Senate Republicans' bill to repeal and replace Obamacare will cut federal Medicaid spending by 35% over two decades compared with current spending, according to a new Congressional Budget Office report released Thursday afternoon.
Democrats in the Senate had asked the nonpartisan agency to estimate outside the typical 10-year budget window, because the Better Care Reconciliation Act changes the growth rate for the per-capita cap in the ninth year.
The CBO report may make it more difficult for GOP leadership to line up moderate votes to pass the bill, and they may have to scrap the bill's proposed change to a lower inflation rate in 2025 to ensure passage.
Until then, the cap for the federal contribution is expected to be higher than projected growth for the elderly and disabled, and lower than the growth rate for healthy children and adults. All groups would have growth pegged to medical inflation, but the elderly and disabled would have medical inflation plus 1 percentage point. In 2025, that growth rate would be limited to general inflation, which the CBO projected would be 2.4% annually.
"In later years, (the) gap would continue to widen because of the compounding effect of the differences in spending growth rates," the CBO report said.
Disabled children are exempt from any cap in the bill.
The agency did not make an estimate of how the declining federal commitment to Medicaid would affect coverage, but said "enrollment in Medicaid would continue to fall."
Sen. Ron Wyden (D-Ore.) said the bill would put states "in a budgetary vise, pushing them to choose between cutting Medicaid, raising taxes on the middle class, or cutting other important state spending like funding for schools."
"This analysis makes clear that the massive cuts to Medicaid are only going to get worse," he said.
Some Republicans have argued that the rollback of a 3.8% tax on "net investment income" such as dividends, capital gains or hedge fund compensation should be scrapped, but Sen. Bob Corker(R-Tenn.), one of the advocates of that provision, wants that money to fund individual insurance subsidies, rather than Medicaid.
That tax is only for individuals who earn more than $200,000 or married couples with a household income of $250,000 or more.