CBO: Senate healthcare bill would cut Medicaid more deeply over 20-year period

If the Better Care Reconciliation Act (BCRA) became law, Medicaid spending would be 35 percent lower by 2036 compared to levels under the Affordable Care Act, according to a Congressional Budget Office (CBO) report. If the Better Care Reconciliation Act (BCRA) became law, Medicaid spending would be 35 percent lower by 2036 compared to levels under the Affordable Care Act (ACA), according to a Congressional Budget Office (CBO) report.

CBO analyses usually only cover a 10-year estimate of a bill’s impact, but Senate Democrats opposed to the BCRA had requested an additional report, arguing a 20-year window would capture the true effects of stricter spending reductions. The CBO didn’t include firm dollar amounts for the future cuts or try to project future insurance coverage as it did in its first report on the BCRA, but it did find Medicaid spending would drop even further in the bill’s second decade compared to its 2016 baseline.

“Over the next decade, CBO projects, a large gap would grow between Medicaid spending under current law and under this bill,” the report said. “In later years, that gap would continue to widen because of the compounding effect of the differences in spending growth rates. CBO projects that the growth rate of Medicaid under current law would exceed the growth rate of the per capita caps for all groups covered by the caps starting in 2025.”

The per capita caps would begin in fiscal year 2020 under the BCRA, limiting federal reimbursement to states for Medicaid by calculating the average per-enrollee cost of medical services for most enrollees who received full Medicaid benefits over any two-year period of the state’s choosing between fiscal year 2014 and the third quarter of fiscal year 2017.

As health care costs rise, states wouldn’t be reimbursed by the federal government for spending over its limit, forcing them to make changes affecting Medicaid providers and beneficiaries.

“Under this legislation, after the next decade, states would continue to need to arrive at more efficient methods for delivering services (to the extent feasible) and to decide whether to commit more of their own resources, cut payments to health care providers and health plans, eliminate optional services, restrict eligibility for enrollment, or adopt some combination of those approaches,” the report said. “Over the long term, there would be increasing pressure on more states to use all of those tools to a greater extent.”

President Donald Trump and HHS Secretary Tom Price, MD, have both claimed the Senate bill doesn’t cut Medicaid. The CBO report says it will reduce spending compared to the ACA. Trump and Price’s assertion also doesn’t account for inflation over the next 10-20 years.

One of the Democrats who requested the expanded analysis, Sen. Ron Wyden of Oregon, said the results show the Senate bill will “place states in a budgetary vise” on Medicaid.

“These cuts will leave states with unfathomable ‘choices’ like whether sick children get essential treatment or pregnant women get pre-natal care or older Americans can receive adequate nursing home care,” Wyden said in a statement. “If the consequences of the Senate Republican plan were not already clear enough, this shows cutting Medicaid to pay for tax cuts for the wealthy is a heartless scheme that no elected representative of the people should support.”