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Home | Newsroom | Miscellaneous | On Medicaid Money, GOP Has Win-Or-Lose Proposition For States

On Medicaid Money, GOP Has Win-Or-Lose Proposition For States

States’ policies differ about who or what to cover in Medicaid, and those decisions have led to historical variances in how much federal money they receive. House Republicans’ effort to shrink federal Medicaid spending would lock in the differences in a way that favors those already spending high amounts per enrollee.

California appears ready for battle.

The largely Democratic state depends heavily on the Medicaid program, known here as Medi-Cal, which insures a third of residents and half of children. And it could suffer one of the hardest blows under the proposal, given the state has added 3.5 million people to the rolls who were ineligible before the health law. That’s more than any other state, according to last year’s estimates from the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.)

To cover the new enrollees, California expects to receive more than $19 billion federal dollars this fiscal year, according to the state Department of Finance. Consumer advocacy groups in California say Medi-Cal could lose almost that same amount of money if, as the GOP is proposing, the Medicaid expansion is rolled back and federal funding is limited to fixed amounts per person.

“It’s basically reneging on a promise,” said Linda Nguy, policy advocate for the Western Center on Law & Poverty. Eliminating billions of federal dollars would force state policymakers to make very difficult decisions about how to backfill the loss, she said. They could cut Medi-Cal’s services or enrollment or try to raise revenue.

“It’s not easy to raise taxes,” said Nguy.

Republicans argue that overhauling federal Medicaid spending with caps per person would hold down federal costs while giving states more leeway to run their programs as they see fit. “This incentive would help encourage efficiencies and accountability with taxpayer funds,” said House Speaker Paul Ryan last June in his white paper, “A Better Way.”

But Nguy said the state could face cuts to mental health and substance abuse treatment, as well as occupational therapy, dental care and vision benefits. California recently started providing comprehensive coverage to undocumented children, but that coverage could be reconsidered, too.

“We don’t want to be in that position where we are choosing” which populations will keep benefits or which services will stay or go, she said.

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