Up to 2.4 million Medicaid recipients could lose their health insurance coverage if Republicans move forward with cost saving measures currently under consideration, according to new analysis from the Congressional Budget Office (CBO). The estimates also show some of the options would save hundreds of billions in debt over the next decade.
The analysis was requested by Sen. Ron Wyden, D-Ore., and Rep. Frank Pallone, D-N.J., the ranking members of the Senate Finance Committee and House Energy and Commerce Committee.
CBO went through five options that could reduce the federal deficit over the next decade and included overall savings in addition to impact on enrollees.
Here are the findings of the analysis.
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Up to 2.5 million Medicaid recipients could lose coverage if cost measures in Congress move forward. At the end of 2024, 78,532,341 people were enrolled in Medicaid and the Children’s Health Insurance Program.
Option 1
The first option would alter the state-federal cost-sharing formula. This would reduce Affordable Care Act expansion cost sharing from the current 90% flat rate to anywhere between 50% and 77% to align with each state’s non-expansion reimbursement rate.
CBO estimates that it would reduce the federal deficit by $710 billion through 2034. It would also lead to 5.5 million no longer being enrolled in Medicaid, 2.4 million of whom would be without health insurance.
House Speaker Mike Johnson, R-La., told Punchbowl News that reducing the cost sharing is off the table, but said per capita caps, considered under options 2-4, are being discussed.
Option 2
This option would limit state taxes on health care providers.
States are allowed to tax medical providers to fund a portion of their Medicaid spending. The federal government returns those taxes to providers as long as they don’t exceed 6% of the provider’s net revenue that they receive from treating patients. This “hold harmless” arrangement allows states to fund their Medicaid programs with funding that’s paid back to the providers by the federal government. The second option would eliminate the 6% threshold, and states wouldn’t be able to collect taxes under that arrangement.
Option 3
The third option would cap federal spending on Medicaid. Currently, federal spending is “open ended” meaning that if a state increases benefits, the federal government automatically increases payments. This option would create a per-enrollee cap on federal spending.
Option 4
This option would also create a per-enrollee cap on federal spending, but only for those who get coverage under the Affordable Care Act’s expanded coverage.
CBO estimates that options 2-4 would all reduce federal spending, leading states to make up for the loss of resources by spending more themselves, reducing payments to providers and limiting benefits. Unlike options one and five however, CBO did not estimate how these options would reduce the federal deficit nor did it state an impact on enrollment.
Option 5
The final option would repeal two Biden administration rules meant to boost enrollment. The first rule made it easier to enroll in Medicare Savings Programs, and the second simplified the application and renewal process for Medicaid and the Children’s Health Insurance Program.
CBO estimates this option would reduce the deficit by $162 billion through 2034. CBO estimates 2.3 million people would no longer be enrolled in Medicaid during that period, 60% of whom would retain their Medicare coverage. Although they would face increased out-of-pocket costs.
