Senate health plan would cut Medicaid safety net, physicians say

By John J. Murphy, MDLinx
Published June 27, 2017

Key Takeaways

The health care reform plan proposed by Republican Senators on June 22, 2017 would subject low- and middle-income patients to higher costs and greater difficulty in affording health care, according to many physicians and public policy experts. See the following articles: AMA releases battleground poll results on GOP health reform fixes, CBO says Senate health care proposal would result in millions losing health care; APA calls again on Senate to reject the deeply flawed proposal, and ASTRO opposes threats to coverage in draft Senate Health Care Bill.

According to the Senate Budget Committee, the health care reform plan—officially titled the Better Care Reconciliation Act—aims to overhaul the Affordable Care Act (ACA) through five key initiatives:

  • Help stabilize collapsing insurance markets that have left millions of Americans with no options.
  • Free the American people from the onerous Obamacare mandates that require them to purchase insurance they don’t want or can’t afford.
  • Improve the affordability of health insurance, which keeps getting more expensive under Obamacare.
  • Preserve access to care for Americans with pre-existing conditions, and allow children to stay on their parents’ health insurance through age 26.
  • Strengthen Medicaid for those who need it most by giving states more flexibility while ensuring that those who rely on this program won’t have the rug pulled out from under them.

While many of these initiatives have raised hackles in Washington, DC and in the nation, it’s the revamping of the Medicaid program that has stoked the ire of patient advocates and physicians. The Congressional Budget Office has provided the estimated costs and savings from the Better Care Reconciliation Act (Click here), and many experts predict the Senate’s plan would gut Medicaid funding.

“Many more low-income and even middle-income Americans are going to have a hard time affording health insurance and could well become uninsured again,” said Jane L. Holl, MD, MPH, Director of the Center for Healthcare Studies at the Institute for Public Health and Medicine at Northwestern University’s Feinberg School of Medicine, in Chicago, IL.

“This will again put pressure on health care systems and increase uncompensated care, leading to cost shifting, with hospitals [and] health care systems increasing costs for health insurers, and health insurers passing along the costs to employers, and employers passing along some of the costs by increasing employees’ premiums,” Dr. Holl explained.

Shrinking Funds and Enrollees

Approximately 74 million Americans—nearly one in five—are currently covered by Medicaid, including half of all newborns, two-thirds of the elderly in nursing homes, and 10 million people with disabilities. About 20 million Americans have gained health care coverage due to ACA, including about 14.5 million covered under Medicaid or CHIP. But Medicaid also costs the nation a lot—total spending was $574.2 billion in the 2016 fiscal year.

To that end, the Senate bill would progressively pass more and more of the responsibility of Medicaid to individual states. It would defund ACA’s Medicaid expansion over a three-year period, from 2021 to 2023. Beginning in 2020, the bill would also cap federal Medicaid payments for enrollees. In 2025, the bill would begin to shrink Medicaid even further by tying its annual growth rate to the standard rate of inflation, instead of the more closely corresponding (and higher) rate of medical inflation.

“All of these changes combined suggest that states will receive considerably less federal funds for Medicaid, leaving states to fill in the gap by reducing the number of people they cover, reducing coverage, and cutting back on services,” Dr. Holl said.

Magic Up Their Sleeve?

So, how would the Senate plan strengthen Medicaid by giving states more flexibility?

“If the amount of funding shipped from the federal government to the states remained the same and states were required to spend it all on medical care, but without other restrictions, then I think Medicaid could be stronger,” speculated Sean Nicholson, PhD, Professor and Director of the Sloan Program in Health Administration at Cornell University, in Ithaca, NY.

“For example, it might cover fewer people but those people would have no trouble being seen quickly by a physician. Or, nursing home coverage could be dropped so that more people could be covered and covered well,” Prof. Nicholson said.

“The problem is, with the funding cuts envisioned in both the House and Senate plans, there is no way Medicaid would be stronger,” he added. “You can't cut [more than] 25% of a program that covers 74 million people and honestly believe that states have some sort of magic up their sleeve. Won’t happen.”

State Your Viewpoint

Another concern: The Senate Republicans’ plan eliminates the 10 essential health benefits required by ACA—such as maternity care, emergency services, and mental health treatment—as of January 1, 2020. As such, would individual states require insurers to provide these services?

Probably not, said Megan McHugh, PhD, a Research Assistant Professor in the Center for Healthcare Studies and Department of Emergency Medicine at Northwestern University’s Feinberg School of Medicine, as well as Director of the Center’s Program in Health Policy and Implementation.

“States may permit insurance companies to sell policies that exclude certain benefits that were required under the ACA, like maternity care and mental health treatment. More conservative states are likely to embrace this option,” she explained. “Prior to the ACA, most plans on the individual market did not include maternity benefits; approximately 34% did not include coverage for substance abuse. So, we may see the return of those more limited insurance products if the bill is passed.”

Many of the largest medical professional societies—including the American Medical Association, American Academy of Pediatrics, American Psychiatric Association, and others—have come out strongly against the bill and against the cuts to Medicaid in particular, Dr. McHugh noted.

“Physicians and other clinicians who feel strongly (for or against) this bill should take the opportunity to call their members of Congress,” she advised. “Members care a lot about their constituents’ perspectives on high-profile legislation. Clinicians should make their viewpoints known.”

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