WASHINGTON — When Republican Gov. Charlie Baker recently groused in a letter to senators that the GOP health care bill reining in Medicaid spending hurts “our lowest income” residents, he echoed a concern of many other governors.
But on top of those cuts that every state will experience, Baker complained about a less publicized provision of the bill that targets his state of Massachusetts by further reducing their recipient funding if they spend more than 25 percent per capita above the national average for a group of people.
He said this double hit would cost his and other high Medicaid cost states, including Pennsylvania and Texas, tens of millions of dollars in funds that would go instead to states that spend less per capita on Medicaid. States like Georgia, Alabama and West Virginia.
The result, Baker said, would be an “enormous budget shortfall” for high-spending Medicaid states and an “enormous windfall” for low-spending states.
A report by the health care consulting firm Mannatt said Massachusetts spends 39.7 percent more than the national average on each child, and 29.4 percent above average for each elderly recipient.
Republican authors of the bill defend the shifting of federal funds high to low as necessary to check the limitless increase in federal spending on Medicaid, which they say now amounts to 10 percent of the federal budget compared with 1.4 percent in 1970.
Republican Sen. Pat Toomey and economist Lawrence Lindsey of the conservative American Enterprise Institute, writing in USA Today on Monday, said the GOP Senate bill recognizes boundless growth of Medicaid cannot continue – and the way to preserve the program is to cap growth on each beneficiary, giving the states maximum flexibility on how they make up the difference and administer it.
Under the GOP bill, the federal government for the first time sets a limit on how much it will spend per person. In addition, the growth rate is restrained, reducing the federal outlay for Medicaid by a third in the year 2036, according to the Congressional Budget Office.
Initiated 50 years ago as a federal-state health insurance program for the poor and vulnerable Medicaid now covers 74 million Americans at a cost of half-a-trillion dollars. Toomey and Lindsey estimated at the current rate of growth, it would rise to $5 trillion over the next 10 years.
If the Republican bill becomes law, states will have to cut back on the number of enrollees, including children and individuals relying on the program for drug abuse treatment, unless they make up for the fewer federal dollars.
The shifting of funds, however, partly addresses the concerns of Medicaid states that spend less per capita on recipients. Because future increases are based on what states now spend, they stand to fare better than high spending states when the per capita cap goes into effect in 2020.
For instance, Alabama, which spends about half per disabled person than the average would have been eligible for $11 million to $44 million more in 2014, Families USA estimated.
West Virginia, which spends a third less than the national average per capita on Medicaid, each disabled person also would be eligible for more funding.
Kentucky would be both a winner and a loser, according to Mannatt, as it spends 35 percent more than the national average on non-disabled adults, but 26 percent below the average on disabled recipients.
Even some states that have tightened Medicaid spending would lose in some enrollment categories.
For example, Texas in 2022 would be eligible for less Medicaid funding for non-disabled adults, because it spends 26 percent more per person than the national average in that category.
Contact Washington reporter Kery Murakami at email@example.com.