The Congressional Budget Office laid out a stark picture of what would happen over the next decade if the Senate health-care bill were implemented as written: 22 million fewer Americans would have insurance than under current law in 2026, driven largely by cuts to federal spending on Medicaid. But by focusing only on the next decade, the report fails to capture how rapidly Medicaid funding would continue to erode, according to a new analysis by the consulting firm, Avalere Health.
"The CBO score dramatically underestimates the effect that this bill would really have on people," said Caroline Pearson, a senior vice president at Avalere. "It looks better than it is; the bill is worse than people may appreciate."
Pearson modeled the longer-term effect of changes to how the bill changes the way Medicaid is funded. States and the federal government split the bill for Medicaid, and in 2020, the Senate bill would switch the federal portion to a per-person cap. Then, in 2025, that cap would start growing at a slower inflation rate than the rate at which medical costs rise. Those changes would begin to have some short-term effects in the period of time CBO examined, particularly on adults who gained Medicaid through the expansion that was part of the Affordable Care Act. That's because the generous federal match for people covered through the expansion declines steeply as part of the bill. But the deeper cuts for other groups would come in the later years.
At the end of the time period CBO examined, for example, Pearson's analysis found that compared to current law, there would be a 5 percent cut in federal Medicaid spending for disabled people and a 12 percent cut for children; older people, most of whom are eligible for both Medicaid and Medicare, would actually have a 1 percent increase in spending.
Look 10 years further out, however, and the cuts are projected to be far more acute. In 2036, federal Medicaid spending on children would be cut by nearly a third than under current law. Federal Medicaid spending for disabled and elderly people would be cut by a quarter.
Those cuts, she warned, probably understate the impact of the changes to Medicaid, because they do not take into account the actions that states might take as their budgets are crunched, such as cutting enrollment by reducing people's eligibility for the program.
"These are draconian changes — just huge, monumental changes in our safety net, and there's just a cascade of hurt for people," said Katherine Hempstead, a senior adviser at the Robert Wood Johnson Foundation.