Umm, Folks, There Is No Medicaid “Cut” in the AHCA

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Watching RI Center for Freedom & Prosperity CEO Mike Stenhouse debate Democrat State Senator Joshua Miller (Cranston, Warwick) on Dan Yorke State of Mind about the American Health Care Act (AHCA) that just passed the House in Washington, D.C., it seemed to me that the national Democrat Party’s urgency to keep the outrage meter pinned to the top has permeated the entire mainstream discussion to the point that people are discussing a fictional piece of legislation.

One can understand how this happens.  As was painfully clear on 10 News Conference, Democrat Governor Gina Raimondo (whom I’m taking to be representative of her party) was largely unfamiliar with the language of the legislation and yet was willing to proclaim its horrors, making her commentary a mixture of ignorance and spin.  With the Democrats’ rhetoric so clearly extreme, journalists will naturally assume some of the same from Republicans who attempt to correct the record (particularly journalists who favor Democrats generally, which is most of them).

One really has to go the actual language of the legislation, and even as somebody who reads a lot of legislation, I found it difficult to wade through, what with cross references and legalese.  Consequently, journalists try to figure out what the legislation actually does by finding the core of truth in both political sides and seeing how it can all cohere.  That doesn’t work when one side doesn’t care if it has even a smidgen of truth in its claims.

In the case at hand, both Miller and Yorke were apparently convinced that the AHCA cuts Medicaid, and Stenhouse wasn’t able to cut through the confusion in the limited time on air.  The bottom line is that there are no cuts to Medicaid.  Under the AHCA:

  • Nothing changes in Medicaid until 2020, except that the phase-down of the federal portion for expansion members actually freezes at a higher level of federal funding than originally planned.
  • Starting in 2020:
    • People already covered under the Medicaid expansion (that is, able-bodied adults without children) can stay on Medicaid, and the state will receive the matching funds from the federal government promised under ObamaCare.
    • People who are eligible under the expansion will still be eligible, if the state wants, but at the regular matching ratios that apply to everybody else on Medicaid (a little more favorable to the state than 50:50).
    • New Medicaid spending will be capped at the prior year’s level adjusted for inflation (specifically medical industry inflation).

As a completely optional choice, states can seek a 10-year block grant covering children and/or “nonelderly, nondisabled, non-expansion adults.” These block grants would provide more flexibility around what services states are required to cover and how they’re provided.  But, the block grant includes no cuts whatsoever.  For whatever group is covered under the block grant, the state receives the federal dollars that were projected without the block grant, adjusted for inflation (all-products inflation, though, not medical).  If the state saves money through its innovations, it gets to keep the extra federal funding.

Looking at the structure of the legislation, it’s clear that the objective of the block grant provision isn’t to save the federal government money in the short term, but to give states incentive to get their own costs under control, which will benefit the federal government in the long term, particularly if other states follow good examples.

So again, there is no cut to Medicaid.  Nobody on Medicaid will lose it.  The only reduction that the state faces is if it decides to keep accepting new Medicaid expansion members after 2020, and even then, the reduction is only to the standard Medicaid reimbursement.



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