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Could Medicaid Benefits Get Pushed off the Fiscal Cliff?


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Rosenbaum argues that reducing coverage would mean that many millions will continue to go without medical coverage, continuing the shift of expenses on to insurers and other patients. The Congressional Budget Office has estimated that insuring people through Medicaid costs 50 percent less per person than subsidizing private insurance from a state-run health insurance exchange. "The problem is that Medicaid's cost is driven by high enrollment, not excessive per capita spending," Rosenbaum notes. "As a result, there's very little money to wring out of Medicaid without shaking its structure in ways that reduce basic coverage."

Medicaid is an effective and efficient investment in health care for large numbers of people, she writes. For example, "much of the health care that Medicaid beneficiaries receive is furnished through safety-net providers such as community health centers, which are highly efficient and accustomed to operating on tight budgets."

One proposal to help trim the federal budget, as outlined by the House Budget Committee, run by Paul Ryan, would remove all of the Affordable Care Act's Medicaid expansions in states and instead give out set grants for states to provide coverage for some qualifying residents. This option is estimated to save some $2 trillion in the next 10 years, but, Rosenbaum argues, it is based on "an arbitrary limit" rather than actual, changing needs. "Recent and ongoing demographic shifts…and recent tragedies, such as Hurricane Sandy, underscore the way in which uncontrollable events can cause unexpected surges in the need for government assistance," she writes.

"Such blunt force strategies would leave many poor and disabled Americans without the basic services they need to stay healthy," Rosenbaum said in a prepared statement. Instead, she suggests redoubling efforts to increase the program's efficiency, looking to reduce costs of caring for the most expensive patients, such as those that require long-term institutional care and use both Medicaid and Medicare.

Other proposals limit states’ abilities to generate funds for Medicaid by levying taxes on hospitals or pharmacies. They also seek to reduce states’ abilities to use Medicaid funds to invest in public hospitals and other centers that care for beneficiaries. "Changing the rules would destabilize these institutions at the very time when expanded insurance coverage is creating greater demand for care," Rosenbaum writes.

But Medicaid is a plump and tempting budgetary target. And unlike Medicare, which provides coverage for seniors, Medicaid does not enjoy the same level of vocal (and financial) support. As Rosenbaum notes, often "Medicaid beneficiaries lack political clout."


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