Congressional Republicans recently passed a budget resolution that calls for the House Energy and Commerce Committee to reduce $880 billion in spending over 10 years, setting the stage for a messy battle over healthcare funds later this summer.
The Congressional Budget Office confirmed that Medicaid spending must be reduced significantly if the proposed levels outlined in the budget resolution are met.
Strategy firm Capstone is more optimistic cuts could avoid massive Medicaid cuts, due to pressure from senators in red states who will be concerned about electoral consequences. If the reconciliation bill repeals Biden-era rules on Medicaid, skilled nursing facilities and other non-healthcare priorities, more difficult reform like per-capita caps, block grants, provider taxes elimination and removing the federal matching assistance percentage floor may not be necessary.
The House is expected to mark up a first-look reconciliation bill no sooner than the week of May 7, reported Punchbowl News. Only a simple majority is required to pass both the Senate and House.
To get a better sense of how Medicaid chatter in Congress could affect healthcare for millions of Americans, Fierce Healthcare contacted dozens of healthcare leaders in March including those representing: think tanks across ideological lines, health systems, insurers, reproductive rights groups, consultant firms, rural health clinics, behavioral health practices, seniors, dental care advocates, legal experts and more.
We emailed questions, asking them to give their opinion on Medicaid health policy today and how the program should improve. Below is a collection of some of the responses, lightly edited.
Question: What, in your view, are current flaws in the Medicaid program and how could they be addressed?
Many respondents agreed Medicaid should be improved, but that does not mean they weigh the program’s faults equally or agree on the diagnoses.
“A good faith effort to fix Medicaid is needed. Medicaid needs to simplify performance standards and operations. It needs to attach these standards to waiver (and funding) authority, so that enterprises are incentivized to comply. It needs to invest in digital infrastructure to take Medicaid out of the fax era.” — Jamey Harvey, founder and CEO of boutique consultant firm Agilian
“Some states have specific programs for children with special healthcare needs, but the eligibility criteria and benefits structures are inconsistent, resulting in inadequacies in comprehensive care." — Taylor Beery, co-founder of tech-enabled medical group Imagine Pediatrics
“Our community health navigators spend disproportionate amounts of time and effort to help members understand and access their benefits; time that could be spent on service delivery.” — Scott Schnell, CEO and co-founder of MedZed, a company helping Medicaid members obtain health-related social needs services
“The asset test for Medicaid long-term care coverage varies by states and can be overly restrictive, forcing individuals to spend down assets to qualify, which may lead to financial instability for families. Policymakers should consider increasing asset limits or simplifying the distinction between countable and exempt assets to reduce the complexity and burden on applicants.” — Indivar Dutta-Gupta, Doris Duke Distinguished Visiting Fellow at the Georgetown University McCourt School of Public Policy
“In the 10 states that did not expand Medicaid under the ACA, there are 1.4 million people with household incomes below poverty who earn too little to qualify for ACA subsidies and too much to be eligible for Medicaid.” — Emily Gee, senior vice president of inclusive growth at the left-leaning Center for American Progress
“One of the major flaws in the Medicaid program is that dental coverage for adult enrollees is optional for states. Additionally, dental benefits have been one of the first things states eliminate when Medicaid funding is cut or state budgets are tight. Congress could establish a federal requirement or incentives for state Medicaid programs in all states to provide dental coverage to adults." — Melissa Burroughs, senior director of public policy at the CareQuest Institute for Oral Health
“We must continue to support states that expand state Medicaid programs to include abortion, travel for those who live in states without abortion access, and Medicaid’s coverage of family planning, births and other reproductive care for Americans and their families.” — Nourbese Flint, president of All* Above All, a group advocating for public insurance coverage of abortion
“Medicaid’s greatest flaw is that unlimited, debt-financed federal matching grants encourage far higher Medicaid enrollment, benefits, spending and economic harm than voters actually support. That flaw makes every other harmful part of Medicaid worse.” — Michael Cannon, director of health policy studies at libertarian think tank Cato Institute
“Medicaid is bloated, rife with waste and has veered significantly from its original purpose of caring for the very poor, disabled and pregnant. In recent years, the entitlement has swelled to cover nearly one in five Americans and total spending exceeded $870 billion in 2023 alone.” — Sally Pipes, president and CEO of free markets think tank Pacific Research Institute
Cannon believes states do not assume an acceptable level of the cost burden because 69% of the costs from Medicaid expansion are passed off to the federal government. Voters, he said, do not support “exorbitant” spending on Medicaid. There is also an incentive to increase spending, as Congress matches every dollar spent on Medicaid up to $9 but doesn’t raise tax revenue to cover the increase. This leads to a debt-financed Medicaid program that faces no limit on Medicaid spending, plus a can kicked down the road to future generations.
Pipes says Republicans have several options at reforming the program. First, they could equalize the federal matching rate for all Medicaid enrollees, so states are not incentivized to enroll healthier adults when pregnant women and disabled Americans should be the program’s priority. Second, she calls for provider taxes to be outlawed, where state governments are reimbursed for some healthcare expenditures, resulting in “fiscal gamesmanship.” Third, most enrollees should be subject to work requirements to qualify for Medicaid. Fourth, the government should crack down on improper payments.
Q: Many say proposals to reduce spending as outlined by the budget resolution are devastating for the program’s future. Some claim reform is essential to root out waste, fraud and abuse. What is your view of the bill and how will it impact your company, industry or the program broadly?
Respondents noted details of cuts at this stage in Congress' reconciliation process are unconfirmed and sparse.
“We recognize that there are currently very few details around the specific cuts being contemplated and so we do not want to under or over-emphasize any one prescription that could be implemented. However, such an unprecedented reduction in federal Medicaid investment paired with recent widespread increases in state Medicaid spending will—regardless of specifics—require most states to make difficult choices about programs.” — Morgan Craven and Andrew Bean, directors of state program and policy at ATI Advisory
“The House-passed budget resolution directs the relevant committee to reduce federal spending over the next 10 years by $880 billion below the [Congressional Budget Office] baseline. Even if all those below-baseline reductions were to come solely from Medicaid, federal Medicaid spending would still grow at an average annual rate of about 3% per year. It is frantic, hyperbolic, special-interest propaganda to claim that a 3% growth rate is a cut at all, much less a 'devastating' cut.” — Cato Institute's Michael Cannon
“My clients (the payers) will tighten their belts, but be fine. Providers, beneficiaries and communities (already skating on the edge of disaster) won’t know what hit them.” — Agilian's Jamey Harvey
“Republicans aren't actually trying to ‘cut’ Medicaid. If they do nothing, Medicaid spending is set to increase by roughly 56% over the next decade. Republicans' proposed ‘cuts’ would reduce the rate at which Medicaid spending grows to 29%, according to Manhattan Institute scholar Chris Pope." — Pacific Research Institute's Sally Pipes
“While I don’t believe that Medicaid will be cut by $880 billion, I do believe that cutting even $1 billion from Medicaid will have significant consequences for states, providers, insurers, and ultimately patients." — Kayla Holgash, health policy director at McDermott+
“Reduced eligibility and benefits could result in more uninsured individuals facing unaffordable medical bills, leading to increased medical debt and financial hardship. States would have fewer resources to maintain preventive health initiatives and respond to public health crises, which could lead to increased morbidity and mortality rates.” — McCourt School of Public Policy's Indivar Dutta-Gupta
“Hospitals simply cannot sustain their current labor models on top of these cuts, particularly when relying on external agency labor, which is significantly more expensive than investing in internal teams.” — Jacob Laufer, chief operating officer at ShiftMed, a healthcare workforce technology company for health systems
“This is an opportunity to ensure that the program—which is essential for certain populations—can continue to exist and serve those most in need." — Michael Baker, director of healthcare policy at right-leaning think tank American Action Forum
“These cuts will impact the 37 million children on the Medicaid program, including nearly 50% of children with special health care needs, 3 million children in military-connected families and more than 40% of children living in rural areas and small towns. Patients in rural communities would be hit especially hard, as hospitals and clinics in these areas rely heavily on Medicaid funding to stay open.” — Matthew Cook, president and CEO of the Children’s Hospital Association
“The level of ‘improper’ payments by the Medicaid program is estimated by the Government Accountability Office to be about $30 billion per year, far less than the level of cuts being contemplated.” — Katherine Hempstead, senior policy officer at the left-leaning Robert Wood Johnson Foundation
“This is deeply concerning given oral health’s direct connection to overall health, with links to conditions like high blood pressure, diabetes and adverse birth outcomes. Having diabetes can raise the risk of developing gum disease (periodontitis) by 86%, and individuals with diabetes have gum disease that is more severe than for people without diabetes." — CareQuest Institute for Oral Health's Melissa Burroughs
“On average, 30% of a rural health clinic’s payer mix is Medicaid. Without these reimbursement mechanisms, and no grant funding to fill in the gaps, the cost of Medicaid cuts could ultimately be rural health clinic closures across the country.” — Sarah Hohman, director of government affairs for the National Association of Rural Health Clinics
“The impact of such cuts on the business of companies like MedZed remains uncertain. On the one hand, the Medicaid population we serve is the least likely—at least in theory—to lose eligibility. On the other hand, a shift away from federal support of health-related social needs might mean that funding for the types of programs we run goes away, and with it, the vital supports for the most vulnerable populations." — MedZed's Scott Schnell
“There isn't anyone in our membership—from providers and device manufacturers to pharmaceutical companies and insurers—who wouldn't feel a negative impact from massive cuts to Medicaid. It would take a toll on the entire sector.” — Maria Ghazal, president and CEO of the Healthcare Leadership Council
“A shortage of workers and services will force family members to stay home from work and out of the economy to care for loved ones, with a disproportionate impact on women. People who might otherwise receive care at home may be institutionalized at an even greater expense to themselves and the government. Long-term care facilities are already facing capacity challenges and will also be directly impacted by Medicaid cuts, limiting their ability to meet growing demand for care.” — Jodi Sturgeon, president and CEO of PHI National, a group supporting eldercare and disability services
“While these changes are potentially temporary and could change with a future administration, it could take years to unravel the changes, creating an uncertain future for the health plans and providers that are the foundation of our healthcare system today." — Kirsten Bickford, associate partner at HealthScape, a Chartis company
Q: In your view, what is the top misconception about the Medicaid program?
Misconceptions vary drastically by party identification.
“The biggest misconception is that people who rely on the program are abusing their access. The majority of Medicaid users have an urgent need for coverage. Fraud is not as widespread as many people claim. If this is the case, we should focus on targeting those accounts rather than restricting access to the program.” — Virginia Caine, M.D., president of the National Medical Association, representing African American physicians
“States and health plans are required by law to institute rigorous program integrity interventions to root out potential overuse of Medicaid dollars—and it is in their financial interest to do so.” — HealthScape's Kirsten Bickford
“Opponents of work requirements in Medicaid often claim that most able-bodied, childless Medicaid recipients already work. In their telling, these requirements are duplicative and administratively burdensome. But the fact is that most able-bodied Medicaid beneficiaries do not work. In December 2022, just 44% of healthy, working-age Medicaid recipients without children worked at least 80 hours per month, according to a recent data analysis from the American Enterprise Institute.” — Pacific Research Institute's Sally Pipes
"One major misconception is that many people on Medicaid are not working, when in fact more than 92% of the people who rely on Medicaid for health insurance are already working or attending school, or else are caregivers, ill or disabled. The small number of the remaining Medicaid patients who just have been laid off, gotten a divorce, or are between jobs (like anyone could be at any point in their lives) may need Medicaid to have continuous care for chronic conditions, or to address substance or mental health issues so they can be ready to rejoin the workforce." — Anthony Wright, executive director of left-leaning advocacy group Families USA
“The Medicaid program covers a wide range of people, nearly one in five Americans—including seniors, pregnant women, people with disabilities and other low-income people and families. Medicaid pays for more than four in 10 births nationwide and is the primary funder of long-term care for disabled and older adults. It also covers many workers: in 2023, 64% of nonelderly adults with Medicaid coverage who were not receiving Social Security or Social Security disability benefits were working full or part-time.” — Center for American Progress's Emily Gee
“A key misconception is that Medicaid is a national program. While broadly administered by the Centers for Medicare and Medicaid Services, state-by-state differences in Medicaid coverage and eligibility have made the program stray from its position as a national safety net and expand into an amorphous care program that certain states take advantage of for a number of reasons, some of which aren’t related to the health of their citizens.” — American Action Forum's Michael Baker
“Despite the program's vast reach, many people do not fully realize that their own or a loved one's care is provided by Medicaid since the program goes by different names in different states, like TennCare or Medi-Cal, and can be operated through private insurance companies. Additionally, before Medicaid begins paying for long-term care services, applicants must demonstrate that they do not have other insurance that would pay for care, that they do not have sufficient income or assets, and that they have a clinical need for help with activities of daily living.” — PHI National's Jodi Sturgeon
Q: What are the top unintended consequences of cutting Medicaid as proposed?
Expect headwinds for state budgets, hospitals, health plans and beneficiaries, respondents say.
“Cutting Medicaid would have negative consequences for enrollees beyond healthcare access and health outcomes, such as detecting cancer later. Evidence shows that Medicaid coverage reduces medical debt and the chances of eviction.” — Center for American Progress's Emily Gee
“Influenza viruses have reached their highest level in 15 years. We also have active measles outbreaks. The proposed changes to Medicaid add a layer of risk and complexity to each public health challenge we are facing today and those that come up in the near future as people will struggle to access preventive care and get help when they are ill.” — National Medical Association's Virginia Caine, M.D.
“Network contractions will create a cascade of healthcare failures: longer wait times for critical appointments, decreased medication adherence, and significant reductions in preventative care—all ultimately resulting in more expensive emergency interventions and hospitalizations for our most vulnerable children.” — Imagine Pediatrics' Taylor Beery
“Some outcomes of reforming Medicaid could include reductions in revenues for providers (since the population on Medicaid could shrink) and altering state tax burdens as state governments seek to balance budgets or work on other competing priorities.” — American Action Forum's Michael Baker
“Increased negative perception of our healthcare system as a whole, but primarily of health plans, leading to declining health outcomes and dissatisfaction." — Jackie Allard, a partner at HealthScape, and Associate Partner Kirsten Bickford
“The red states that recently expanded Medicaid will be hit the hardest because they get the largest federal match and have the highest poverty levels in the U.S. The most marginalized people in these states will have more harm compounded upon them.” — Agilian's Jamey Harvey
“Health programs can’t be outsourced and are by definition local spending, meaning dollars get recirculated in the community—but that means cuts also have a bigger economic ‘multiplier effect’ when those dollars are taken away." — Families USA's Anthony Wright
“The cost of care for uninsured patients will shift to the hospital which, in turn, will try to absorb that cost by negotiating higher reimbursement rates from its commercial insurance contracts. The commercial insurance companies will then attempt to recover their cost increases through higher premiums." — MedZed's Scott Schnell
“Many hospitals and clinics—especially those in rural and low-income communities—rely heavily on Medicaid reimbursements to sustain labor and delivery services. Since Medicaid reimburses at lower rates than private insurance, additional funding cuts would force more hospitals to shut down obstetric units, leaving millions of women without nearby maternity care." — Amanda Williams, M.D., interim chief medical officer at maternal health nonprofit March of Dimes
Q: If the legislation passes and is signed into law, how do you recommend stakeholders adapt?
Respondents note the healthcare system will look fundamentally different if large cuts take place, but there are a few approaches that may mitigate the worst consequences, if only slightly.
“If the question is, ‘How should high-cost/low-quality providers who cannot weather 3% revenue growth adapt?’ then my answer is, ‘Take the money you planned to spend on lobbying for subsidies and instead use it to innovate to make healthcare better, more affordable and more secure.’" — Cato Institute's Michael Cannon
“If those cuts become law, states will be facing a swell in residents without health insurance. For example, if Congress reduces the federal support for Medicaid expansion, states would be unlikely to raise enough revenue to make up the difference and about 16 million people could lose Medicaid/CHIP coverage. One response should be helping enroll people who are eligible for ACA marketplace subsidies into private plans.” — Center for American Progress's Emily Gee
“Partners should consider strengthening value-based payment arrangements and renegotiate contracts regarding rate structures and capitation.” — Agilian's Jamey Harvey
“If Medicaid reforms are enacted, stakeholders should pursue wide-ranging, value-based arrangements with providers to better track outcomes and ensure that value is being generated in the program.” — American Action Forum's Michael Baker
“Providers will have to shift financial resources and operations, such as using telehealth services to reduce expenses.” — National Medical Association's Virginia Caine, M.D.
“Health plans should ramp up member and provider engagement to inform them of upcoming changes and connect vulnerable individuals to community resources to address unmet needs. Foster strong relationships with providers through resources and support.” — HealthScape's Jackie Allard and Kirsten Bickford
“Should the most extreme proposals become law, the healthcare industry will face unprecedented disruption. Meeting this challenge will require further accelerated innovation in technology and care models that reduce unit costs while addressing the widening access gaps created by Medicaid underfunding.” — Imagine Pediatrics' Taylor Beery