The House and Senate Republican approaches to revamping the US
healthcare system take somewhat diverging strategies, but they do
have one major thing in common: massive proposed cuts to
The nonpartisan Congressional Budget Office last week released
its analysis for the Senate bill, the Better Care
Reconciliation Act, and estimated that provisions in it would
result in $772 billion in cuts to Medicaid spending by 2026.
The CBO previously estimated that the House bill, the American
Health Care Act, would result in
roughly $880 billion in cuts over the same period.
But what is Medicaid, how does it work, and why are Republicans
so intent on changing the program?
What is Medicaid?
Medicaid is the government-run health program that provides
insurance primarily to
pregnant women, single parents, people with disabilities, and
seniors with low incomes. The goal of the program is to provide
medical coverage to people with insufficient income to purchase
commercial health insurance.
The program was established in 1965 during the presidency of
Lyndon B. Johnson with the Social Security Amendments Act, which
also established Medicare, the government-run healthcare program
for the elderly.
Medicaid is a joint program between states and the federal
government. States manage their own program and set eligibility
requirements and benefits for its recipients, as long as it meets
certain quality, funding, and eligibility standards set by the
federal government and the Centers for Medicare and Medicaid
Services. The federal government, through CMS, sets the rate of
payment for services that Medicaid covers and monitors state
programs to make sure they adhere to the federal government’s
The program is considered an open-ended entitlement program,
meaning anyone who meets the eligibility requirements has a right
to enroll. And if costs go up because of new, expensive
treatments or increasing healthcare needs, states receive more
While states fund a big portion of their individual Medicaid
programs, the federal government matches up to a certain
percentage, with bigger matches for poorer states.
Andy Kiersz/Business Insider
Who is on Medicaid?
All Medicaid recipients must be US citizens or legal permanent
residents. Nearly 74 million Americans, or about 20% of the
population, is currently on Medicaid.
All state programs are required to cover pregnant women,
children, elderly, and disabled people who make under a certain
amount annually. Some states choose to cover those groups at
higher household incomes than is federally required.
Diana Yukari/Business Insider
How did Obamacare affect Medicaid?
The Affordable Care Act, the law better known as Obamacare,
provided states with the option to expand their Medicaid programs
to new groups.
New federal requirements established that any adult living under
138% of the federal poverty level — an income of $27,821
for a family of three in 2016 — was eligible. Before the
expansion, eligibility was usually set at 100% of the federal
poverty level, or about $20,420 for a family of three.
States that expanded Medicaid under the new ACA requirements
received federal funds to do so. Thirty-two states and the
District of Columbia have
Andy Kiersz/Business Insider
The expansion has led
more than 11 million new people to join the program, a number
that continues to grow.
Because the Medicaid expansion opened care to any adult living
under 138% of the poverty line, it has
become a major tool in providing drug treatment and continuing
care for those suffering from the opioid crisis.
Overall, 1.29 million people
are receiving treatment for substance-use disorders or mental
illnesses thanks to the Medicaid expansion, according to research
conducted by Harvard Medical School Health Economics professor
Richard Frank and New York University dean Sherry Glied. About
220,000 of those people are receiving treatment for opioid abuse.
How would Republican plans in the Senate and the House affect
In essence, both the House GOP’s American Health Care Act and the
Senate GOP’s Better Care Reconciliation Act would overhaul the
Medicaid program, cut future spending growth, and shift the
burden of care onto the state governments.
Both bills would slice billions of dollars in federal funding
from Medicaid over the next 10 years and kick millions off the
rolls, according to the analysis by the nonpartisan Congressional
There are two ways the bill would do this: by undoing the
Medicaid expansion and by changing the formula for how the
federal government determines how much funding it will give
The first part is straightforward — both bills would eventually
end federal funding for the ACA expansion. The House bill would
end all funding in 2020, while the Senate bill would slowly phase
out the funding from 2020 to 2023.
Either way, many people would be left without insurance, the CBO
said, as costs for coverage in the individual market — where
former expansion enrollees would be forced to get coverage —
would most likely be too high for many people.
The second part of the GOP’s funding overhaul is a bit more
Right now, the federal government simply matches a percentage of
states’ Medicaid spending. The federal funding for poorer states
with more enrollees and higher healthcare costs is greater than
its funding for richer states.
Under the two Republican plans, Medicaid funding would be set on
a per capita basis — meaning the federal government would send
states a fixed amount of money per Medicaid enrollee in the
state, regardless of whether that would cover needs or care.
In addition, the per capita system would divide Medicaid
into different categories, such as elderly people or people
with disabilities, to determine the size of payments. Some
categories, like disabled people, would generate a larger payment
Experts say the per capita system would lead to less funding for
states’ Medicaid programs than the current system and place
strain on already stretched state budgets to try to cover the
a study from The Brookings Institution found that if the
Senate’s per capita limits were in place in 2011, there would
have been a huge burden shifted to the states.
“The Senate’s proposed per-capita cap would have reduced federal
funding to state Medicaid programs by $27 billion in 2011,
requiring states to increase their spending by an average of 17
percent to maintain their programs in their then-current form,”
the study found.
Another difference in the Senate bill is how quickly the caps for
funding would grow. Under the House bill, the per capita amount
would increase at the pace of the consumer price index for
medical care — plus another percentage point. The Senate bill
would use that formula until 2025, when it would shift to the CPI
for all goods, a formula that would leave the amount much lower
than the CPI just for medical care.
Cuts under the House bill would be harsher up front, but the
Senate’s bill has a greater potential long-term effect. Either
way, the GOP plan “fundamentally changes the kind of contract
that exists between the states and the federal government,”
Richard Frank, a Harvard Medical School professor, told Business
Insider in May.
“It’s no longer an open-ended matching program,” Frank said.
The AHCA would slice $834 billion from funding and lead to 14
million fewer Americans on the rolls over the next decade, the
CBO projected. The BCRA would slice $772 billion in funding with
15 million fewer enrollments during the same time frame, the CBO
President Donald Trump and his surrogates have suggested that the
bills do not in fact represent a cut to Medicaid, arguing that
the number of dollars going into the program from the federal
government would still increase over time.
Kiersz/Business Insider, Congressional Budget
What do Americans think of the GOP’s plan to change Medicaid?
A tracking poll
released in February from the Kaiser Family Foundation, a
nonpartisan health-policy organization, found that a significant
majority of Americans supported the new Medicaid program expanded
by the ACA.
According to the poll, 65% of Americans said Medicaid should
continue largely in its existing form.
Even more Americans support the use of federal funds for the
According to the survey, 87% of Americans living in a Medicaid
expansion state run by a Republican governor support continued
federal funding for the Medicaid expansion; 85% of Americans with
a Democratic or independent governor are in support. And 80% of
Americans in states without the expansion — 19 in total — support
keeping the expansion.
A Public Opinion Strategies poll
released last week found widespread support for maintaining
or increasing funding to Medicaid in Alaska, Arkansas, Tennessee,
Colorado, Nevada, and Ohio — predominantly states with Republican
senators needed to pass the bill.