Congress could cut billions from Medicaid over the next decade.
In February, the U.S. House of Representative passed its version of a federal spending plan that envisions cutting at least $880 billion from Medicaid over 10 years. The Senate budget resolution called for at least $1 billion in cuts to the health insurance program for low-income Americans.
"The heavy lifting is next. They need to do something that's called a budget reconciliation bill, and that's where Congress needs to come up with very detailed plans about not just Medicaid, not just SNAP, but taxes, defense spending, everything," George Washington University health policy researcher Leighton Ku said.
Federal spending details will be finalized when both chambers agree on the same version of the budget. It's part of a lengthy process called budget reconciliation, which has historically been used to fast-track spending, tax or debt-limit changes by the federal government.
Some insight into future spending decisions can be drawn from the 50-page menu of proposed cuts released by the House Ways and Means Committee in February.
Proposals that could impact Medicaid include:
- Establishing work requirements for "able-bodied adults without dependents" for Medicaid.
- Reinstating limits on state-directed payments in Medicaid.
- Repeal "minimum staffing" rules for long-term care facilities for Medicaid payments.
- Preventing states from levying health care provider taxes to put toward state share of Medicaid spending.
- Rescinding the 5% Federal Medical Assistance Percentage incentive for states with expanded Medicaid programs (Florida is not one of them).
In a study published in March, Ku investigated the economic impact of the proposed Medicaid cuts.
The findings published by the Commonwealth Fund , a private health care advocacy foundation, show that slashing Medicaid — the single largest source of federal funding for states — would inevitably weaken state and local economies.
The modeling system used in this research was based off a projected $880 billion reduction in Medicaid funding if those cuts were proportional across all 50 states over 10 years, according to the report.
In Florida, it's estimated that Medicaid cuts would have far-reaching effects on the job market, overall economic output and local tax revenue.
"In the state of Florida, be aware that some of these big changes that are being proposed in Medicaid and SNAP not only affect the low-income people who are the beneficiaries of Medicaid or SNAP, but also have broader effects for the economy," Ku said.
SNAP, or the federal Supplemental Nutrition Assistance Program, provides food-purchasing support for people and families with low incomes.
A hit to Florida's job market
The research shows that Medicaid cuts, as proposed, could threaten around 33,000 jobs in Florida.
That would include about 17,000 health care jobs at hospitals, clinic, pharmacies, nursing homes and community health centers. Another 16,000 jobs could be lost in other job sectors, such as retail, construction and manufacturing, according to the economic projections.
"Medicaid pays money to health care providers, to hospitals, clinics, pharmacies, nursing homes to provide care. If federal funding for Medicaid is really cut, then … essentially speaking, they need to lay people off," he said.
Ku said it's also possible that nursing homes, long-term care facilities and community-based health centers are forced to close if federal funding runs dry. That could disproportionately affect people on low and fixed incomes who rely on Medicaid for health care.
On top of projected job losses due to Medicaid cuts, an announcement came last month that 20,000 full-time employees are being laid off from the U.S. Department of Health and Human Services, which partially oversees skilled nursing facilities.
Ripple effects to the state economy
A hit to the job market could have "ripple-through effects" through the state economy, Ku said.
The data shows the cutbacks could ultimately leave a $3 billion hole in Florida's gross domestic product, a measure of economic activity. The losses are even greater when combined with the effects of proposed cuts to SNAP.
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"Cuts in federal funding for Medicaid and SNAP shrink revenue for those businesses and their employees, and the effects ripple across other businesses and workers in their supply chains, such as medical equipment suppliers, food producers and farms," according to the report.
Undercutting local tax revenue
The research also shows that an economic downturn induced by Medicaid cuts could ultimately lower the tax revenue collected by state and local governments.
"This would make it harder for states and localities to balance their budgets and fund vital needs like education or infrastructure," according to the report.
In Florida, an estimated $177 million in future local tax revenue could be in jeopardy if Medicaid cuts are carried out, according to economic projections published in the report.
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