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Where does Medicaid stand in the height of the Fiscal Cliff?

AP photo - Medicaid Cuts

Medicaid gives more than 60 million Americans, children and adults alike, who might not otherwise be able to afford medical care.  Mostly, this government program has been able to avoid large federal cuts, but is now vulnerable because Washington needs to close the budget gap and avoid the fiscal cliff.

Luckily, Medicaid is relatively protected from automatic budget cuts by the Budget Control Act. The program is insulated from across-the-board spending reduction know as sequestration which will take effect if Congress and the president is unsuccessful in reaching a compromise by the end of the year.

Still, there are many ways Medicaid could be stalled in progress during the budgetary negotiations. It is, by nature, an attractive target being a massive federal program that is only set to grow.

Sara Rosenbuam, a professor of health law and policy at the George Washington University School of Public Health and Health Services in Washington, DC, in an essay published online December 5 in the New England Journal of Medicine argues that reducing coverage would mean that many millions will continue to go without medical coverage, shifting the expenses on to insurers and other patients. The Congressional Budget Office has estimated that insuring people through Medicaid costs 50% less per person than subsidizing private insurance from a state-run health insurance exchange.

“The problem is that Medicaid’s cost is driven by high enrollment, not excessive per capita spending,” Rosenbaum notes. “As a result, there’s very little money to wring out of Medicaid without shaking its structure in ways that reduce basic coverage.”

There are many proposals offered that may help trim the federal budget. One proposal, run by Paul Ryan and outlined by the House Budget Committee, would remove all of the Affordable Care Act’s Medicaid expansions in states and instead offer grants for states to provide coverage for some qualifying residents. This option is set to save some $2 trillion in the next 10 years, but Rosenbaum argues that it is based on an “arbitrary limit” rather than actual evolving needs.  “Recent and ongoing demographic shifts…and recent tragedies, such as Hurricane Sandy, underscore the way in which uncontrollable events can cause unexpected surges in the need for government assistance,” she writes.

“Such blunt force strategies would leave many poor and disabled Americans without the basic services they need to stay healthy,” she said in a prepared statement. Her suggestion is to redouble efforts to increase the program’s efficiency by reducing costs of caring for the most expensive patients, especially those concerning long-term institutional care.

Other proposals announced limit states’ capabilities to generate funds for Medicaid by imposing taxes on hospitals or pharmacies. They also look for reduction of states’ abilities to use Medicaid funds to invest in public hospitals and other centers that care for beneficiaries.  There are many proposals on the issue of Medicaid cuts.  But, Rosenbaum writes, “Changing the rules would destabilize these institutions at the very time when expanded insurance coverage is creating greater demand for care.”

Medicaid is a large and tempting budgetary target, for sure. We’ve heard a lot in the past month about raising the eligibility age and means testing as possible Medicare cuts in a fiscal cliff deal. What we haven’t heard a lot about is Medicaid. Unlike Medicare, which is the main coverage for seniors, Medicaid is not a participant of the same amount of vocal and financial support. Rosenbaum stated it best, “Medicaid beneficiaries lack political clout”.  Regardless of the lack of coverage on Medicaid, it still remains just as important, if not more.  We will continue to keep you updated on all these issues here on Functional Independence Home Care.

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