CBO: Senate healthcare bill will reduce Medicaid spending 35% by 2036
The Congressional Budget Office (CBO) released a report that explored the longer-term effects on Medicaid spending if the Senate’s Better Care Reconciliation Act of 2017 became law.
The CBO said Medicaid spending would be 26% lower in 2026. That would rise to about 35% in 2036.
CBO provided an extended baseline that predicted Medicaid spending under the current law would grow 5.1% per year during the next two decades, partly because of medical service price increases. Under the Senate bill, that spending would increase by 1.9% per year through 2026 and about 3.5% per year after that.
Medicaid would take the biggest spending hits in the Senate bill. The CBO said the effects would come from three provisions in the bill: elimination of the individual and large employer insurance mandates; caps on the growth in per-enrollee payments for nondisabled children and nondisabled adults enrolled in Medicaid; and reducing the federal matching rate for funding for adults that get Medicaid coverage through the Affordable Care Act’s Medicare expansion.
“Over the next decade, CBO projects, a large gap would grow between Medicaid spending under current law and under this bill. In later years, that gap would continue to widen because of the compounding effect of the differences in spending growth rates,” said the CBO.
The CBO predicts states will need to make tough financial decisions about spending and coverage in the coming years if the bill becomes law.
“Under this legislation, after the next decade, states would continue to need to arrive at more efficient methods for delivering services (to the extent feasible) and to decide whether to commit more of their own resources, cut payments to healthcare providers and health plans, eliminate optional services, restrict eligibility for enrollment or adopt some combination of those approaches. Over the long-term, there would be increasing pressure on more states to use all of those tools to a greater extent,” said the CBO.
The CBO created the longer-range forecast after requests from the Senate Committee on the Budget and Senate Committee on Finance. Sen. Majority Leader Mitch McConnell hoped to bring the bill up to a vote before the July 4 recess, but nixed the idea after he couldn’t get the 50 votes needed to pass the bill.
Republicans only have a two-vote majority in the Senate, which means McConnell can only lose two Republican votes for the bill to pass without any Democratic support through the reconciliation process. Both conservative and moderate Republicans spoke out about the legislation. Moderate Senators like Susan Collins questioned the level of Medicaid cuts, while conservatives like Rand Paul said the bill didn’t do enough to cut costs.
Healthcare organizations like the American Medical Association, American Hospital Association and the Association of Medicaid Directors have also strongly opposed the bill.
An earlier CBO report predicted that 15 million Americans would lose health insurance next year if the bill became law. The CBO said 22 million would lose coverage by 2026.
Before the Senate's healthcare proposal, the House narrowly approved its own healthcare reform bill, the American Health Care Act, in May. The CBO said the House bill would leave 14 million without health insurance next year and 23 million American by 2026.
The Senate is expected to work on its bill to gain more Republican support after the July 4 recess.