Tuesday, May 23, 2017

Trump/Ryan Medicaid cuts would destroy Wisconsin budget

There are two huge releases in DC relating to health care policy and spending. The first will be the Congressional Budget Office's release of the updated Trump-Ryancare bill, which was blasted through the House of Representatives without an analysis of how many people would lose health care under the amended bill, or even an indication of what it would do to the US budget. In fact, there is a real possibility that the CBO score will show that so many people will take subsidies for crap insurance under the new bill that it would add to the deficit, which may require Paul Ryan to take the bill back and not officially send it over to the Senate.

Another big story is today's release of the austerity-driven Trump budget for the Fiscal Year that begins on October 1. This features massive cuts to domestic programs, with some of the largest declines coming in Medicaid.
The Trump administration's 2018 budget proposal released Tuesday included massive cuts to Medicaid, the government-run health program that provides insurance primarily to pregnant women, single parents, people with disabilities, and seniors with low incomes.

The plan calls for cuts amounting to $627 billion over the next 10 years.

That number does not include the roughly $880 billion in proposed cuts to the program through the American Health Care Act, the GOP leadership's plan to repeal and replace the Affordable Care Act, which the administration supports.

The plan has already received near-universal pushback in Congress, as even members of President Donald Trump's own party expressed skepticism over its provisions. The drastic cuts to Medicaid, among other programs, have drawn blowback from lawmakers in districts whose constituents would stand to be affected by the slashes.
Interestingly, the Wisconsin Joint Finance Committee is scheduled to discuss the Medicaid budget in their meeting on Thursday. The Legislative Fiscal Bureau says that lower-than-expected enrollments and costs for Medicaid will give over $95 million in breathing room for Governor Walker's 2017-19 budget, but that cushion may be put at major risk if Trump-Ryancare or the proposed Trump budget ever becomes law.
Another significant risk is potential changes in federal policy as it relates to Medicaid or broader healthcare policy. A potential decision to not renew CHIP allocations was already mentioned, but other changes to federal policy could also affect the state's MA spending. Discussions in Congress on the potential repeal of the Affordable Care Act are ongoing. The elimination of or reduction to income-based premium tax credits for the purchase of health insurance could reduce opportunities to obtain coverage for households near the poverty line, which may push some, who would otherwise purchase commercial insurance with these subsidies, to seek or retain MA coverage.
And today, Wisconsin's Survival Coalition sent a letter to Wisconsin's Joint Finance Committee, laying out the major problems the state might face in funding Medicaid if Trumpcare becomes law.
As you are aware, the federal government currently funds about 60% of Wisconsin’s Medicaid costs, bringing roughly $5 billion to Wisconsin. These federal matching funds are the largest funding source for Wisconsin’s Medicaid programs and help to ensure that state GPR can be used for other essential purposes.

In March the Congressional Budget Office projected impacts on states that would be forced to operate undera per capita cap or block grant: “With less federal reimbursement for Medicaid, states would need to decide whether to commit more of their own resources to finance the program at current-law levels or whether to reduce spending by cutting payments to health care providers and health plans, eliminating optional services, restricting eligibility for enrollment, or (to the extent feasible) arriving at more efficient methods for delivering services.”

Our analysis of the proposed cuts shows it will be difficult for Wisconsin to meet current and future enrollment needs in a block grant or per capita cap scenario. Wisconsin has already achieved significant cost savings compared to other states, specifically related to long-term care populations which are among the most expensive to serve. The clear majority of long-term care participants are enrolled in managed care while other states are just now making the switch from fee-for-service to managed care. This shift alone has already resulted in savings of approximately $300 million per year compared to the legacy waiver programs it replaced.

Rough estimates provided by the Urban Institute project a $1 billion loss in Medicaid funds for Wisconsin under the AHCA.
And that $1 billion would have to be made up with a sizable increase in state spending using money that we don't have available in the state budget. The other option is having tens of thousands of Wisconsinites cut off of medical assistance and losing stability, with our economy suffering from the inevitable trade-offs that would result.

It makes me wonder if the Joint Finance Committee might want to take a step back on the Medicaid budget for a bit, to get an idea about how much federal funding they can count on (or not count on). At the very least, perhaps some additional money should be set aside as a hedge against Congressional action, even if that makes other Wisconsin budget initiatives impossible. Because if that doesn't happen, and if some kind of GOP health care bill ever goes through that cuts Medicaid funding from DC, then the state ends up at significant risk of having to have a repair bill to fill in the massive holes in the health services budget that would result.

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