Study: Romney’s Medicaid scheme would throw tens of millions off rolls

Former Massachusetts Gov. Mitt Romney, gestures as he speaks to supporters at Oklahoma state Republican Party Headquarters in Oklahoma City, May 9, where he...
Former Massachusetts Gov. Mitt Romney, gestures as he speaks to supporters at Oklahoma state Republican Party Headquarters in Oklahoma City, May 9, where he...
Sue Ogrocki/AP

It is one of Mitt Romney’s favorite talking points, repeated at Monday night’s debate: that states can better run programs for poor people, and as president he would give them the freedom to do so.

“We take some programs that we are [going] to keep, like Medicaid, which is a program for the poor; we’ll take that health care program for the poor and we give it to the states to run because states run these programs more efficiently,” explained Romney in Boca.

That might sound like smart management. But a new study, released Tuesday by the nonpartisan Kaiser Family Foundation, finds that block-granting Medicaid, as Romney proposes, would see tens of millions of poor Americans lose their health insurance, while the remaining Medicaid beneficiaries would get reduced coverage. Throw in Romney’s plan to repeal Obamacare, and the impact would be even worse.

Under the House Republican budget plan, which is essentially the same plan Romney is proposing, “federal Medicaid spending would be cut by $1.7 trillion over the 2013-2022 period,” the report concludes.

By restricting federal Medicaid spending to a set block grant amount, the plan would save $810 billion, the report finds. But that would be done by kicking tens of millions of struggling Americans off the Medicaid rolls. According to the report, which uses data from the liberal-leaning Urban Institute, under even the most optimistic assumptions, 14.3 million Americans would lose their Medicaid eligibility. Using more dire assumptions, the figure is 20 million.

But Romney, of course, also wants to repeal the Affordable Care Act (ACA), including its expansion of Medicaid. That would deprive an additional roughly 17 million people of health insurance they’re currently in line for, according to the Congressional Budget Office.

Put bluntly, between block-granting Medicaid and scrapping ACA, Romney would take health insurance away from between 31 and 37.5 million vulnerable Americans.

And it could be even worse than that. No one knows, except perhaps for Paul Ryan, what the federal rules would be governing state management of Medicaid. As the report notes, “If there are no requirements that federal payments be matched by state contributions, states could reduce state spending more than federal spending and these enrollment estimates would be understated.” Of course, states could also choose to be more generous. But whereas state Medicaid expansions are currently matched by federal dollars, they no longer would be. So, the report states, “Completely avoiding enrollment cuts would require very large increases in spending to offset the reduction in federal funds.”

In other words, the report’s estimates of how many people would be affected are more likely to be too low than too high.

There’s more: States would also have to cut back dramatically on what money they still do spend. The report’s authors assumed that cuts would be spread evenly across the different areas of expenditure. They found that payments to hospitals could fall by $363.8 billion and payments to nursing homes by $220.2 billion, or 22%, over the 2013 to 2022 period.

That, in turn, could mean reductions in the services Medicaid beneficiaries receive. “Medicaid spending per enrollee is already lower than under Medicare or private insurance,” noted Robin Rudowitz, a Medicaid expert at Kaiser. “If you significantly cut rates further, it could jeopardize provider participation.”

The threat is especially acute in nursing homes and other long-term care facilities—leaving seniors at risk of seeing reductions in care they depend on. “Medicaid is the primary payer for long-term care services, so cuts in payments means cuts in delivery of long-term care services more broadly,” says Rudowitz.

And here’s another worry: Right now, federal spending on Medicaid automatically increases during an economic downturn as workers lose their jobs and become eligible for coverage, meaning the safety net expands when it’s most needed. But under a block grant system, there would be no additional federal spending in such situations. So another recession could cause even more struggling Americans to be thrown off the rolls than even the Kaiser report estimates.

Romney has blasted President Obama for cutting $716 billion from Medicare Advantage. But his plan to block grant Medicaid would cut even more from that program. And unlike Obama’s Medicare “cuts,” which don’t come from seniors’ care, Romney’s Medicaid cuts would have a direct impact on beneficiaries. Of course, that happens to be the poor and disabled—in other words, the 47%.