On the President's Medicaid Proposal

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Posted by Sadie from ? ( on Wednesday, May 14, 2003 at 5:25PM :

MAY 13, 2003
9:13 AM

President's Medicaid Proposal Will Result in Nearly Half a Trillion Dollar Cutback in Funding

Cuts Would Result in Millions Losing Vital Health Care Coverage

WASHINGTON - May 13 - As Congress debates whether additional funding should be given to states to help pay for their cash-strapped Medicaid programs, a report issued today reveals that the Bush Administration's alternative to such funding would cause millions of seniors, children, and people with disabilities to lose health coverage. According to the report, the Bush Administration's alternative proposal-which would convert Medicaid to a block grant-would result in an almost half a trillion dollar loss of public health funds over the next 10 years.

The report, prepared by the health care consumer organization Families USA, finds that the Bush Administration's proposal would cause large funding cutbacks in Medicaid and the State Children's Health Insurance Program (SCHIP). The cutbacks would grow in each passing year. For example:

In 2004, Medicaid and SCHIP funding would be cut by $8 billion, or 3 percent. In 2009, the funding reduction would be $49 billion, or 10 percent. By 2013, the cutback would be $105 billion, or 16 percent.

In total, over the next 10 years, Medicaid and SCHIP funds would be cut by $492 billion under the Administration's proposal.

"The Bush Administration's proposal would slash the funds needed to sustain needed health services for America's seniors, children, and people with disabilities," said Ron Pollack, executive director of Families USA. "It would result millions losing their health lifeline."

The Administration's proposal would radically alter how Medicaid is funded. Today, the federal government provides matching funds for every dollar a state spends on Medicaid. The federal government pays states between $1 and $3 for every $1 a state puts into Medicaid. Through this system, states are guaranteed a very favorable match in federal funds for every dollar committed to the program.

Under the Bush plan, the federal government would establish a set amount that a state must spend on Medicaid in order to receive a cash allotment from the federal government. The amount states would have to spend in order to receive federal assistance would be considerably less than they are projected to spend under current law. Therefore, states would have no incentive to commit resources above the amount specified because no additional federal funds would be provided as a match. The Families USA report calculates the resulting loss in funding.

At the end of the 10-year funding period (in 2013), the Medicaid and SCHIP programs would be cut by 16 percent. By applying this 16 percent cutback to today's Medicaid program, the Families USA report illustrates how these cuts could affect seniors, children, and people with disabilities. If this 16 percent cutback were applied today in across-the-board reductions in program eligibility:

Almost 7.5 million people would lose health care coverage. Nearly 3.9 million children; over 1.2 million people with disabilities; almost 690,00 seniors; and approximately 1.7 million other adults would lose health coverage.

The report-including state-by-state data concerning funding cutbacks and potential losses of health coverage for seniors, children, people with disabilities, and others-is available on the Families USA Web site at www.familiesusa.org.

-- Sadie
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