NC Budget and Tax Center, Trump Administration

Would the U.S. Senate healthcare bill affect NC’s budget in a negative way? Definitely, here’s why…

The Senate GOP has released its proposed healthcare bill, and analysis shows that it would cut federal Medicaid spending even more over the next ten years than the House passed health plan. How much more? $467.4 billion. This cost shift to the states would cause greater state budget shortfalls: Instead of North Carolina losing at least $6 billion over the next 10 years in federal funding for Medicaid, it is estimated that the state would now lose and have to make up at least twice as much ($13 billion) over the same period for Medicaid.

To put that in perspective, North Carolina has only had to contribute $3.1 billion a year for Medicaid in state appropriations, on average, each of the past seven years.

How does this happen? Through a framework proposed by the GOP in Congress called Medicaid Per-Capita Caps. The Urban Institute explains that the American Health Care Act (AHCA) changes the way Medicaid is funded by capping federal Medicaid payments per enrollee, beginning in 2020. Under the House version of the AHCA, these caps would grow at the rate of the medical Consumer Price Index (m-CPI) for most Medicaid enrollees, adding 1 percent to the rate for the elderly and disabled.

The Senate bill, however, lowers the growth rate to the Consumer Price Index for All Urban Consumers (CPI-U) beginning in 2025. Over the next decade, it’s projected to grow at 2.4 percent, compared to the m-CPI rate of 3.7 percent used in the House version. This means a shortfall between federal Medicaid payments and projected costs that will grow over time, and states will have to make the difference up by raising taxes, cutting enrollment, reducing benefits, or reducing provider reimbursement.

President Trump has admitted that he used the word “mean” to describe the House GOP’s health plan. Given the fact that the Congressional Budget Office (CBO) is set to release its estimate for the Senate GOP health care plan very soon, and that it will show that millions of Americans will lose health coverage and billions in Medicaid costs will be shifted to the states, there is one question left to be answered:

Will North Carolina’s own U.S. senators, Richard Burr and Thom Tillis, do the right thing and reject the current proposal that would cut health coverage for millions of vulnerable Americans and shift billions in costs to North Carolina?

In Case You Missed It

Most of the debate regarding North Carolina’s state budget took place last week. And interestingly enough there was one topic that legislators did not address: the federal funding cuts that loom overhead. This is concerning given the massive cuts to federal funding proposed by the President and GOP in Congress. Based on those federal cuts, we know that North Carolina would have to come up with at least $13 billion in additional revenue over the next 10 years to maintain existing vital programs – one of those being Medicaid.

Before the Senate released its proposed health care bill last week we reported that the GOP’s health plan secrecy and Medicaid per-capita caps should raise alarms in NC. We stated If the Senate produces a new health plan bill and keeps Medicaid per-capita caps in its framework, North Carolina’s state budget and its people will suffer in the long-term.”

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

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