National Association of Counties
Washington, D.C.

 Administration, Senate GOP put down markers on Medicaid cuts

By Paul Beddoe

As congressional Republicans recalibrate their strategy for achieving significant federal spending cuts, they continue to look to the large health care entitlement programs — Medicare and Medicaid — for major savings.

Meanwhile, senior White House advisor Gene Sperling made news Jan. 31, telling the health care advocacy group Families USA meeting in Washington, D.C. that big Medicaid cuts are off the table.

According to reports, Sperling, director of the National Economic Council, said even cuts to Medicaid that the Administration had previously proposed would not be supported going forward. He directly attributed the change to the desire to convince states debating whether to implement the Affordable Care Act (ACA) Medicaid expansion that Washington would not “pull the rug out from under them” by changing the rules, sticking them with increased costs.

The 2012 U.S. Supreme Court ruling on the ACA essentially made the expansion of Medicaid to all non-elderly adults below 133 percent of the federal poverty level a state option. Sperling did leave the door open to making “smart, efficiency type” changes to Medicaid.

“As always, the devil is in the details,” said Randy Johnson, commissioner, Hennepin County, Minn. Johnson, who chairs NACo’s Medicaid and Indigent Care Subcommittee, noted that NACo will monitor proposals to change Medicaid’s financing structure since many counties use local funds to draw down federal dollars to sustain their county health care safety net systems.

Sen. Orrin Hatch (R-Utah), the top Republican on the Senate Finance Committee, which has jurisdiction over both programs, laid out five specific proposals to rein in federal Medicare and Medicaid spending in a floor speech on Jan. 24. Among Hatch’s five proposals, four seek savings in the Medicare program, and one imposes a per capita cap on federal Medicaid spending.

According to a statement issued by Hatch’s office, spending limits would be set by beneficiary eligibility categories and adjusted for patient health condition, and would be combined with new tools for states to implement patient-centered reforms. He also proposes that the federal government work with the states to set clear goals and monitor quality, access and coverage metrics.

By putting a hard cap on the federal side of the ledger, the proposal would change the basic structure of Medicaid from an open-ended entitlement, increasing financial risk to states and counties. The Committee for a Responsible Federal Budget characterizes the potential savings from a per capita cap as “dialable” because the cap can be set at any level up or down to hit a desired level of savings.

“Counties are very wary of any plan to impose caps on the federal share of Medicaid or to put new limits on our ability to raise the non-federal match,” said Larry Johnson, commissioner, DeKalb County, Ga. “The problem is the high cost of health care and that won’t be fixed by arbitrary caps or cuts.” Johnson, NACo’s Health Steering Committee chair explained that the risk of shifting costs to county safety net systems prompted NACo’s long-standing opposition to block grants, caps and other cuts to Medicaid.

In the last Congress, Rep. Bill Cassidy (R-La.) introduced a per capita cap bill, the Medicaid Accountability and Care Act (H.R. 5979). It has not been reintroduced in the 113th Congress.

Hatch’s Medicare proposals include raising the eligibility age from 65 to 67, limiting first-dollar coverage in supplemental Medicare plans, streamlining beneficiary cost sharing, and moving Medicare to a competitive bidding or defined premium support model. Raising the Medicare age may encourage county employees to postpone retirement, keeping them on county health plans longer and increasing the health insurance costs.

Meanwhile on Feb. 1, Hatch joined Finance Committee Chairman Max Baucus (D-Mont.) and Sens. Ron Wyden (D-Ore.), Tom Coburn (R-Okla.), Tom Carper (D-Del.) and Chuck Grassley (R-Iowa) in releasing a report outlining opportunities to reduce waste, fraud and abuse in Medicare and Medicaid.

Some of the ideas that the report highlights include requiring the Center for Medicare and Medicaid Services to use existing authorities, such as issuing moratoria, that the agency does not currently use; clarifying when to use inpatient and outpatient treatment; increasing federal funding to help states crack down on Medicaid fraud; eliminating overlapping federal and state anti-fraud programs; and creating a clinical advisory panel to help supervise contractors.

The senators intend to refine the list of possible legislative and administrative actions with the committees of jurisdiction, the Government Accountability Office, the U.S. Department of Health and Human Services’ Office of the Inspector General and stakeholders.