A new report from the Kaiser Family Foundation on a House Republican proposal to convert Medicaid funding to block grants indicates it could force as many as 44 million people out of the program over the next 10 years.
The study, conducted for the Kaiser Commission on Medicaid by the Urban Institute, provides national and state-by-state analyses of the potential impacts contained in Rep. Paul Ryan's (R-Wis.) budget proposal unveiled last month. Under the plan, states would receive $243 billion less in federal funds for their state insurance programs for the poor by 2021 – a reduction of 44 percent.
[See also: CBO: Ryan budget roadmap shifts healthcare burden to seniors, states; Republicans' 2012 budget plan alters Medicare, Medicaid]
"The House budget plan would result in federal budget savings and more predictable federal financing for Medicaid in the future. In exchange, the plan would make fundamental changes to the financing structure of Medicaid that would substantially reduce federal payments to states, challenging states' ability to finance coverage for their low-income residents," the report noted. "This reduction could result in large reductions in payments to providers and enrollment. In turn, these reductions would likely worsen the problem of the uninsured and strain the nation's safety net."
To avoid cuts in services, the burden would fall on states to increase funding for the program. According to the report, state spending on Medicaid would need to increase by 71 percent, or $241 billion, to maintain current annual levels of services and eligibility, based on current cost growth rates.
Even if they could slow the rate of spending per enrollee as projected in the Affordable Care Act, states would still need to provide an extra $152 billion each year by 2021 to maintain current coverage.
"Under the House budget plan, the Medicaid block grant would reduce and cap federal Medicaid spending, substantially reducing states' ability to provide coverage to low-income Americans," said Diane Rowland, executive vice president of the Kaiser Foundation and executive director of the Kaiser Commission on Medicaid and the Uninsured. "The repeal of the ACA combined with the adoption of the Medicaid block grant would add millions more to the number of uninsured Americans and compromise Medicaid's role as the health safety net in the next recession."
The report also showed that state reductions of federal funding under the block grants would vary, and states that haven't set up insurance programs for the poor would be less prepared for the program.
Medicaid spending reductions over the next decade relative to current law would range from a 26 percent drop in Washington, Vermont and Minnesota to 41 percent in Oregon, Georgia and Colorado to a 44 percent decrease in Florida.
The analysis also finds that hospitals could see their Medicaid payments fall by as much as 38 percent – or $84.3 billion – relative to current projections, in 2021.