Fact Sheet on Effect of Chairman Ryan’s Budget on Medicaid

Mar 20, 2012

Today, the Democratic Staff of the Energy and Commerce Committee released a fact sheet summarizing the effects of Chairman Ryan’s budget on the Medicaid program.

March 2012

Fact Sheet on Effect of Chairman Ryan’s Budget on Medicaid

Committee on Energy and Commerce

Minority Staff

On March 20, 2012, Chairman Paul Ryan introduced the Republican budget for FY 2013.  This budget contains enormous cuts to the Medicaid program, endangering health care coverage for over 60 million Americans, including 16 million seniors and individuals with disabilities and 33 million children.  This fact sheet summarizes the budget’s effects on Medicaid and its beneficiaries.

Highlights from Chairman Ryan’s Fiscal Year 2013 Budget Resolution:

  • Ryan’s budget turns Medicaid into a block grant that cuts the program by $810 billion over the next decade.  That is a 22% reduction to the Medicaid program from the block grant.
  • Ryan’s budget repeals the Affordable Care Act’s Medicaid expansion, cutting an additional $931 billion from Medicaid over the next decade. 
  • In total, Ryan’s budget cuts Medicaid by $1.7 trillion over the next decade.
  • By 2050, Ryan’s budget cuts the Medicaid program by nearly three-quarters, according to the Congressional Budget Office (CBO).

The Ryan budget shreds the Medicaid safety net and shifts healthcare costs to states and beneficiaries.  Medicaid is currently structured to provide more help when states need it most:  when unemployment increases and citizens lose insurance coverage.  This budget restructures Medicaid into a block grant where states receive a capped amount of money for the program. The Medicaid block grant would not account for innovation in healthcare, enrollment growth in the program, and more.  This shifts all risks including future recessions, healthcare cost increases, and disasters to states and beneficiaries.  The federal government would no longer be a partner responding to such changes.  This is not a cost savings to the program, but a cost shift from the federal budget to states and Medicaid beneficiaries.

How the Ryan budget would affect states, providers and beneficiaries:

  • According to CBO, “even with significant efficiency gains [by states], the magnitude of the reduction in spending . . . means that states would need to increase their spending on these programs, make considerable cutbacks in them, or both.  Cutbacks might involve reduced eligibility for Medicaid and CHIP, coverage of fewer services, lower payments to providers, or increased cost-sharing by beneficiaries – all of which would reduce access to care.”
  • The Urban Institute estimated that the Medicaid block grant in the FY 2012 Republican Budget by Chairman Ryan, similar to this year’s proposal, would lead states to drop between 14 million and 27 million people from Medicaid by 2021and cut reimbursements to health care providers by 31%.  This does not account for the number of people losing Medicaid as a result of repealing the Affordable Care Act.
  • The Congressional Budget Office estimates that repealing the Affordable Care Act will result in 33 million people becoming uninsured by 2022. 

The effects of these cuts would be devastating.  For example:

  • Coverage for today’s 1 million nursing home residents would be at risk, and quality and staffing in nursing homes would likely degrade. 
  • Benefits allowing 3 million elderly and disabled individuals to remain independent and in their homes today would be at risk. 
  • Benefits such as prescription drugs for patients with HIV/AIDS, early prevention, diagnosis, and treatment (EPSDT) for sick or disabled children, and behavioral therapies for autistic children could also be eliminated.

The Ryan budget’s Medicaid cuts would result in job losses.  Every federal dollar cut from Medicaid means almost $2 cut from the state economy because states match federal spending.  Under current law, a cut of $1.7 trillion in federal spending over the next decade would mean a total cut of nearly $3.4 trillion in healthcare spending for state and local economies, causing a significant loss in healthcare jobs and investments.

American Families Support Medicaid.  According to a Kaiser Family Foundation poll from 2011, most Americans oppose the idea of converting Medicaid into a block grant.  More than half wanted to see no reductions at all in Medicaid spending.