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Most of the headlines about the choice of Wisconsin Rep. Paul Ryan as running mate for presidential candidate Mitt Romney have screamed about how the author of the House budget plan would upend the Medicare program and upset seniors’ certainty about healthcare. Ryan’s plans for Medicaid, however, are more extreme and immediate.
Ryan adds a heavyweight to the Republican ticket for making deep cuts in Medicaid funds and converting the program into a block grant. Both of these were signature items of his House budget plans introduced earlier this year and last year.
The budget plans described his vision for slashing federal spending and reducing the operations of government and offer a detailed view of what to likely expect from the Romney-Ryan ticket.
Unlike the proposed Medicare cuts, which wouldn't take effect until 2023, Ryan’s $810 billion Medicaid cuts and changes would start right away in 2013 and deepen over 10 years.
Those cuts do not include the effects of repealing the health reform law and Medicaid expansion, which both Romney and Ryan have promised to do, said Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities.
“We already have a large number of uninsured, but we’re going to see a huge hit in terms of the healthcare safety net in deep, damaging cuts,” he said.
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The effects of the House budget plan and health reform law repeal would mean that “millions of people [are] going to lose coverage, and overwhelmingly become uninsured. Those on the program today would likely lose access to needed care either because they couldn’t find providers for them or they would no longer receive the benefits that they need that they get today,” Park said.
Currently, the federal government picks up on average about 57 percent of costs of state Medicaid programs, whether those costs go up or down. Changing Medicaid to a block grant means states will get a fixed amount of money, which “will be set well below what would be provided under the current financing system,” he said.
Under a block grant, states could obtain more funds for Medicaid only based on population and inflation increases, not growth in healthcare costs.
In Ryan’s words, his Medicaid plan would save $810 billion over 10 years. “States will no longer be shackled by federally determined program requirements and enrollment criteria. Instead, they will have the freedom and flexibility to tailor a Medicaid program that fits the needs of their unique populations,” Ryan said in an issue sheet on his website.
While he suggests that the changes will allow states to make their Medicaid programs more efficient, the cuts are so large that they would ultimately result in fewer benefits or covering fewer individuals.
The Medicaid program is already very lean, Park said. “So to compensate for cuts in the size, states are going to have to make really deep damaging cuts to eligibility, benefits and provider rates,” he added.
Based on the House budget, between 14 million and 17 million individuals currently receiving Medicaid would lose coverage, Park said. That’s on top of the millions who wouldn’t gain coverage because of the Patient Protection and Affordable Care Act being repealed. Others won’t be able to access care because they won’t be able to find providers taking Medicaid patients.
“Provider rates would be cut another one-third, and providers already feel that Medicaid pays too little,” he said. States have been making lots of cuts to their provider payments in recent years because of budget deficits.
States as well as counties and cities, which also offer a lot of safety net services, will have to pay for more demand by more uninsured individuals visiting hospital emergency rooms and community health centers.
“Not only do they take a hit when they lose federal funds on Medicaid programs when they cut all these people. Many of these services that are going to be accessed are going to be state-only dollars,” Park said.
The Congressional Budget Office also concluded that flexibility to enable state Medicaid and Children’s Health Insurance (CHIP) programs to become more efficient in delivering health care to low-income individuals was not sufficient to keep the current beneficiaries covered in the face of the massive cuts.
“The magnitude of the reduction in spending means that states would need to increase their spending on these programs, make considerable cutbacks in them, or both. Cutbacks might involve reduced eligibility for Medicaid and CHIP, coverage of fewer services, lower payments to providers, or increased cost-sharing by beneficiaries—all of which would reduce access to care,” the CBO said in its analysis of the House budget plan.