Washington Watch

Medicaid targeted by budget hawks

By Adam Sonfield
Senior Public Policy Associate
Guttmacher Institute
Washington, DC

At the federal and state levels, cutting government spending has led the political agenda in 2011, and conservative policymakers have specifically targeted Medicaid.1

Proposals in Congress, including a FY 2012 budget backed by House Republicans, would convert Medicaid from an open-ended entitlement program (meaning that the program's budget adjusts automatically with economic circumstances to meet fluctuating levels of demand) into a capped block grant to the states.2 The Republican Governors Association has called for "increased flexibility" to restructure Medicaid and control costs, with a block grant cited as one option to that end.3

The potential contraction of Medicaid is a particular concern because the program today is the most important source of public funding for a broad range of reproductive health services (with the notable exception of abortion). It provides comprehensive coverage of family planning services and supplies, pregnancy-related care, testing and treatment for sexually transmitted infections, and other reproductive health care for more than nine million women aged 15–44, including 40% of those women with incomes below the poverty level.4 Its role in providing reproductive health services is enhanced by three types of expansion programs that provide coverage for pregnancy care, family planning services, and breast and cervical cancer treatment to people who do not otherwise qualify for Medicaid. The result is that, in 2006, Medicaid paid for 48% of all U.S. births (including 64% of births resulting from unintended pregnancy) and accounted for 71% of all public spending on family planning.5,6

This crucial role is slated to expand further under the Patient Protection and Affordable Care Act (ACA) of 2010. Starting in January 2014, all states must extend Medicaid eligibility to citizens and long-time legal residents with incomes up to 133% of poverty. In most states, this change will cause a considerable expansion of the program, particularly for childless adults. By 2019, experts project that Medicaid will serve 16 million people who would otherwise be uninsured.7 Women and men newly eligible for Medicaid will not necessarily receive the full package of benefits provided traditionally under Medicaid, but provisions in the ACA, including a mandatory package of essential health benefits, should ensure strong coverage for reproductive health services. The ACA is also expected to end up encouraging millions of Americans already eligible for Medicaid to sign up for coverage, in part because it will eliminate long-standing bureaucratic obstacles to enrollment.8

Proposals by state governors and congressional Republicans to convert Medicaid into a block grant or otherwise scale back the program would, of course, move the U.S. healthcare system in an entirely different direction.

A block grant is attractive for many policymakers because it would provide greater predictability in costs and -- for state policymakers and advocates of a smaller federal government -- because it would shift power from the federal government to the states. It would only be effective as a cost-cutting, measure, however, if the grant amounts are structured to increase at a slower pace than is expected in the program's current form. This change is exactly what conservative policymakers are proposing. The House Republican plan, for example, projects 49% less federal funding in 2030 than would be the case under current law,(REFERENCE 2) which is a reduction likely to force considerable rollbacks in access to care, potentially including reproductive healthcare.

For its part, the Obama administration's approach toward Medicaid during the budget debates has been mixed. On the one hand, it has publicly emphasized the flexibility states already have under current law to reshape their Medicaid programs, and administration officials reportedly proposed substantial cuts to Medicaid during deficit reduction negotiations earlier this year.

On the other hand, the administration has stoutly defended the ACA and its expansion of Medicaid by citing projections that the law will reduce costs for the states and the federal government.(REFERENCES 2,8) In the end, Medicaid was given special protections under the deficit reduction agreement reached in early August. It was not touched in the initial $900 billion set of budget cuts, and it was exempted from $1.2 billion in broad-based cuts that will be triggered if a second round of congressional negotiations fails in November. These exemptions could be little more than a temporary reprieve, however. It is widely expected that Medicaid and the ACA more broadly will remain a continued object of contention in the years ahead and a prime target during future budget negotiations.

References

  1. Sonfield A. Political tug-of-war over Medicaid could have major implications for reproductive health care, Guttmacher Policy Review 2011; 14(3):11-16, 23.
  2. Elmendorf DW. Long-Term Analysis of a Budget Proposal by Chairman Ryan, Washington, DC: Congressional Budget Office, 2011. Accessed at http://www.cbo.gov/ftpdocs/121xx/doc12128/04–05-Ryan_Letter.pdf.
  3. Republican Governors Association. GOP govs unveil Medicaid reform principles, 2011. Accessed at http://www.rga.org/homepage/gop-govs-unveil-medicaid-reform-principles.
  4. Guttmacher Institute. Special tabulations of the 2010 U.S. Census Bureau Current Population Survey. Unpublished.
  5. Sonfield A, Kost K, Gold RB, et al. The public costs of births resulting from unintended pregnancies: national and state-level estimates. Perspect Sex Reprod Health 2011; 43:94-102.
  6. Sonfield A, Alrich C, Gold RB. Public funding for family planning, sterilization and abortion services, FY 1980-2006; Occasional Report, New York: Guttmacher Institute, 2008, No. 38.
  7. Elmendorf DW. CBO's Analysis of the Major Health Care Legislation Enacted in March 2010. Washington, DC: Congressional Budget Office, 2011. Accessed at http://www.cbo.gov/ftpdocs/121xx/doc12119/03-30-HealthCareLegislation.pdf.
  8. Bovbjerg RR, Ormond BA, Chen V. State Budgets under Federal Health Reform: The Extent and Causes of Variations in Estimated Impacts. Washington, DC: Kaiser Commission on Medicaid and the Uninsured, 2011. Accessed at http://www.kff.org/healthreform/upload/8149.pdf.