In advance of the President’s Day recess, the House Majority Leadership released an outline of a plan to repeal the Affordable Care Act (ACA) and restructure and cut the Medicaid program. The outline indicates that the ACA’s Medicaid expansion would be repealed. While states that have already accepted Medicaid expansion would be grandfathered, the federal match rate would be reduced from 90 percent to the state’s traditional rate, reducing the incentive for states to continue the program. It would allow for an unspecified transition period, and then states that chose to keep the program open to new adult enrollees would be reimbursed at their traditional rate.
The plan would further destabilize the Medicaid program by reducing and capping federal spending. The proposal, known as a per capita cap/allotment, is a financing tool that will dramatically cut Medicaid funding. Unlike the current funding system, the amount provided under a per capita cap will not automatically increase when the cost of providing covered services to eligible individuals goes up. The intent of the per capita cap is to reduce federal spending by restructuring the program and significantly cutting the cost to the federal government. It is unlikely that states will be able to achieve these cuts without scaling back benefits, reducing reimbursement rates, or shifting costs to beneficiaries. Furthermore, states will no longer receive a federal match beyond the cap for changes that increase costs, such as increasing direct support professional wages. States would have the option to accept the per capita cap approach or a block grant (which would also have many of the same features).
The savings from the Medicaid per capita cap would help pay for the tax cuts included in the proposed plan. The outline proposes repealing the taxes on corporations and providers that helped pay for the ACA and the provisions that helped make health insurance affordable to the individual. The ACA replacement plan would combine a universal, refundable health care tax credit, based on age rather than income, to purchase insurance, changes to health savings accounts, and state funding for high risk pools or other projects. Health savings accounts are tax-advantaged savings accounts, tied to high-deductible plans.
The bottom line is that during the week of February 27 the House is expected to begin legislative action on a proposal to restructure the Medicaid program in a manner which will undermine the federal/state partnership upon which it has been built. If successful, this restructuring would result in cost savings to the federal government that will shift costs to the states and to individuals and their families. It will also ultimately reduce the availability of supports and services to people with disabilities in the community and through the health care system. Read The Arc’s statement on the plan here.