Center for Renewing America Budget Plan Would Cut Federal Medicaid Spending by One-Third, Repeal Affordable Care Act’s Coverage Expansions

According to recent media reports, Russell Vought, the former Director of the Office of Management and Budget in the Trump Administration who is now President of the Center for Renewing America, is a key advisor to House Republican leaders for the severe budget cuts they should seek as the price for agreeing to raise the debt ceiling and avoid catastrophic debt default. Like the Republican Study Committee (RSC) budget plan, the Center for Renewing America fiscal year 2023 budget plan includes draconian Medicaid cuts. It would reduce federal Medicaid spending by one-third over the next decade, relative to current law. Among its proposed Medicaid cuts, the budget plan would entirely eliminate the Affordable Care Act’s Medicaid expansion. Because the plan would also eliminate the ACA’s marketplace subsidies, it would repeal both of the ACA’s major coverage expansions, taking away health coverage from tens of millions of low- and moderate-income Americans without any replacement.

How would the Center for Renewing America budget plan cut Medicaid?

• The budget plan would fully repeal the ACA’s Medicaid expansion. Thirty-nine states and the District of Columbia have adopted the Medicaid expansion, with North Carolina now advancing bipartisan legislation to also expand Medicaid. As of March 2022, the Medicaid expansion had extended coverage to 17.8 million low-income adults who would not otherwise have been eligible for Medicaid without it. Moreover, research shows that when parents gained coverage under the Medicaid expansion, Medicaid participation among their eligible but unenrolled children also increased. As a result, by repealing the expansion, the budget plan would likely significantly increase the number of low-income children without health insurance as well.
• The Center for Renewing America plan would entirely prohibit provider taxes, which nearly all states use to finance a portion of the state share of Medicaid costs. Without any taxes on health care providers and plans, states either have to generate sufficient alternative revenues, such as higher income taxes or sale taxes, to finance their contribution to the cost of their Medicaid programs, or as is far more likely, deeply cut their Medicaid programs by reducing eligibility, benefits and provider payment rates. As a result, tens of millions of low-income children, parents, people with disabilities and seniors could lose their Medicaid coverage or access to needed health care and long-term services and supports, on top of those ending up uninsured with the repeal of the Medicaid expansion.
• The budget plan would impose work requirements on all low-income “able-bodied” adults “of working age”— including the low-income parents who remain eligible after repeal of the Medicaid expansion — as a condition of their Medicaid coverage. As research shows, most adult Medicaid beneficiaries already work or they are limited in their ability to work due to health problems or disabilities, caregiving responsibilities or they are in school. But as the experience with Arkansas’ waiver indicates, as well as research on similar requirements in other safety-net programs, Medicaid work and work reporting requirements would have little or no impact on employment while creating significant red tape and confusion that would lead to large losses in Medicaid coverage.
• The budget plan would eliminate the minimum federal Medicaid matching rate (FMAP) for states. Under current law, states with lower relative average per-capita income receive higher FMAPs than states with the highest average per-capita income. But no state receives a FMAP that is lower than 50 percent. That 50 percent floor, which currently applies in 11 states such as California, New York and Wyoming, would be eliminated. According to older estimates, some states like Connecticut would see their FMAP fall to as low as 15 percent. These states would have to pick up a far greater share of the cost of their Medicaid programs or as is far more likely, make substantial cuts to their Medicaid programs.
• The Center for Renewing America plan would also make other changes to Medicaid, including unspecified provisions to “allow the federal government to recoup payments from states that spend Medicaid dollars on ineligible or misclassified beneficiaries.” Because the federal government can already disallow federal funding for Medicaid expenditures that do not meet federal requirements, it is unclear what the plan envisions. It is likely that this would involve new enrollment barriers and red tape that states would need to institute in their Medicaid programs beyond work requirements, which would further reduce coverage among eligible individuals and families. The plan would also build on reductions to Medicaid Disproportionate Share Hospital (DSH) funding for states originally enacted in the ACA, which have been delayed or reduced by Congress. The plan does not specify the DSH cuts.
• According to the budget summary tables, the Center for Renewing America budget plan would cut federal spending by $2.16 trillion over 10 years. That constitutes a 33.5 percent cut, relative to the Congressional Budget Office’s May 2022 baseline 2023-2032 spending levels for Medicaid. By the tenth year (2032), the cut would equal a 35.4 percent reduction.

In addition, the budget plan would entirely eliminate the ACA’s premium subsidies to purchase coverage through the marketplaces. According to the Centers for Medicare and Medicaid Services, 16.3 million people enrolled in marketplace plans during the 2023 Open Enrollment Period (OEP), a historic high. Marketplace data indicates that the vast majority of those enrolling in the marketplaces receive subsidies. For example, in the 2022 OEP, more than 90 percent received subsidies to purchase marketplace plans. Without financial assistance, most individuals and families enrolled in marketplace coverage would likely end up uninsured. Combined with the elimination of the Medicaid expansion, the budget plan would repeal both of the ACA’s two major coverage expansions without any alternative coverage source. Based on current enrollment, the budget plan could add perhaps up to 30 million low and moderate-income people to the ranks of the uninsured. In addition, many additional millions of low-income children, parents, people with disabilities and seniors would likely end up uninsured or underinsured and forego needed health care and long-term services and supports due to the other highly damaging Medicaid cuts included in the budget plan, such as the elimination of provider taxes, the imposition of work requirements and the removal of the FMAP floor.