see their federal Medicaid payments fall by more than 20 percent. Under the AHCA proposal, three states would see federal spending decreases of about 20 percent, while eight would lose 14 to 19 percent. To make up for these cuts, low-income expansion states would have to increase their Medicaid spending from 58 to 82 percent under the Better Way plan, and from 34 to 55 percent under the AHCA.
The authors did not estimate coverage losses for each state because accurately predicting how individual states would act is impossible. For example, enrollment cuts would not only reduce state spending but also federal funding. Assuming the bulk of states that expanded coverage under the ACA dropped eligibility for their expansion populations, they estimate that 8 million enrollees would be dropped and federal savings would increase to $735 billion over 10 years, close to CBO estimates.
“Coverage gains are in jeopardy with this proposed reduction in federal support for Medicaid,” said Katherine Hempstead, senior adviser at the Robert Wood Johnson Foundation. “Given the size of the proposed cuts, many states will likely struggle to maintain coverage gains and provide services for Medicaid enrollees.”
About the Robert Wood Johnson Foundation
For more than 40 years the Robert Wood Johnson Foundation has worked to improve health and health care. We are working with others to build a national Culture of Health enabling everyone in America to live longer, healthier lives. For more information, visit www.rwjf.org. Follow the Foundation on Twitter at www.rwjf.org/twitter or on Facebook at www.rwjf.org/facebook.
