New Congressional Attempt to Cut Medicaid Through Budget ...

This week, the House of Representatives is trying to lay the groundwork for rushed and drastic cuts to Medicaid and other supportive programs. These cuts would take health care away from people who need it most, including older adults, people with disabilities, and children who get their health insurance from Medicaid to support them in their homes and communities. No one with Medicaid is safe from these cuts.

Outline of Budget Reconciliation Process

The budget reconciliation process does not follow normal rules in the Senate and would therefore allow Congress to rush through these cuts. Essentially, it is a mechanism that allows the Senate to bypass the typical 60 vote filibuster threshold and pass certain tax and spending changes with just 51 votes. It does not apply in the House where, like other bills, a majority would continue to be needed for passage. There are complicated parliamentary standards that reconciliation bills must meet to get this privileged treatment in the Senate, but bills that comply can be used to make consequential changes, including to key health care programs like Medicare, Medicaid, and the Affordable Care Act. Most recently, lawmakers used reconciliation to pass the Inflation Reduction Act under President Biden and tax cuts under President Trump.

The process starts with the budget committees of the House and Senate writing budget resolutions that call for reconciliation. Those instructions tell certain other committees how much they are required to spend or save on programs under their jurisdiction. Each Budget Committee and chamber must vote on whether to accept the reconciliation instructions. Once approved, the committees begin writing bills that meet their targets. Those drafts are then packaged together and any differences between the House and Senate versions must be worked out prior to final passage.

Competing Instructions in the House and the Senate

This year, the House and the Senate are taking different approaches to budget reconciliation, with the House trying to do a single, massive bill and the Senate pursuing a two-bill strategy. Work in both chambers is underway.

The House is marking up its draft budget resolution today, February 13. As proposed, it would require deep cuts to programs that support health, food, and safety to fund tax cuts and hikes to the defense budget. It specifically directs the Energy and Commerce Committee to reduce spending by at least $880 billion. Medicaid is the largest program this committee oversees and the only plausible source for these potential cuts. Importantly, this target number is a floor and not a ceiling; lawmakers could cut even more as the process advances.

After the budget resolution passes out of committee, it will move to the full House for consideration. Republican leaders are targeting the week of February 24 for that vote.

The Senate instructions for their first bill are farther along; the budget resolution passed out of the Budget Committee yesterday along party lines. It prioritizes military and security programs, directing those committees to increase spending by $342 billion. It does not fully pay for this hike, but it does direct the Senate Finance Committee to cut at least $1 billion, most of which would likely come from Medicaid. As with the House instructions to the Energy and Commerce committee, this number could also grow over time. And a two-bill strategy would give the Senate another opportunity this year to pursue harmful Medicaid cuts.

The full Senate may consider its budget resolution the week of February 18.

Risks to Medicaid

There are a number of ways Republican lawmakers could try to cut Medicaid in a reconciliation bill, all of them harmful. The House Budget Committee previously released a list of potential policies, ranging from eligibility changes to funding rollbacks.

One option is to limit the federal help states receive. Currently, states work with the federal government to fund Medicaid and receive a fixed percentage (the FMAP) every year. Slashing these percentages would save federal dollars, while forcing states to either cut their Medicaid programs or pay for them solely from state funds. Since most states would likely be unable to maintain current coverage and services without appropriate federal assistance, this could lead to widespread cuts and millions of older adults and people with disabilities losing access to needed care and supports.

Similarly, some lawmakers have proposed moving Medicaid to a capped program. This too would reduce the federal government’s role and financial support. There are a several approaches a restructuring could take, but under the recently floated policy, states would receive a fixed amount of federal Medicaid funding on a per-beneficiary basis, “based on a preset formula, which [would] not increase based on actual costs. States exceeding the ‘cap’ for enrollees would thus need to find other revenues to maintain spending levels or explore innovative ways to reduce excessive costs.” 

To maximize federal savings Medicaid funding caps are typically not intended or designed to keep pace with expected health care cost growth, creating funding shortfalls that grow larger over time. As these deficits mount, states would have little choice but to curtail costs on an ever-growing scale, eventually cutting critical lifelines for older adults, people with disabilities, and their families.

Older adults and people with disabilities would likely bear the brunt of any Medicaid cuts, as their health care costs comprise more than half of all Medicaid spending. According to a recent KFF fact sheet, nearly 1 in 4 Medicaid enrollees are eligible for the program because they are ages 65 and older or have a disability, and they have higher per-enrollee costs “than other enrollees due to more complex health care needs, higher rates of chronic conditions and being more likely to utilize long-term care.” 

Medicaid is the primary payor for long-term services and supports for people who need home and community-based services and nursing home care, and it also plays a vital role in helping support family caregivers.

Increasing red tape is also in play, with the potential to require enrollees to jump through administrative hoops in the form of work requirements or more frequent redetermination that both cause people to lose coverage while still being eligible. Paradoxically, work requirements and other administrative barriers are extremely expensive for states to set up and maintain. They have also not been shown to increase employment, only to decrease coverage.

Reconciliation could also limit eligibility, funds, or otherwise target specific populations, such as those eligible for expansion Medicaid.

Other Programs Also At Risk

Medicaid cuts are clearly on the table, as are cuts to other vital programs, like the Supplemental Nutrition Assistance Program (SNAP). 

Any cut to Medicaid is a cut to Medicare. Over 12 million people with Medicare rely on Medicaid for help in accessing and affording vital services like care in the home, family caregiver support, and durable medical equipment as well as helping millions cover Medicare costs through Medicare Savings Programs. By keeping people healthier and out of the hospital, Medicaid boosts enrollee outcomes and saves Medicare dollars, strengthening the program.

Take Action to Protect Medicaid

As Congress contemplates next steps on budget reconciliation, we need to send a clear message: Don’t cut Medicaid! Join Medicare Rights and advocates across the country today.

• Use this call-in line (provided by SEIU) to reach your lawmakers: 866-426-2631.
• Tell them to oppose any Medicaid cuts. Whether it’s work requirements, eligibility changes, or reduced funding, a cut is a cut.
• A cut to Medicaid is a cut to Medicare. The programs work together to provide the services and supports people need.
• And the outcome from any cut is the same: older adults, people with disabilities, and their caregivers would lose access to needed health and long-term care.
• Medicaid is a lifeline for over 7 million older adults and 12 million people with Medicare. Slashing the program would cause serious and lasting harm.
• Be sure to personalize your message! View this map to learn what percentage of people in your Congressional district rely on Medicaid and share that number with your lawmakers.