Medicaid cuts would hurt Iowa

Reducing federal deficits is a worthy goal, but only as part of a balanced approach and not at the expense of America’s and Iowa’s most vulnerable.

Andrew Cannon photo
Andrew Cannon

The recently passed House budget plan, authored by Representative Paul Ryan, would radically alter Medicaid as we know it. These changes would push hundreds of thousands of Iowans off the Medicaid rolls and into the ranks of the uninsured, and would reduce federal payments to the state by billions.

Under the proposal, states would receive a set amount of federal money, known as a block grant, for Medicaid, rather than the matched federal funding in the present form of Medicaid. The proposal would also repeal the Affordable Care Act, affecting a projected 16 million Americans who would be covered through the new health law’s expansion of Medicaid.

The Kaiser Commission on Medicaid and the Uninsured estimates that the the House Budget Plan’s repeal of the Affordable Care Act alone would result in 56,000 Iowans losing Medicaid coverage. Over 10 years, Iowa would lose $6.6 billion in Medicaid funds.

And the state wouldn’t be the only entity to take a financial hit: Iowa hospitals would lose out on over $300 million in Medicaid payments in 2021 because of the House budget.

Converting Medicaid to a block grant program would require states to drastically reduce their Medicaid programs.

Putting the results of the proposal in human terms is a bit stickier, as state Medicaid programs are required to serve certain populations by federal law and may, at a state’s discretion, cover other populations. Further, these groups cost wildly different amounts of money to cover. For instance, children make up well over half of Iowa’s Medicaid enrollees, yet account for just 16 percent of all Medicaid spending in Iowa. By contrast, only about 20 percent of Iowa’s Medicaid enrollees are persons with disabilities, yet Iowa spends nearly half of its Medicaid funds on persons with disabilities.

Under Kaiser estimates, various approaches could cut from 153,000 to 273,000 Iowans from Medicaid.

In one model, Kaiser assumed cuts caused by a Medicaid block grant would be spread evenly across all enrollment groups. In this model, the House plan would require cutting as many as 153,000 Iowans from the Medicaid rolls.

If, on the other hand, Iowa lawmakers decided to shield the elderly and persons with disabilities from Medicaid cuts necessitated by the House plan, children and adults would bear most effects: 273,000 Iowa children and adults under age 65 would be cut from the Medicaid roles.

Reducing federal deficits over the long term is a worthy goal. But it should as part of a balanced approach that includes revenue improvements, and not at the expense of our most vulnerable citizens.

Posted by Andrew Cannon, Research Associate