Medicaid

Medicaid is the largest health insurance program in the U.S. Medicaid provides health insurance coverage to over 60 million people -- roughly one in every five Americans. Without Medicaid, most of the beneficiaries would be uninsured or lack coverage for the care that they need.

Cutting Medicaid is one of the priorities for the Campaign to "Fix the Debt." The Campaign to Fix the Debt is the latest incarnation of a decades-long effort by former Nixon man turned Wall Street billionaire Pete Peterson to slash earned benefit programs such as Social Security, Medicare, and Medicaid under the guise of fixing the nation's "debt problem."

Fix the Debt does not articulate how exactly it would "reform Medicaid" and "limit future cost growth." The budget plan adopted by the House of Representatives in 2011 and 2012 would have slashed federal spending on Medicaid by 38 percent within ten years. The Congressional Budget Office found that the House Republican plan would have cut health care spending for lower-income and vulnerable Americans -- through Medicaid, the Children's Health Insurance Program (CHIP), and the Affordable Care Act -- by more than 75 percent by 2050. States would have no choice but to severely limit eligibility and access to health services.

This article is part of the Center for Media and Democracy's investigation of Pete Peterson's Campaign to "Fix the Debt." Please visit our main SourceWatch page on Fix the Debt.

Key Facts about Medicaid
Medicaid is the primary source of health insurance for low-income Americans and people with high health care costs. Key coverage populations under Medicaid include low-income families, individuals with disabilities, and low-income elderly. In 2009, Medicaid covered 31 million children; 16 million non-elderly adults; six million seniors; and 9.3 million people with disabilities.

Medicaid is not available to all low-income people. Notably, low-income adults without dependent children are not eligible for Medicaid. These individuals will gain access beginning in 2014 under expansions in coverage from the Affordable Care Act.

Together, Medicaid and the State Children's Health Insurance Program (SCHIP) provide healthcare to millions of Americans who have lost their jobs during the recession and slow economic recovery. Estimates show that one million more Americans rely on Medicaid for their healthcare coverage for each one percentage point increase in the unemployment rate.

Increased enrollment is the primary contributor to growth in Medicaid spending. From 2007 to 2010, total Medicaid spending grew by 24 percent. Enrollment grew by 19 percent, and spending per enrollee grew by only 4 percent.

While children and parents make up the vast majority (75 percent) of Medicaid enrollees, they account for about a third of spending. In contrast, the elderly and people with disabilities make up about 25 percent of enrollees but account for nearly two-thirds of spending. The elderly and people with disabilities use more acute care services and are more likely to use long-term care services.

Although Medicaid is publicly financed, the program purchases health services primarily in the private sector. Medicaid is not a government-operated health system. Most Medicaid services are purchased from private providers in the marketplace on a fee-for-service basis, or by paying premiums to managed care plans under contracts. Because Medicaid services are purchased in the private marketplace, it can be difficult to control health care costs.

Republican Efforts to Slash Medicaid Spending and Services
Medicaid is jointly funded by states and the federal government. The federal government share is determined by a formula based on a state’s average personal income. The federal government pays at least of half of Medicaid costs in a state.

Republicans have been trying to slash federal Medicaid spending since regaining control of the House of Representatives in 2011. In both 2011 and 2012, House Republicans have attempted to enact deep cuts in Medicaid.

Instead of paying a share of overall Medicaid costs, Republicans proposed to give states a fixed amount of money from which they could pay for the health costs of low-income, elderly, and disabled residents. The fixed funding level would be substantially less than what states would need to meet health needs. And the federal share of health care costs would go down every year.

According to the Congressional Budget Office, unless states substantially increased their own health care spending to make up for the deep federal cuts, they would have to cut eligibility (leading to more uninsured people), cut covered health services (leading to more people without needed health care), and cut payments to providers, likely inducing more doctors, hospitals, and nursing homes to withdraw from Medicaid (thus reducing access to health care providers).

The Urban Institute estimated that, if the House Republican Medicaid proposal was enacted, states would drop between 14 million and 20 million people from Medicaid by 2021. An addition 17 million people would lose Medicaid coverage under the proposed repeal of the Medicaid expansions in the Affordable Care Act.

The Medicaid cuts would also have a devastating impact on jobs and the economy. The Economic Policy Institute estimated that the Medicaid cuts in the House Republican budget would have resulted in a loss of five million jobs in the first five years. Almost all of those job losses (4.8 million) would have occurred in the private sector.

Featured SourceWatch Articles on Fix the Debt

 * Fix the Debt Portal Page
 * Fix the Debt's Leadership
 * Fix the Debt's Partner Groups
 * Fix the Debt's State Chapters
 * Fix the Debt's Lobbyists
 * Fix the Debt's Parent Group
 * Fix the Debt's Corporations
 * Pete Peterson
 * Peter G. Peterson Foundation
 * America Speaks
 * Simpson-Bowles Commission
 * Erskine Bowles
 * Alan Simpson
 * Social Security
 * Medicare