President’s Medicaid Proposal Could Hurt Kids

As the debt crisis and budget talks continue to make news, yet another proposal threatening Medicaid is on the table.

This one is notable for its proponent, President Barack Obama.

Obama’s health care plan relies heavily on the expansion of Medicaid. So, the latest development, a proposed “Medicaid blended rate,” has experts wondering how these cuts would change the prognosis for Obama’s health care reform. Experts also question how the many children and disadvantaged Americans who would benefit from Obama's health care reform would be affected.

The president’s April budget blueprint referred to a blended rate, but it didn’t raise much concern until it was reported that the administration was considering using it as a bargaining chip in budget negotiations.

Under a blended rate, the federal government would create a standard federal matching rate for various populations. Currently for the Children's Health Insurance Program (CHIP), the federal matching rate varies, from about 57 percent to about 70 percent.

In 2014, when the Patient Protection and Affordable Care Act becomes effective, the federal government will pick up 100 percent of the cost of new enrollees, eventually decreasing to 90 percent.

Because of the need to rely on numerous assumptions, experts say it would be nearly impossible to accurately calculate a matching rate that would keep the promises of the Affordable Care Act.

The administration has said that the proposal would result in a federal savings of $100 billion due to the greater efficiency of using a single rate. The Center on Budget and Policy Priorities issued a report saying administrative savings would be “slight.”

Experts say with the lower federal match created by a blended rate, states would be forced to cut costs, most likely by increasing eligibility standards and lowering provider reimbursement. Providers of services to children and families could be forced to reduce services. And, critical access to medical care and mental health services, already strained, could become even more difficult for children in out-of-home care, as well as for youth aging out of the system. 

Jocelyn Guyer of the Georgetown University Center for Children and Families says that CHIP faces serious erosion. According to Guyer, the relatively high federal match rate has encouraged all states to participate, with half the states covering children at 250 percent of the federal poverty level or above.

With a diluted federal match rate, she concludes that states, already under economic pressure, would find it difficult to maintain current levels of coverage.

At a health care forum last month, Genevieve Kelly, a senior fellow at the Urban Institute, said the rate of uninsured children is currently the lowest it has ever been, though 4.5 million children are eligible but still not enrolled in Medicaid or CHIP.

She said the rate of uninsured adults continues to rise, and currently 43 percent of uninsured parents have no health insurance, which places a strain on struggling families.

According to a June 2011 report from First Focus, Medicaid has been effective at protecting the health of both children and adults.