Under Ryan's proposal, hospitals would face “lower payments per procedure, increased out of pocket-cost expenses for patients, a more narrow range of services offered by Medicare and Medicaid, and an increasing number of uninsured patients because it would not mandate individual coverage,” the Moody's comment says.
The Wisconsin Republican's plans for Medicare vouchers and Medicaid block grants would leave seniors and states responsible for significant costs, the Congressional Budget Office said after comparing the proposal against prior projections of health spending.
Seniors who become eligible for Medicare starting in 2020 would be provided cash to buy insurance rather than benefits under Medicare. That would leave seniors under Ryan's proposal to cover more of the cost of medical care, the CBO said.
Meanwhile, federal financing for Medicaid, which is jointly financed with states, would be converted to block grants as of 2013. As it stands, federal tax dollars finance a percentage of Medicaid spending, so federal funds rise and fall with demand, as was the case during the recent recession.
Under Ryan's plan, seniors will likely seek less medical care to offset higher healthcare costs, the Moody's comment says.
States will be forced to spend more on Medicaid or make cuts to benefits, eligibility and payment to providers, Moody's notes. For children's hospitals that depend heavily on Medicaid, Ryan's plan would likely require “fundamental restructuring” of hospital operations. Medicaid accounted for half of gross patient revenue for the median Moody's-rated children's hospital, the comment says.
The CBO acknowledged block grants would so significantly curb Medicaid federal funding that states would probably be forced to spend more themselves or make cuts of their own.
Researchers with the Center on Budget and Policy Priorities who recently published an estimate of Medicaid spending under two prior block grant proposals said such financing would leave little alternative to smaller Medicaid programs or lower provider payments.
“Some states may believe they can make up for reduced federal funding under a block grant by exercising the greater flexibility that block grant proposals typically give them to make their programs most cost-effective, without unduly cutting eligibility, benefits or provider payments,” write researchers Edwin Park and Matt Broaddus. “Such hopes would likely prove unrealistic.”
