Economist explains impacts of Senate health plan

Vanderbilt News



by Amy Wolf | Jul. 17, 2017, 3:29 PM | Want more research news? Subscribe to our weekly newsletter »


SHARELINES TweetEconomist explains the highs and lows of the Senate health care proposal on Medicaid TweetEconomist explains nuts and bolts of Senate health care proposal for Medicaid participants





Andrew Goodman-Bacon (Vanderbilt University)
Vanderbilt University economist Andrew Goodman-Bacon, who studies the long-term effects of public safety net programs like Medicaid, gives his take on the latest Senate health care proposal called the Better Care Reconciliation Act of 2017. Here are Goodman-Bacon’s thoughts on the proposal:
The bill enacts steep and growing cuts to federal Medicaid funding. After 2025, the bill indexes the growth of federal Medicaid spending to general inflation instead of health care inflation, effectively cutting spending by not growing it in step with the segment it is supposed to fund. This is a huge cut that gets worse and worse over time. Proponents will argue that the bill simply limits federal funds, and states can choose to cover whatever they want. States will say they can’t afford to cover what they want because federal money is insufficient. The almost certain result will be smaller, less generous Medicaid programs.
The bill punishes states for spending too much of their own money. States that spend a lot on each recipient—even when much of that spending comes only from state money—will lose 0.5-2 percent of their federal reimbursement. For a rough scale, Tennessee spends $35 billion on the disabled population, and so this penalty would be something like $17 million to $71 million for that group alone. This is a huge incentive to cut services and eligibility for expensive groups.
The bill limits Medicaid’s ability to pay for care obtained before recipients apply. Medicaid applications take time. You need to report income, assets, family structure, and often get verification for your condition (which itself requires a medical visit). ...

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