The Senate’s new, draconian plan to cut Medicaid.

The Senate Has a New Idea to Cut Medicaid That’s Even Crueler Than the House Plan

The Senate Has a New Idea to Cut Medicaid That’s Even Crueler Than the House Plan

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A blog about business and economics.
June 19 2017 12:18 PM

The Senate Has a New Idea to Cut Medicaid That’s Even Crueler Than the House Plan

USA-CONGRESS/MCCONNELL
Senate Majority Leader Mitch McConnell (R-KY) speaks to Reuters during an interview in Washington, U.S., May 24, 2017.

Joshua Roberts/Reuters

Darth Sidious
Senate Majority Leader Darth McConnell.

Mark Wilson/Getty Images

With health care negotiations hitting a critical stretch this week, Senate Republicans are reportedly considering a new plan that would cut per-patient Medicaid spending even deeper than the bill passed last month by the House.

According to the Hill, lawmakers are considering a tweak to the program's funding formula that would, for all intents and purposes, put its budget in a vise. The House legislation, you may recall, caps Medicaid's per-patient spending for the first time ever and adjusts it upward each year based on the consumer price index for medical care, with an extra percentage point tacked on each year for the elderly and disabled. This would likely curtail Medicaid's spending growth over time, since the CPI-M—which only actually measures the cost of out-of-pocket medical purchases—is expected to grow more slowly than the program's expenses otherwise would. The Office of the Chief Actuary at the Centers for Medicare and Medicaid Services recently estimated that the change would shave $64 billion from its funding over a decade.

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Senate Republicans reportedly want to use the same system—initially. But beginning in 2025, they would start adjusting Medicaid's per-enrollee spending using the plain old consumer price index—or CPI-U, the one that includes stuff like the price of televisions and socks—which would grow even more gradually. To give you a sense of how dramatic a change this is, just look at this chart. Since 2000, the medical cost index has grown by about 41 percentage points more than the CPI-U.

cpi_gap

The Hill reports that the “plan has been described as a ‘consensus option’” and has been sent to the Congressional Budget Office for analysis, though other ideas are still being considered. Presumably, Senate Republicans are thinking about these deeper cuts because they need to offset spending elsewhere in the bill, at least on paper. The fact that the changes aren't set to kick in until 2025 suggests that maybe, just maybe, the thinking is that future Congresses would prevent the change from ever taking effect. But if they failed to do so, the long-term result would be a large blow to Medicaid that could force states to trim the program's coverage dramatically in order to manage costs, making sure that American health insurance for the sick, poor, and disabled would become truly inadequate.

No wonder the Senate leadership doesn't want the public to see what it's working on.

Jordan Weissmann is Slate’s senior business and economics correspondent.