A conservative think tank is floating Medicaid financing reforms that would phase out the higher federal match for the expansion population and reduce the floor for all payments in order to end what the group views view as more favorable treatment of able-bodied adults over traditional beneficiaries and of wealthier states over those with lower income residents, while saving the federal government billions.
Paragon has presented the proposals on Capitol Hill, and is receiving a good amount of interest, according to Paragon Founder and President Brian Blase.
But, Democratic stakeholders say attacks on the expansion population are misguided and the cuts proposed by Paragon Health Institute — as well as other GOP proposals, like work requirements and block grants — would be harmful to all enrollees and would devastate state budgets.
With the Republican Study Committee already recommending Medicaid transition to block grants, and the Heritage Foundation’s Project 2025 also backing block grants and other limits to care, Paragon’s report is another sign that Medicaid would be a target under a second Trump administration, Joan Alker of Georgetown says in a blog published the day after Paragon’s report. The centrist think tank The Third Way also released a brief stating Medicaid is crucial for working adults and arguing the GOP’s opposition to extending Medicaid to adults, both working and unable to work, is misguided.
In the July 23 paper, Blase and Senior Research Fellow Drew Gonshorowski contend that that no government program has grown as much over the past generation — and with such poor results — as Medicaid, largely due to the program’s open-ended reimbursement for state spending and the 50% minimum federal match for wealthier states.
The ACA’s expansion of Medicaid to adults earning up to 138% of the federal poverty level — which has been taken up by all but 10 states — worsened the program’s structural problems, the authors say, by diverting resources away from the traditional Medicaid enrollees including low-income children and people with disabilities — which reduces their access and has resulted in a near quadrupling of Medicaid improper payments as of 2021, a spending surge that has contributed to debt.
Paragon proposes two policy solutions that it says would redirect funding to traditional enrollees and lower income states while saving federal dollars.
First, starting in 2026, the 90% federal match for the expansion population would be phased down until it is level with each state’s traditional enrollees in 2034. States would still be able to maintain the expansion population, but with a new cutoff of 100% poverty — while those earning more would be eligible for ACA plans.
“This policy would better protect services for traditional enrollees, better align state incentives to get value from expenditures and eliminate their incentive to enroll as many people under the expansion as possible, and significantly increase enrollment in the exchanges relative to Medicaid,” Blase and Gonshorowski argue.
Under the second proposal, the minimum amount of spending covered by federal dollars would be reduced from 50% to 40%, also starting in 2026 and ending as of 2034. According to Paragon, the District of Columbia, which has the highest per-capita income, would be the most affected by the policy as its federal match would drop to 40%. Other wealthier states, like New York, California and Massachusetts, would have matches rates between 45% and 50%.
Paragon estimates the first policy would cost states about $110 billion from 2026 through 2024, and the second would increase states’ costs to $171.5 billion. Federal savings would be about $251 billion from the first proposal, according to Paragon’s estimate, yet that would climb to $314.2 billion should Congress also lower the minimum floor, per the second proposal.
Both of Paragon’s estimates presume no states would drop the expansion and that all people eligible for ACA plans would enroll.
The savings increase significantly once Paragon accounts for the behavioral changes that the Congressional Budget Office would assume under the policies, which include about one-quarter of the states dropping their expansion population and about a fifth of the consumers eligible to enroll in an Affordable Care Act plan failing to do so.
Paragon thus expects CBO would score the first proposal as saving $529 billion over the eight-year period, which would increase to $592 billion over the same period should the second proposal be implemented.
The report mentions a proposal that would allocate federal Medicaid dollars based on the number of residents living in poverty, and it also discuss transitioning Medicaid into a block grant or per-capita caps, a longstanding GOP idea that the Republican Study Committee has also endorsed. Neither of those policies is fully analyzed in the paper. However, Paragon notes that the allocation of federal funds across states is one of three key areas that policymakers must consider when developing a block grant proposal. Paragon plans to address the other two elements, including what requirements should be placed on states to receive the federal dollars and how to grow the funding over time, in future papers and growth models.
Alker of Georgetown says Paragon’s major proposals are similar to past calls by conservatives for “sharply shifting costs to states to roll back the Medicaid expansion with additional cuts to higher income states which would overwhelmingly affect blue states.”
“We are not surprised by this — after all Medicaid has long been a target for Republicans,” she writes. “And while it is doubtful that former President Trump will hold to statements that he will not cut Medicare and Social Security, as Project 2025 includes radical cuts to both, Medicaid is the obvious remaining target for massive spending cuts.”
She further argues that despite what she views as the author’s “preposterous” claim that the proposals would protect children, pregnant women and people with disabilities, nothing could be further from the truth as the proposal explicitly lowers federal spending in 11 states that have the 50% match rate, and states that want to maintain the Medicaid expansion would have to cut other parts of their program that those populations rely on.
“Or states would have to cut other parts of their budget, and the largest general fund spending item is K-12 education,” she adds.
Third Way’s report is focused on “setting the record straight” about working age adults enrolled in Medicaid.
“The far right sees Medicaid as a welfare program, and they continue to push for penalties against Medicaid enrollees without a job. The problem is that the view of Medicaid as welfare is divorced from reality,” Third Way’s David Kendall writes in the short brief, What the Far Right Gets Wrong on Medicaid. “Adults with Medicaid need coverage as much if not more than others due to challenging health issues,” he adds.
The brief uses data from the Behavioral Risk Factor Surveillance System to show that Medicaid is often adults’ only source of affordable coverage because many employers do not provide health insurance. Those who are out of work often have health-related obstacles, and those who cannot work need Medicaid because they do not have any other source of coverage, the brief finds.
“That’s why far-right proposals for Medicaid make no sense,” Third Way says. “Threatening adults with the loss of health care coverage is not going to make them more likely to work. Instead, it will reduce the access to care they need to work. Ending Medicaid’s guarantee of coverage through a block grant proposal threatens everyone with Medicaid coverage, regardless of employment status,” the paper concludes.
GOP Think Tank Proposal Would Phase Out Higher Fed Match For Medicaid Expansion
bgov.com
August 1, 2024 4:02 pm
A conservative think tank is floating Medicaid financing reforms that would phase out the higher federal match for the expansion population and reduce the floor for all payments in order to end what the group views view as more favorable treatment of able-bodied adults over traditional beneficiaries and of wealthier states over those with lower income residents, while saving the federal government billions.
Paragon has presented the proposals on Capitol Hill, and is receiving a good amount of interest, according to Paragon Founder and President Brian Blase.
But, Democratic stakeholders say attacks on the expansion population are misguided and the cuts proposed by Paragon Health Institute — as well as other GOP proposals, like work requirements and block grants — would be harmful to all enrollees and would devastate state budgets.
With the Republican Study Committee already recommending Medicaid transition to block grants, and the Heritage Foundation’s Project 2025 also backing block grants and other limits to care, Paragon’s report is another sign that Medicaid would be a target under a second Trump administration, Joan Alker of Georgetown says in a blog published the day after Paragon’s report. The centrist think tank The Third Way also released a brief stating Medicaid is crucial for working adults and arguing the GOP’s opposition to extending Medicaid to adults, both working and unable to work, is misguided.
In the July 23 paper, Blase and Senior Research Fellow Drew Gonshorowski contend that that no government program has grown as much over the past generation — and with such poor results — as Medicaid, largely due to the program’s open-ended reimbursement for state spending and the 50% minimum federal match for wealthier states.
The ACA’s expansion of Medicaid to adults earning up to 138% of the federal poverty level — which has been taken up by all but 10 states — worsened the program’s structural problems, the authors say, by diverting resources away from the traditional Medicaid enrollees including low-income children and people with disabilities — which reduces their access and has resulted in a near quadrupling of Medicaid improper payments as of 2021, a spending surge that has contributed to debt.
Paragon proposes two policy solutions that it says would redirect funding to traditional enrollees and lower income states while saving federal dollars.
First, starting in 2026, the 90% federal match for the expansion population would be phased down until it is level with each state’s traditional enrollees in 2034. States would still be able to maintain the expansion population, but with a new cutoff of 100% poverty — while those earning more would be eligible for ACA plans.
“This policy would better protect services for traditional enrollees, better align state incentives to get value from expenditures and eliminate their incentive to enroll as many people under the expansion as possible, and significantly increase enrollment in the exchanges relative to Medicaid,” Blase and Gonshorowski argue.
Under the second proposal, the minimum amount of spending covered by federal dollars would be reduced from 50% to 40%, also starting in 2026 and ending as of 2034. According to Paragon, the District of Columbia, which has the highest per-capita income, would be the most affected by the policy as its federal match would drop to 40%. Other wealthier states, like New York, California and Massachusetts, would have matches rates between 45% and 50%.
Paragon estimates the first policy would cost states about $110 billion from 2026 through 2024, and the second would increase states’ costs to $171.5 billion. Federal savings would be about $251 billion from the first proposal, according to Paragon’s estimate, yet that would climb to $314.2 billion should Congress also lower the minimum floor, per the second proposal.
Both of Paragon’s estimates presume no states would drop the expansion and that all people eligible for ACA plans would enroll.
The savings increase significantly once Paragon accounts for the behavioral changes that the Congressional Budget Office would assume under the policies, which include about one-quarter of the states dropping their expansion population and about a fifth of the consumers eligible to enroll in an Affordable Care Act plan failing to do so.
Paragon thus expects CBO would score the first proposal as saving $529 billion over the eight-year period, which would increase to $592 billion over the same period should the second proposal be implemented.
The report mentions a proposal that would allocate federal Medicaid dollars based on the number of residents living in poverty, and it also discuss transitioning Medicaid into a block grant or per-capita caps, a longstanding GOP idea that the Republican Study Committee has also endorsed. Neither of those policies is fully analyzed in the paper. However, Paragon notes that the allocation of federal funds across states is one of three key areas that policymakers must consider when developing a block grant proposal. Paragon plans to address the other two elements, including what requirements should be placed on states to receive the federal dollars and how to grow the funding over time, in future papers and growth models.
Alker of Georgetown says Paragon’s major proposals are similar to past calls by conservatives for “sharply shifting costs to states to roll back the Medicaid expansion with additional cuts to higher income states which would overwhelmingly affect blue states.”
“We are not surprised by this — after all Medicaid has long been a target for Republicans,” she writes. “And while it is doubtful that former President Trump will hold to statements that he will not cut Medicare and Social Security, as Project 2025 includes radical cuts to both, Medicaid is the obvious remaining target for massive spending cuts.”
She further argues that despite what she views as the author’s “preposterous” claim that the proposals would protect children, pregnant women and people with disabilities, nothing could be further from the truth as the proposal explicitly lowers federal spending in 11 states that have the 50% match rate, and states that want to maintain the Medicaid expansion would have to cut other parts of their program that those populations rely on.
“Or states would have to cut other parts of their budget, and the largest general fund spending item is K-12 education,” she adds.
Third Way’s report is focused on “setting the record straight” about working age adults enrolled in Medicaid.
“The far right sees Medicaid as a welfare program, and they continue to push for penalties against Medicaid enrollees without a job. The problem is that the view of Medicaid as welfare is divorced from reality,” Third Way’s David Kendall writes in the short brief, What the Far Right Gets Wrong on Medicaid. “Adults with Medicaid need coverage as much if not more than others due to challenging health issues,” he adds.
The brief uses data from the Behavioral Risk Factor Surveillance System to show that Medicaid is often adults’ only source of affordable coverage because many employers do not provide health insurance. Those who are out of work often have health-related obstacles, and those who cannot work need Medicaid because they do not have any other source of coverage, the brief finds.
“That’s why far-right proposals for Medicaid make no sense,” Third Way says. “Threatening adults with the loss of health care coverage is not going to make them more likely to work. Instead, it will reduce the access to care they need to work. Ending Medicaid’s guarantee of coverage through a block grant proposal threatens everyone with Medicaid coverage, regardless of employment status,” the paper concludes.