The Senate Bill Reforms Medicaid in a Fiscally Responsible Way

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Posted by Elizabeth McKee on Wednesday, July 5th, 2017, 9:30 AM PERMALINK

Critics of the Senate’s “Better Care Reconciliation Act” argue that the healthcare reforms made to Medicaid in the bill are cruel, irresponsible, or reckless. 

But this is wrong. The truth is, The BCRA does not cut Medicaid funding or kick people off the program. It does, however, implement practical reforms that would put Medicaid on a sustainable path by tying it to inflation - first CPI-M and then CPI-U after a transition period. Through this reform, the BCRA ensures that people who depend on Medicaid can continue to receive the care they depend on. No one will be kicked off Medicaid, and no one will no longer be eligible for the program.

“The BCRA will put Medicaid on a budget for the first time in history,” said Americans for Tax Reform president Grover Norquist, “allowing it to grow with inflation and population but not continue to spin out of control.”

Under the Senate Reforms, Medicaid will Continue to Grow. The BCRA ties the growth rate of the program to inflation, first at CPI-M or CPI-M+1 percent depending on the eligibility group, and then CPI-U after 2025. This will ensure that the program’s per-beneficiary growth rate does not grow faster than the economy. As noted below, this reform ensures that Medicaid will grow at a reasonable rate. The program will remain solvent for years to come with both current and new enrollees continuing to receive benefits. In fact, the BCRA allows Medicaid funding to increase by $71 billion over the next decade.

The Current Trajectory of Medicaid is Unsustainable. Under current law, Medicaid spending will grow every year and will gradually comprise a larger part of federal spending as a percentage of the economy. This year, federal Medicaid spending will total $393 billion. By 2026, CBO projects spending will reach $624 billion – a growth rate of 5.34 percent, far above the growth rate of the economy. 

Failing to address this problem will mean the truly needy no longer have access to care. The Senate bill is a sensible measure that allows the program to keep growing at a sustainable rate, extending Medicaid’s lifespan far into the future.

BCRA Medicaid Reforms Promote State Flexibility and Choice. In addition to stabilizing the program, the Senate legislation allows the federal government to distribute Medicaid funds to states in the form of a traditional block grant or a targeted per capita allotment. States will be given several years to implement this system, and will be granted broad flexibility to implement work requirements. In this way, Medicaid can be adapted to target the specific needs of each state.

These Ideas Have Bipartisan Support. Democrats have previously endorsed the creation of a per capita spending cap on Medicaid – including Senator Patty Murray (D-WA), Senator Patrick Leahy (D-VT), Senator Dianne Feinstein (D-CA) and former Senate Majority Leader Harry Reid (D-NV).

In fact, the idea originated from the Bill Clinton White House.

Photo Credit: Department of Health and Human Services, Wally Gobetz

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