This commentary was adapted from episode 161 of the Health & Veritas podcast. The views expressed are the author’s own. Subscribe to Health & Veritas for weekly doses of expert insight on health and the healthcare industry.
Congress is in the midst of considering massive tax and spending changes, and many of these may codify some of the changes recently made by executive order, including those related to USAID, the NIH, and other grant-giving parts of government. I would welcome an honest debate over each of these. I recognize that the politics of this moment are unique and often unsettling, but we should all prefer that the Constitution is followed as opposed to upending the foundation of our republic and putting us purely at the will of the executive.
There are many areas where healthcare may well be affected by federal budgetary decision making. Today I think it is worth reminding everyone of what is at stake for our lowest-income individuals.
Medicaid is an extraordinarily impactful program. If you combine Medicaid with the Children’s Health Insurance Program and the subsidies for the Obamacare exchanges, you are talking about over 100 million individuals and over $1 trillion in annual spending. Federal spending on Medicaid is well above $600 billion per year, which makes it a very large target for budgeteers who have said that they will not touch Social Security or Medicare and can’t touch interest on the debt, which are other very large components of the budget. Defense is the only other large budget item that could remain in play. The administration is seeking to cut complete departments out of future budgets, but these savings will pale in comparison to anything they can do with defense and health programs.
Most attempts at cutting Medicaid in a meaningful way would fall equally or worse on poorer states. States like Kentucky, West Virginia, Kansas, and many others would be hard-hit by Medicaid cuts, no matter how they are structured.
Which is to say this is not a done deal. There are optically appealing maneuvers that Congress can make—work requirements, for example. But these save very little money and come at the great expense of some of the neediest individuals. There are ways to cut funding directly or through new formulas, but then many states will suffer and their representatives do come up for election every two years.
In the coming weeks, we will hear about many efforts to cut Medicaid and/or exchange subsidies. So a brief reminder: Medicaid covers 39% of all children, and 44% of all non-elderly adults with disabilities. It covers 60% of impoverished non-elderly adults. It covers the majority of skilled nursing facility beds and many other institutionalized adults and children. And it is a laboratory for change: 57 Medicaid programs across the country, all constantly seeking to deliver the best care at the lowest cost.
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