Medicaid provides health coverage to low-income adults, children, pregnant women, elderly adults and people with disabilities. The program is administered by the states and funded jointly by the states and the federal government.
Expanded Medicaid coverage represents a boon for children. That’s because Medicaid provides health coverage for 50.7 percent of all kids in the country, and half of all enrollees in Medicaid and the Children’s Health Insurance Program are under the age of 18, according to the most recent federal data.
The Affordable Care Act (ACA) allows states to expand Medicaid eligibility to individuals under age 65 in families with incomes up to 133 percent of the federal poverty level. For example, in Virginia, single adults earning up to $16,754 will now qualify for Medicaid health coverage, as will a family of three earning up to $28,677. In total, 400,000 Virginia residents are expected to gain health coverage under its Medicaid expansion.
While more states are extending health coverage to more Americans – targeting those who earn too much to qualify for Medicaid but whose jobs don’t include health insurance – that coverage is costly. Federal Medicaid spending is projected to rise from $383 billion today to $655 billion in 2028. Under the ACA, Washington picks up 90 percent of the cost for states that expand their Medicaid programs. Counting state spending, total Medicaid spending is projected to top $1 trillion in 10 years.
Those expenditures – the overwhelming majority of which are federal dollars – could trigger a fiscal and political backlash on Capitol Hill.
Congressional Republicans say Medicaid is becoming increasingly unaffordable for states, potentially forcing states to consider limiting beneficiary access or cutting covered services. And if Washington stopped subsidizing expanded Medicaid populations – as lawmakers on Capitol Hill warn is inevitable – states would be unlikely to make up the difference. That would force governors to roll back Medicaid coverage of the expanded populations.
The GOP-controlled Congress spent much of 2017 trying to repeal the ACA and transform Medicaid into a block-grant program with fewer federal dollars available but with more latitude for governors to design state-specific programs. If Republicans maintain their congressional majorities after the November midterm elections, conservative lawmakers want to renew efforts to reform Medicaid next year.
In fact, the House Budget Committee last week approved a fiscal 2019 budget resolution that calls for replacing Medicaid’s automatic spending with a per-capita cap. House Republicans say this would put Medicaid on a budget for the first time since its enactment in 1965. Critics warn low-income Americans – and particularly children – could be harmed.
Because of the growing fiscal challenges faced by both Washington and state governments, changes in how Medicaid is administered and funded are likely to remain policy flashpoints on Capitol Hill and in state capitals nationwide. Paradoxically, the drive toward more states expanding their Medicaid programs could hasten that fiscal debate over how – or whether – to continue to pay for it.