Cuts won’t make Medicaid ‘more effective and better’

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How will Republicans meet their stated target of cutting $1.5 trillion from the federal budget over the next decade, now that the House and Senate agree on a general framework for the federal budget bill? Medicaid — or “Medical Assistance” in Minnesota, which provides popular, low-cost coverage to many lower-income citizens — will remain a likely target. It constitutes the lion’s share of funds controlled by the House committee tasked with finding $880 billion in cuts.

Some Republicans claim that they will merely cut “waste, fraud and abuse” in Medicaid. “The people won’t be affected,” and the program will be “more effective and better.”

Don’t believe it.

Since eligibility cuts are off the table, Republicans will look to more innocuous-seeming targets, like Medicaid provider taxes, increased eligibility redeterminations and work requirements.

Minnesota and every state except Alaska tax some health care providers and use the revenue to help finance the state’s share of Medicaid payments. Federal restrictions allow states to use provider taxes to expand their total Medicaid funding, but only within strict limits.

It is true that some states arguably abused provider taxes in the past and may still do so. But eliminating this method of funding altogether will hamstring state Medicaid programs. Most use provider taxes to finance health care for new populations and help support safety net hospitals that care for a disproportionate number of uninsured and Medicaid patients. It is absurd to think that states could absorb a cut of this magnitude by paying doctors and hospitals less than they already do.

House Republicans may also require more frequent eligibility redeterminations or impose work requirements on working-age Medicaid beneficiaries. Both sound benign or sensible. They’re not. They would make it harder for eligible beneficiaries to keep their benefits while imposing significant administrative costs on states.

Presently, beneficiaries must prove Medicaid eligibility annually or semiannually by completing relevant paperwork and submitting evidence of income and other documents. Failure means termination of benefits. Requiring quarterly redeterminations will make it more likely that many eligible beneficiaries will fall through the cracks. It will also increase administrative costs.

Instituting work requirements will have similar effects. This isn’t because beneficiaries don’t work — most do. It’s because work requirements aren’t about making beneficiaries work, but instead about imposing bureaucratic hoops that trip people up for no good reason, often causing them to lose coverage.

When work requirements were imposed in Arkansas, over 18,000 beneficiaries lost their coverage in just months. Many didn’t know about the policy or were unsure whether it was in effect. At the same time, it may not have saved Arkansas much money. Implementation of the failed policy cost an estimated $26.1 million.

Worst of all, the Penn Wharton Budget Model estimates that, if one takes into account the effects of proposed spending cuts, the House Republican tax plan will yield a net loss to nearly everyone in the bottom 60% of income share. The wealthiest 40% will see most of the benefits, with the greatest share accruing to the oldest Americans from permanent tax cuts — over $230,000 per person. All this, on the backs of younger, lower- and middle-income Americans.

If Congress is genuinely interested in preventing improper use of provider taxes, both the Government Accountability Office and MACPAC have suggested reforms. And if it wants to promote work, making sure people can get the health care they need to become and stay healthy enough to hold a job is crucial. Tax cuts aren’t worth the price.