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Pennsylvania Medicaid Is Facing Threats at the Federal and State Levels

Public Benefits

Pennsylvania Medicaid Is Facing Threats at the Federal and State Levels

Date Posted: 
05/31/2017

Pennsylvania’s Medicaid program covers nearly 2.9 million Pennsylvanians, most of whom are children, older adults, and individuals with disabilities.  Pennsylvania Medicaid ensures that children can access preventive care like vaccinations, and it provides early intervention services for children with autism or serious disabilities.  It helps older adults and individuals with disabilities to live independently in their homes, and it pays for quality nursing home care when necessary.  It also helps workers to stay healthy and employed.

In recent months, Pennsylvania Medicaid is facing threats at both the state and federal levels.  If proposed cuts to Medicaid move forward, Pennsylvania may have to limit eligibility or cut services for people who rely on Medicaid to get and stay healthy.

Federal Threats to Medicaid:

  • The U.S. Senate is considering proposals to cap Medicaid payments to states, decimating Pennsylvania’s budget and leading to cuts.  In May 2017, the U.S. House of Representatives passed the American Health Care Act (AHCA).  The AHCA would end Medicaid funding as it currently exists for older adults, individuals with disabilities, pregnant women, and children.  Instead, states would get per-person allotments for each Medicaid enrollee, called “per capita caps.”  Funding increases would be capped at low rates and would not keep pace with inflation.  Per capita caps would force Pennsylvania to ration care by cutting benefits or limiting eligibility for some or all categories of enrollees.  They would threaten Pennsylvania’s ability to improve coordination of care and reduce nursing home placements through its new managed long term care initiative, Community Health Choices.  The U.S. Senate is now considering these cuts.
  • The U.S. Senate is considering plans to roll back Medicaid expansion under the Affordable Care Act (ACA), which covers more than 700,000 Pennsylvanians.  Pennsylvania expanded Medicaid in 2015.  Under the ACA, it gets enhanced federal funding to offer coverage without breaking its budget.  The AHCA would freeze Medicaid expansion starting in 2020.  After 2020, states could cover new enrollees, but they would get much less federal funding.  Most states would be forced to stop offering coverage due to budget reasons.  Current enrollees could stay on the program, but if they lost coverage for more than a month, they would not be able to reenroll at the enhanced federal rate.  The nonpartisan Congressional Budget Office projects that 95% of enrollees would lose eligibility for enhanced federal funding by 2024.  The U.S. Senate is now considering these cuts.
  • The Trump Administration budget for the 2017-18 Fiscal Year would cut more than $1.4 trillion in federal Medicaid spending.  In a proposed budget released in May 2017, the Trump Administration assumes that the AHCA will become law, resulting in an $839 billion cut in federal Medicaid spending from capping payments to states and ending Medicaid expansion.  The budget assumes an additional $627 billion in cuts over ten years through further reductions in capped payments to states.

State Threats to Medicaid:

  • The Pennsylvania General Assembly is weighing harmful cuts to Pennsylvania’s Medicaid budget.  In April 2017, the Pennsylvania House of Representatives passed House Bill (HB) 218, a General Fund budget for the 2017-18 Fiscal Year.  HB 218 included cuts to an initial Fiscal Year budget proposed by Governor Wolf, including large funding cuts for Pennsylvania’s Medicaid program.  HB 218 would cut $178 million in funding for Medicaid capitation, or payments to the insurers who provide coverage to most Medicaid enrollees, compared to Governor Wolf’s proposed budget.  It would also cut funding for long-term care, home and community based services, and behavioral health care.  HB 218 is now being considered by the Pennsylvania Senate.
  • The General Assembly may also consider pushing Pennsylvania to seek federal Medicaid “waivers” that would create red tape for families who need coverage.  Through waivers, the federal government agrees to waive certain Medicaid rules to allow states to try out new ways to provide Medicaid services.  In 2014, Pennsylvania asked the federal government for waivers under the Healthy Pennsylvania initiative.  The waivers would have allowed Pennsylvania to impose work requirements even for some Medicaid enrollees with disabilities, charge unaffordable premiums and lock enrollees out of coverage for inability to pay, and limit access to federally qualified health centers.  Pennsylvania cancelled the waivers in 2015, as it adopted traditional Medicaid expansion.  In March 2017, the newly appointed leader of the federal Centers for Medicare & Medicaid Services sent a letter to states, inviting them to apply for new waivers.  One state legislator introduced a bill in the Pennsylvania House of Representatives in May 2017 that would require Pennsylvania to pursue waivers.
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