Critics say Ryan's Medicaid plan puts pressure on safety nets

Since the announcement that Wisconsin Rep. Paul Ryan is presidential candidate Mitt Romney's running mate, many of the headlines about the choice have focused on how the author of the House budget plan would upend the Medicare program and upset seniors’ certainty about healthcare. Ryan’s plans for Medicaid, however, merit some attention because they are more immediate.

Mary Mosquera, Government Health IT's senior editor, talked to Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities, a non-partisan policy institute that researches and analyzes fiscal policies, for Political Malpractice, a joint project with GHIT's sister publications that explores the issue of healthcare in the 2012 election season.

Making deep cuts in Medicaid funds and converting the program into a block grant were signature items of Ryan's House budget plans introduced earlier this year and last. The budget plans described his vision for cutting federal spending and reducing the operations of government and offer a detailed view of what to likely expect from the Romney-Ryan ticket.

Unlike the proposed Medicare cuts, which wouldn't take effect until 2023, Ryan’s $810 billion Medicaid cuts and changes would start right away in 2013 and deepen over 10 years.

Those cuts do not include the effects of repealing the health reform law and Medicaid expansion, which both Romney and Ryan have promised to do, said Park.

“We already have a large number of uninsured, but we’re going to see a huge hit in terms of the healthcare safety net in deep, damaging cuts,” he said.

The effects of the House budget plan and health reform law repeal would mean that “millions of people [are] going to lose coverage, and overwhelmingly become uninsured. Those on the program today would likely lose access to needed care either because they couldn’t find providers for them or they would no longer receive the benefits that they need that they get today,” Park said.

Currently, the federal government picks up on average about 57 percent of costs of state Medicaid programs, whether those costs go up or down. Changing Medicaid to a block grant means states will get a fixed amount of money, which “will be set well below what would be provided under the current financing system,” he said.

Under a block grant, states could obtain more funds for Medicaid only based on population and inflation increases, not growth in healthcare costs.

In Ryan’s words, his Medicaid plan would save $810 billion over 10 years. “States will no longer be shackled by federally determined program requirements and enrollment criteria. Instead, they will have the freedom and flexibility to tailor a Medicaid program that fits the needs of their unique populations,” Ryan said in an issue sheet on his website.

While he suggests that the changes will allow states to make their Medicaid programs more efficient, critics contend that the cuts are so large that they would ultimately result in fewer benefits and cover fewer individuals.

The Medicaid program is already very lean, Park said. “So to compensate for cuts in the size, states are going to have to make really deep damaging cuts to eligibility, benefits and provider rates,” he said. 

Based on the House budget, between 14 million and 17 million individuals currently receiving Medicaid would lose coverage, Park said. That’s on top of the millions who wouldn’t gain coverage under the budget's plan to repeal the Patient Protection and Affordable Care Act. And others won’t be able to access care because they won’t be able to find providers taking Medicaid patients.

“Provider rates would be cut another one-third, and providers already feel that Medicaid pays too little,” he said. States have been making lots of cuts to their provider payments in recent years because of budget deficits.

States, as well as counties and cities, which also offer a lot of safety-net services, will have to pay for more demand by more uninsured individuals visiting hospital emergency rooms and community health centers, Park pointed out.

“Not only do they take a hit when they lose federal funds on Medicaid programs when they cut all these people. Many of these services that are going to be accessed are going to be state-only dollars,” Park said.

The Congressional Budget Office also concluded that flexibility to enable state Medicaid and Children’s Health Insurance (CHIP) programs to become more efficient in delivering healthcare to low-income individuals was not sufficient to keep the current beneficiaries covered in the face of the massive cuts.

“The magnitude of the reduction in spending means that states would need to increase their spending on these programs, make considerable cutbacks in them, or both. Cutbacks might involve reduced eligibility for Medicaid and CHIP, coverage of fewer services, lower payments to providers, or increased cost-sharing by beneficiaries – all of which would reduce access to care,” the CBO said in its analysis of the House budget plan.