Medicaid
February 2005
Medicaid and the State Children’s Health Insurance Program (SCHIP) serve as our nation’s health care safety net, providing health care coverage for over 52 million people, including children and adults in low-income families, the elderly and the disabled – many of the sickest and the poorest in our nation. Without Medicaid and SCHIP, the vast majority of these families and individuals would be uninsured: they cannot afford to buy private insurance; low-income workers usually either are not offered or cannot afford insurance through their employers; and many policies exclude people with disabilities and chronic illnesses. In the absence of these programs, most of those covered by Medicaid and SCHIP would be added to the 45 million Americans who currently have no source of health insurance at all.
In 2003, Medicaid provided coverage to:
- 25 million children
- 14 million adults (mostly low-income working parents)
- 5 million seniors
- 8 million people with disabilities
Many low-income
working families depend on Medicaid. Two-thirds of all people on Medicaid are in low-wage working families – and almost one in four children relies on Medicaid.
While children and their parents make up 75% of Medicaid beneficiaries, their health care represents only 31% of Medicaid spending. The majority of Medicaid spending goes to care for the elderly and people with disabilities, because they need intensive, and costly, acute and long-term care. Two-fifths of Medicaid spending is for “dual eligibles,” low-income Medicare beneficiaries who are also served by Medicaid. In recent years, the annual increase in per capita Medicaid cost has been substantially lower than the increase in private health insurance premiums.
Medicaid financing is shared by the federal and state governments. The federal government matches state spending for services covered by Medicaid. The matching rate varies by state – the federal government pays for a range of 50% to 77% of total benefit costs, depending on the state. Following severe budget shortfalls in the early 2000s, all states have taken steps to cut their state spending on Medicaid, some for five years in a row. Thirty-eight states have reduced eligibility, and 34 states have reduced benefits.
Congress and the Administration will seek to rein in growing budget deficits this year, and cost savings in Medicaid will be part of the plan. Any proposals to change Medicaid’s structure or funding should be considered against the vital role Medicaid plays as the health care safety net for millions of low-income Americans.
The budget – that is, our nation’s priorities for spending federal resources -- will likely be finalized in March or April in the budget resolution passed by both Houses of Congress. In addition to detailing spending and revenue levels, the budget resolution may instruct Congressional committees to make changes in specific
programs that will produce specific amounts of savings. It is up to the committees to decide what policy changes to recommend to produce the required savings. The changes the committees recommend to comply with these “reconciliation instructions” will become pieces of legislation that are likely to be very difficult to amend before they are passed.
The Administration has proposed its budget outline already, calling for specific amounts of budget cuts and suggestions on how to achieve those cuts. The proposal is to reduce federal spending on Medicaid by a total of $60 billion over ten years, which they believe can be achieved by targeting administrative changes intended to address fraud or inefficiency. Of this amount, $15 billion of the savings would be reinvested in the program, mostly for Medicaid and SCHIP enrollment outreach and coverage for the resulting enrollees. The Administration’s budget also proposes, without giving specific details, that states be allowed to come up with ways to cover more people under Medicaid, but only if they can do so without increasing the amount of federal funding they receive – in other words, only if states accept a “cap” on federal funds.
Beginning in early March, the budget committees in the Senate and the House of Representatives will begin to outline their priorities for federal spending, including whether and how much to cut from the Medicaid program, and whether to set a cap on federal Medicaid funding. Congress is not bound by the President’s proposal and may adopt some, all or none of the Administration’s proposals on how to reduce Medicaid funding.
Catholic teaching insists that access to adequate health care is a basic human right, necessary for the development and maintenance of life and for the ability of human beings to realize the fullness of their dignity. The USCCB has consistently worked for access to affordable health care for all, in a way that reflects a priority concern for the poor. (See USCCB statements Health and Health Care and A Framework for Comprehensive Health Care Reform). Our nation has long been committed to meeting the basic health care and long-term service needs of low-income Americans through Medicaid, a system of shared federal and state responsibility. We believe this shared responsibility should continue.
If there are concerns about fraud or inefficiency in Medicaid, Congress and the Administration should carefully review the program to identify where improvements can be made, independent of the budget process. Policy makers should be very careful not to simply shift costs to the states through budget cuts, caps or other mechanisms.
Urge your Senators and Representatives to:
- Oppose cuts in Medicaid funding in the budget resolution, which could have a negative impact on the poor and vulnerable
- Maintain the fundamental nature of Medicaid as a guarantee to health care for the most vulnerable among us, including low income families and children, the elderly, and people with disabilities
- Reinvest in Medicaid and SCHIP any savings that result from changes to those programs in the budget process
USCCB: Kathy Curran, 202-541-3188, kcurran@usccb.org; www.usccb.org
CCUSA: Sharon Daly, 703-549-1390, sdaly@catholiccharitiesusa.org; www.catholiccharitiesusa.org
CHA: Pam Smith, 202-296-3993, psmith@chausa.org; www.chausa.org