White House to safeguard Medicaid in budget talks

The ACA’s Medicaid expansion places new importance on the entitlement program, an Obama official tells a health policy conference.

By — Posted Feb. 8, 2013

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The Obama administration plans to use the health system reform law’s Medicaid expansion provision as a shield against funding reductions to the rest of the program.

At a Jan. 31 health policy conference, a top White House official announced that the administration would reject cuts to the Medicaid program during deficit reduction negotiations because “the world has changed and, because of that, our policies are being affected.”

Republican lawmakers have been eyeing significant cuts to entitlement programs as one of several mechanisms to reduce federal deficits, said Gene Sperling, director of the White House National Economic Council, who spoke during a conference hosted by advocacy group Families USA in Washington. Such reductions have included $830 billion in proposed reductions to Medicaid, or a third of its budget, he said.

Sen. Orrin Hatch of Utah, the ranking Republican on the Senate Finance Committee, has cautioned that Medicaid and Medicare reforms need to be an integral part of the deficit reduction debate. Unless changes are made, the two programs will cost the federal government $12 trillion over the next decade, Hatch said in a statement. Cuts to Medicaid of about $100 billion also had been proposed in earlier talks by the administration, Sperling acknowledged.

“But we have come to believe that it is not the time to make even those savings, not when there’s this critical moment in implementing the Affordable Care Act,” Sperling said. During his remarks, he also urged that all state governors “do the right thing and expand Medicaid” under the ACA.

The health system reform law authorized states to expand Medicaid up to an effective rate of 138% of the federal poverty level, although a U.S. Supreme Court decision in June 2012 rendered that provision optional. Since then, the leaders of at least 20 states and the District of Columbia have chosen to expand their programs in 2014. At this article’s deadline, Ohio and Michigan were the latest GOP-led states to come on board the expansion initiative.

The Medicaid expansion “is the most consequential state decision for low-income people in the last 40 years, and we can’t do anything to let federal policymakers screw it up,” said Robert Greenstein, founder and president of the liberal Center on Budget and Policy Priorities in Washington, speaking during the Families USA conference. Although it’s encouraging that President Obama changed his position on cutting Medicaid, “that doesn’t mean all Democrats on the Hill are necessarily” on board with this plan, Greenstein added. He noted Obama’s estimate that $1.5 trillion more in deficit reduction is needed over 10 years to stabilize debt so it doesn’t rise faster than the economy.

Entitlements still will be target

Keeping Medicaid off the table during congressional budget negotiations won’t be easy, Sperling said. “It doesn’t come for free. It means we’ll have to do other things that are difficult,” such as drawing more savings from Medicare. “And those savings may be more politically tough.”

A series of automatic cuts scheduled to take effect March 1 under the process known as sequestration includes a 2% reduction to Medicare physician payments but would not affect Medicaid.

Public hospitals, often the main point of care for Medicaid patients, applauded the White House decision. “This is welcome news for the millions of people who rely on the safety net for essential health care services, for their communities and for the hospitals and health systems committed to their care,” said Bruce Siegel, MD, MPH, president and CEO of the National Assn. of Public Hospitals and Health Systems. Dr. Siegel said his association would call on Congress and the states to make the same commitment to protect Medicaid.

Those who want to slash Medicaid have the assumption that no one will care or try to lobby against them, Sperling said. “It is incumbent upon all of us to let them know they are wrong.”

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