Medicaid: House Budget Proposal Harms Millions

By Jeanne Lambrew, Karen Davenport | November 29, 2005

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Summary

One of the most disturbing things about the House's effort to cut the Medicaid program is not even the size of the $12 billion spending cut. More problematic is the plain fact that these proposals will cut health care spending for low-income Americans to finance tax cuts for wealthy Americans. The House could have followed the Senate's lead and found significant savings by reducing Medicaid overpayments for prescription drugs and Medicare overpayments for private health plans, thereby avoiding significant harm to people with Medicaid coverage. Instead, the House budget plan derives most of its health care savings - 68 percent - from "taxing" Medicaid enrollees through increased cost sharing, increased premiums, and scaled-back benefits.

The real impact of these cuts is best understood by examining the impact on Medicaid enrollees. For example, as a result of these policies, in 2015:

• 30 million Medicaid enrollees could face higher cost sharing;
• 30 million Medicaid enrollees could face new or higher premiums;
• 2 million Medicaid enrollees could lose coverage because they cannot afford their premium bills;
• 26 million Medicaid enrollees could face reduced benefits;
• A family of three could experience a $1,086 annual increase in cost sharing; and
• People with disabilities could experience a $9,786 per person cut in annual health care spending.

These cost sharing and premium increases, together with benefit reductions, represent a cost-shift from low-income working Americans - who must now bear these costs themselves or go without care - to higher-income Americans who will benefit from the tax cuts these changes will partially finance.

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