Trumpcare’s Medicaid Cuts and Caps Create Losers and Bigger Losers

Every child in America should be given the opportunity to fulfill his or her God-given potential and to live the American Dream, regardless of zip code. When it comes to the health of children, children should have access to quality and affordable health care and we have made enormous strides toward achieve that goal through the combination of private and public coverage, as less than 5 percent of children in this country do not have health insurance coverage.

Source: Child Trends, “Health Insurance Coverage Improves Child Well-Being,” May 2017, https://www.childtrends.org/wp-content/uploads/2017/05/2017-22HealthInsurance_final.pdf

Now is not the time to backtrack and reverse course. And yet, that is exactly what the House bill or American Health Care Act (AHCA) would do. It would increase the number of uninsured children and slash $834 billion out of Medicaid, which will disproportionately harm children as they are nearly half of all those covered by the program.

Sadly, in an attempt to defend the AHCA or Trumpcare, Chris Pope of the Manhattan Institute tries to argue that the bill’s $834,000,000,000 in Medicaid cuts are really “extraordinarily modest.” Seriously, that is what he actually wrote. It is important to note that the average cost per child in Medicaid is just $2,600, so $834 billion in cuts would be immense.

Maybe Pope also thinks the CBO estimate that 14 million people would lose Medicaid coverage is also “modest,” but that represents more people than if you sold out Oracle Arena to watch the Golden State Warriors play their next 714 home games, which would take more than 17 NBA seasons.

Oracle Arena — Home of the Golden State Warriors

For non-disabled children alone, Avalere Health has found that the Medicaid per capita cap and block grant option in the House bill would result in $43–78 billion in cuts in states.

U.S. senators should be aware that the cuts to children would be much higher if Avalere had been able to estimate the impact to children with disabilities as well. But even without including those children in the estimate, the following chart shows the impact that Trumpcare would have on kids in their respective states (and it isn’t “extraordinarily modest”).

Medicaid Per Capita Caps and Block Grants Lock-In and Widen Inequities Between States

Pope argues that the current Medicaid program creates inequities because some northern states cover a greater percentage of their population than some southern states. He compares Connecticut to Alabama to make this point, but then jumps to the false conclusion that Medicaid per capita caps or block grants would somehow reduce this inequity when, in fact, the arbitrary caps would make things far worse.

In fact (and unfortunately for Pope and Trumpcare), Pope’s own analysis proves the exact opposite of the case he is trying to make.

First, under the House bill’s arbitrarily imposed Medicaid per capita caps or block grant option, all current funding inequities would be locked into place and made worse for at least a decade.

As an example, if Connecticut spends three times more than Alabama per capita on long-term care, as Pope claims, Trumpcare’s per capita cap would set the spending limit at what states spent in 2016 and lock-in that funding disparity with only slight adjustments for an arbitrarily set inflation rate by Congress. The result would be that higher spending states would receive a greater dollar increase annually than lower spending states over the next decade or longer. In short, Trumpcare would actually widen the disparity between high- and low-spending states.

Recognizing the fallacy of his argument, Pope tries to make the claim that “Medicaid caps can — and likely would be — revised every year in the federal budget by future sessions of Congress. They are unlikely to be enforced to prevent Alabama from bringing its Medicaid spending in line with the national average, nor would they prevent Congress from acting against sudden public health challenges in states.”

Pope can’t be serious, and it is clear that he doesn’t really know how Congress works. If anything, the reverse is more likely because funding formulas are virtually impossible to change. Any positive adjustment for states like Alabama would trigger a Congressional Budget Office (CBO) score and need to be offset. Moreover, block grants are almost never revised or revisited in the federal budget other than to impose further cuts, which is the exact opposition of what Pope is arguing.

As the Center on Budget and Policy Priorities explains, “Since 2000, overall funding for the 13 major housing, health, and social services block grant programs in the federal budget has fallen by 27 percent after adjusting for inflation, and by 37 percent after adjusting for inflation and population growth.”

Consequently, despite Pope’s claim, Alabama and all other states with below average spending per capita would have almost zero chance of closing the current funding gap for years to come.

Senators should understand that whatever inequities they vote to build into Medicaid or accept to be imposed upon their states in secret, backroom deals will likely be imposed on the nation and locked-in for years to come.

For example, according to data from the Kaiser Family Foundation (Table 2), states with lower than average spending for children in FY 2014 were: Alabama, California, Colorado, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Michigan, Mississippi, Nebraska, Nevada, New Jersey, North Carolina, Ohio, South Carolina, South Dakota, Utah, Washington, West Virginia, Wisconsin, and Wyoming.

Source: Kaiser Family Foundation, Spending Per Full-Benefit Child, FY 2014

(NOTE: Figure 1, below, and Table 2 also shows the differences in spending for seniors, people with disabilities, and adults.)

Source: Kaiser Family Foundation, Per Enrollee Spending by Enrollment Group, FY 2014

If those same 25 states had lower spending than average in FY 2016, which was the base year upon which to calculate the per capita cap in the House bill, House members in those 25 states will have voted to potentially shortchange the children in their state for a decade or even longer.

Certainly, there are definite differences between states with respect to cost of living and ability to raise their own revenue that might justify some of these disparities. Also, higher spending states make a strong argument that they may have made decisions to increase provider payments and benefits in order to improve access to care for the people in their state. And yet, these arguments are still unlikely to account for the enormous gap between what New Mexico ($5,137) and Nevada ($1,520) spent in FY 2014 per child.

Did House members from Nevada who voted for the AHCA understand that they would vastly underfund their pediatric system for the next decade? If they did, do they think the health of their children is worth a rather astounding 70 percent less than kids in New Mexico? And, what does Senator Dean Heller (R-NV) think about that?

The 50 senators representing these lower spending states can make the argument that their states should not be punished for running efficient programs. Their states likely have the least ability to find additional savings to achieve the savings that Congress imposes upon the states. These senators have a decision to make. Do they do nothing, as their colleagues in the House did, and leave their states’ children in a position of less coverage, higher cost sharing, lower paid providers, fewer benefits, and less access to care than children in other states or will they take action now, as Senator Richard Burr (R-NC) did last year to address an inequity he believed were in education funding formulas.

The action or inaction of senators is monumental at this moment, as billions and billions of dollars are at stake for their states, their citizens, and their health care providers.

One important point is that some seem to be in the room making decisions the bill while others are not. Majority Leader Mitch McConnell has decided to completely bypass the Senate Finance Committee on the future of Medicaid and appointed a male-only, Republican-only group of 13 members to put together this massive legislation that impacts one-sixth of our nation’s economy.

Source: Congressional Budget Office

The appointed senators include Leader McConnell (R-KY) and Sens. Lamar Alexander (R-TN), John Cornyn (R-TX), Tom Cotton (R-AR), Patrick Toomey (R-PA), and Ted Cruz (R-TX) from higher child spending states, and Orrin Hatch (R-UT), Michael Enzi (R-WY), John Thune (R-SD), John Barrasso (R-WY), Cory Gardner (R-CO), Rob Portman (R-OH), and Mike Lee (R-UT) from lower child spending states.

The higher child spending states represented in the group had average spending of $3,098 compared to $2,346, or $752 less per child, for those from lower child spending states. That would be a pretty significant gap to lock-in and widen for the next decade or longer. And while Texas, Utah, and Wyoming each have two senators in the 13-member group, 40 other states have no representation at all, including 12 of the 13 states with the lowest spending levels per child.

In fact, among the 13 lowest spending states (Nevada, Wisconsin, Florida, Louisiana, South Carolina, Washington, Colorado, Alabama, Illinois, Indiana, Nebraska, Idaho, and Iowa with an average spending level of less than $2,000 per child), Sen. Gardner is the only senator in the group appointed by McConnell.

Ironically, although legislation that cuts $834 billion out of Medicaid leaves virtually nobody unscathed, the House bill disproportionately shortchanges the children in these 13 low-spending states, which happen to be represented by 17 Republicans and 9 Democrats in the Senate and 10 Republicans and 3 Democrats among the governors.

Medicaid Block Grants Also Fail to Adjust for Population Growth

Even worse than the per capita cap disparities, federal funding would not even adjust for population changes under the House bill’s Medicaid block grant option. Therefore, if the population in lower spending states grows faster than in higher spending states like Connecticut, the disparity would grow much worse.

This is exactly what has happened between Connecticut and faster growing states when the Aid for Families with Dependent Children (AFDC) was converted into a block grant and renamed as Temporary Assistance to Needy Families (TANF). For example, in 1997, Connecticut received 515 percent more per child in poverty than Alabama under the TANF block grant.

If Pope’s argument were correct, Congress would have “revised the budget” every year to correct for any, but that never happened. In fact, the absolute opposite took place.

By 2009, since Alabama’s child population grew faster than Connecticut’s over the next 12 years, the huge disparity between the two states had actually grown wider and Connecticut was receiving 721 percent more per child in poverty than Alabama.

Likewise, the gap between Alaska and Texas was $1,990 to $360 in 1997 (442 percent) but had grown to $2,863 to $294 in 2009 (874 percent). And as for Pope’s claim that Congress will allow low-spending states to bring their “spending in line with the national average,” the opposite happened. To help mitigate the dramatic disparities in spending, Sen. Kay Bailey Hutchison (R-TX) got a 2.5 percent add-on to certain low-spending and/or high growth states (e.g., Alabama, Alaska, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho, Louisiana, Mississippi, Montana, Nevada, New Mexico, North Carolina, Tennessee, Texas, and Utah) to help mitigate the disparity.

However, rather than expanding the provision, as was envisioned when the provision was adopted, Congress actually allowed the supplemental payment to expire in 2011 and the disparity has grown even wider.

Source: First Focus, “TANF Supplemental Grants: Reforming and Restoring Support for Children Who Need it Most,” Dec. 2011, https://firstfocus.org/resources/report/tanf-supplemental-grants-reforming-restoring-support-children-need/

Like TANF, the Medicaid block grant option would largely shortchange children and pregnant women, as the House exempted people with disabilities and senior citizens from its harm and significant cuts. Between 2020, when the House bill’s Medicaid caps go into effect, and 2030, 41 states are expected to see their population of children grow but they would not be funded if the state were to choose Trumpcare’s block grant option.

Source: Urban Institute, “Mapping America’s Future,” Map of Projected Growth Rate of Children in States (2020–2030), http://apps.urban.org/features/mapping-americas-futures/

The states that are projected to be both low-spending and growing in the 2020’s include (Republican senators are listed in parenthesis): Alabama (Sens. Shelby and Strange), California, Colorado (Sen. Gardner), Florida (Sen. Rubio), Hawaii, Idaho (Sens. Crapo and Risch), Illinois, Indiana (Sen. Young), Iowa (Sens. Grassley and Ernst), Kansas (Sens. Roberts and Moran), Louisiana (Sens. Cassidy and Kennedy), Michigan, Mississippi (Sens. Cochran and Wicker), Nebraska (Sens. Fischer and Sasse), Nevada (Sen. Heller), New Jersey, North Carolina (Sens. Burr and Tillis), Ohio (Sen. Portman), South Carolina (Sens. Graham and Scott), South Dakota (Sens. Thune and Rounds), Utah (Sens. Hatch and Lee), Washington, West Virginia (Sen. Crapo), and Wisconsin (Sen. Johnson).

In a bill where there are $834 billion in Medicaid cuts and an estimated 23 million will lose health coverage, nobody is a winner. However, there are 29 Republican and 19 Democratic senators and 17 Republican and 7 Democratic governors whose states, children, and health care providers would be particularly shortchanged and harmed by the Medicaid block grant option.

Put another way, the funding disparity that Chris Pope identifies in his analysis would tragically be made much worse by the House bill’s arbitrary per capita caps and block grant option, and the irony is that it would disproportionately harm the states represented by Republican governors, who would be forced to take the brunt of these cuts, and Republican senators, who are being asked to provide the votes for the bill’s passage.

In light of all the bill’s problems, it is no wonder that only 17 percent of Americans support the bill’s passage.

Source: Fox News, Chart of Quinnipiac University Poll, May 31-June 6