House Republicans Propose $1 Trillion in Medicaid Cuts

A new proposal introduced by Republicans in the House of Representatives asks that the Medicaid program be cut by $1 trillion. Lawmakers say this proposed cutback could help trim money from the deficit over the next 10 years.

Medicaid Reform Proposal on Deck

The Medicaid program began in 1965 as a way to offer public health insurance coverage to children, pregnant mothers, disabled and poor individuals. In order to cut the massive U.S. deficit, House Budget Chief Rep. Paul Ryan proposed to reform this program by making a few changes:

  • Reverse current health care laws: One way to cut costs is by reversing health care reform. Since the Medicaid program was expanded in the new reform law to cover millions of uninsured who currently earn too much to qualify, the proposal asks to repeal the law entirely.
  • Limit rate Medicaid spending grows: The proposal also asks to limit the rate Medicaid spending grows to reflect changes in population and prices. This, according to the proposal, would result in $771 billion in cuts over the next 10 years.
  • Rework how Medicaid dollars are issued: The proposal asks federal officials to give Medicaid dollars to states in a lump sum, rather than as a match to state spending.

The third suggestion is backed by the Congressional Budget Office (CBO), which suggested in November that a similar block grant system could save $180 over the next 10 years.

Proposal Faces Criticism from White House and Senate

While the proposal promises to save money for the country, experts say significant cuts are guaranteed to curtail benefits for the nation’s poorest–a number that increased significantly after the onset of the recession. As a result, Democrats in the White House and Senate are expected to reject the ideas.

Even the CBO, which issued an analysis of the revamp Tuesday afternoon, agreed the changes could have a heavy effect on struggling Americans as it could “curtail eligibility for Medicaid” and “provide less extensive coverage to beneficiaries.”

The problem of reducing benefits coupled with the belief that states receiving block payments could end up using the money to fill gaps in their own troubled budgets leaves opponents of the proposal to think that it would not have enough short- or long-term benefits to pass in Congress.