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Kaiser Report: Enrollment Effects of GOP Medicaid Changes Would Vary by State

By Dena Bunis, CQ HealthBeat Managing Editor

May 10, 2012 -- Tens of millions of Americans would be thrown off Medicaid if the House-passed budget plan to convert the program to a block grant became law and the health care overhaul was repealed. But how many would be cut from the plan for the poor and disabled would vary greatly depending on the state, according to a new report released by the Kaiser Family Foundation's Commission on Medicaid and the Uninsured.

The report, prepared for Kaiser by the Urban Institute, suggests three ways that states could deal with such a fundamental change in the Medicaid program as well as the elimination of the program's expansion, something that would occur if the health law (PL 111-148, PL 111-152) was repealed.

Although the House adopted Budget Committee Chairman Paul D. Ryan's blueprint to make Medicaid a block grant program and voted to repeal the health law, neither move is expected to have any traction in the Senate. Even if that chamber approved such measures, President Obama has promised to veto them. Senate Budget Chairman Kent Conrad, D-N.D., is expected to soon release his proposal to cut spending. He's talking about some "modest" cuts to Medicare and hasn't mentioned eating into the Medicaid program at all.

The enrollment impact of the House plan and repeal of the health law would depend, the Kaiser report says, on how states decide to adjust their spending and what they do in terms of enrollment eligibility requirements. The report estimates that under the House plan, between 31 million and 44 million people nationally who, based on current law, would be on Medicaid in 2021 would not be. Of those, between 14 million and 27 million would have lost coverage solely because Medicaid was transformed into a block grant program.

Overall, the report finds that total federal Medicaid spending reductions over the next decade would range from a 26 percent drop by 2021 in Washington, Vermont and Minnesota to 41 percent declines in Georgia and Colorado and a 44 percent decrease in Florida.

The impact would also be felt by hospitals, which would see their Medicaid payments fall by as much as 38 percent in 2021, the report said.

"The repeal of the [Affordable Care Act] 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,'' Diane Rowland, executive vice president of the foundation and executive director of the Kaiser Commission on Medicaid and the Uninsured, said in a written release announcing the report.

Under the first scenario the study envisions, Medicaid spending per enrollee would grow 6.1 percent between 2012 and 2021. That's equal to the increase in the gross domestic product plus 1.4 percentage points. Under this assumption, were the House plan and repeal of the health law in effect, all the savings would come from cuts in enrollment. The result from this example would be a cut of 36.4 million Medicaid enrollees, a 46 percent reduction.

Scenario two is based on the states reducing the rate of growth in Medicaid spending per enrollee as well as achieving substantial efficiencies as a way of decreasing the number of people who would be cut from the program. This assumes keeping the Medicaid rate of growth in spending per enrollee to the GDP, 1.4 percentage points less than the first scenario. Under this example, Medicaid enrollment would fall by 30.8 million, a reduction of 41 percent.

In Kaiser's third scenario, states would basically protect the aged and disabled on the program, with children and adults bearing the brunt of enrollment cuts. This example would result in a 58 percent reduction in enrollment—44 million people. Enrollment for children and adults would drop by 71 percent. This scenario also assumes that spending growth would be kept to the rate of the GDP.

"We cannot predict how these cuts would be distributed across adults and children but the cuts are so large that a typically state would have to eliminate almost all coverage for adults to avoid any cuts for children,'' the report says.

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