Two Republican committee chairmen want Congress to consider cutting “optional” Medicaid eligibility and benefit categories as a way to control the growth of Medicaid spending.
In a letter sent Wednesday to the Medicaid and CHIP Payment and Access Commission (MACPAC), Senate Finance Committee Chair Orrin Hatch (R-Utah) and House Energy & Commerce Committee, Chair Greg Walden (R-Ore.) asked MACPAC to create a detailed report on Medicaid's optional benefits and eligibility groups. They said that would guide their work in finding ways to reduce program spending. There currently is no up-to-date central source for this information, they said.
“In this environment, we believe it is important to better understand the optional eligibility groups and optional benefits states are covering,” the letter said. “Without action, the unrestrained spending on Medicaid, which increases for each benefit and individual covered, could crowd out funding for other critical state and federal priorities like education, criminal justice enforcement, and transportation.”
They gave MACPAC until Jan. 25 to outline what it would take to create such a report. A spokeswoman for MACPAC confirmed receipt of the letter and said it will respond by the deadline.
This new focus could mean that Republicans recognize they need to examine alternative ways of curbing Medicaid spending, other than restructuring Medicaid by converting it from an entitlement to a program of capped federal contributions to the states. Critics say such capped payments, in the form of state block grants or per-capita payments, would force states to cut benefits, eligibility and reimbursements to providers.
“Policymakers have to think about the trade-offs, pain versus gain, that result from making cutbacks,” said Stan Dorn, senior fellow at the Urban Institute Health Policy Center. “That is a very different approach from block grants and per capita caps, where the federal government decides the level of savings without being forced to think through what that would mean for beneficiaries.”
Under Medicaid, states are required to cover a set of mandatory benefits, including inpatient services and physician visits. They also can receive federal matching payments for “optional benefits,” including prescription drugs, hospice care and psychiatric services for children.
States also can choose to cover optional eligibility groups, such as people dually eligible for Medicaid and Medicare with income above Medicaid eligibility levels, or parents of a Medicaid-eligible child with income above Medicaid levels.
In their letter, Hatch and Walden said combined state and federal Medicaid spending could hit $1 trillion annually starting in 2026. They explained they also want to take a closer look at optional benefits and groups because paying for optional benefits has forced children and adults with intellectual and developmental disabilities to wait for care.
Medicaid patient advocates say that argument is inaccurate and misleading, because the people on those waiting lists are waiting for home- and community- based services, which are optional benefits under Medicaid.
“The vulnerable people on waiting lists are exactly these same optional populations” whose Medicaid benefits the GOP chairmen are thinking about cutting, said Leonardo Cuello, director of health policy for the National Health Law Program.
Other experts say the letter doesn't necessarily mean GOP lawmakers are abandoning the block grant or per-capita cap approach they've long favored. Instead they could use the data to set minimum benefits that must be covered, even under capped federal contributions, said Charlene Frizzera, a former acting CMS administrator the Obama administration and deputy Medicaid director under the George W. Bush administration.
Another possibility is to implement block grants only for the optional benefits and beneficiaries, while continuing open-ended funding for mandatory benefits and beneficiaries. A similar proposal was floated during the Bush administration in 2003, said Joan Alker, a Medicaid expert at Georgetown University.
Alker and other Medicaid advocates oppose efforts to cut so-called optional benefits and beneficiaries groups because they say these services are vital for the affected patients. “The mandatory-optional distinction is in many respects meaningless when it comes to what people need to address their healthcare needs in the real world,” Alker said. “Prescription drugs is the most obvious example of a benefit that is obviously not optional.”
If Republicans want to reduce Medicaid spending growth, a better way would be to take action to reduce prescription drug prices, because that's a leading driver of Medicaid spending for optional benefits, said Andrea Callow, a Medicaid policy analyst at consumer group Families USA.