Malani: Why America Needs a ‘do-over’ on Medicaid Reform

Why America needs a ‘do-over’ on Medicaid reform
Anup Malani, Darius Lakdawalla, Jay Bhattacharya
Why America needs a ‘do-over’ on Medicaid reform
May 11, 2017

One of the most important pieces of the newly passed House health bill is a possible US$800 billion cut over 10 years to Medicaid, the federal program designed to provide insurance coverage to the poor.

That bill, entitled the American Health Care Act (AHCA), rolls back part of the expansion of Medicaid that took place under the Affordable Care Act (ACA) by limiting federal contributions toward state coverage of individuals with annual incomes above US$16,643 or families of four with annual incomes above $33,948. With the reduction in federal support, states will now have to decide if they can afford to cover adults with incomes just above the federal poverty line. In addition, the AHCA freezes federal spending per Medicaid beneficiary at its 2016 levels.

The bill’s exact financial impact on Medicaid remains uncertain, because the House passed it before the Congressional Budget Office had a chance to evaluate the numbers. The projected $800 billion cut is taken from a CBO analysis conducted on a prior version of the AHCA. That version as well as the bill passed in May give more control to states to administer Medicaid.

Republican leaders have argued the current Medicaid system is failing and in need of reform. Democrats, including former President Obama, have charged that the AHCA harms the well-being of poor and vulnerable groups.

We wholeheartedly agree – with both sides. We question the wisdom of steep cuts to an already underfunded Medicaid system. But the status quo is not working either.

So what should we do?

Faculty: 
Anup Malani