Republicans Outline Health Savings Opportunities for Budget Reconciliation Bill with Focus on Medicaid
Various media outlets are reporting on a list of policy options to achieve savings in the healthcare portion of an expected Republican budget reconciliation bill. The list includes huge reductions to federal Medicaid spending and other significant changes to Medicare and the Affordable Care Act (ACA).
Republicans will control the House, Senate and White House, but will not control enough votes in the Senate to advance most legislation without support from Democrats. Senate rules require at least 60 votes to end debate and advance a bill to a final vote (which can then be passed with a simple majority). Republicans control 53 seats.
Budget reconciliation bills can bypass this 60-vote threshold and advance with only a simple majority. While politically advantageous in this way, budget reconciliation bills are disadvantaged from a policy standpoint in that they are limited to provisions that impact federal spending and revenue. Republicans intend to pass major parts of their legislative agenda via at least one (possibly two or three) budget reconciliation bills. The exact timing of this process is uncertain, but it will likely begin within the next few weeks.
One of the overarching goals for the Republican policy agenda is to reduce federal spending. While many cuts to discretionary spending are expected, the bulk of federal spending is mandatory spending on entitle programs such as Social Security, Medicare and Medicaid. Budget reconciliation bills cannot impact Social Security. This means Medicare and Medicaid will be targets for this process.
It is clear from this list that most of the cuts will be focused on federal Medicaid spending. The largest single savings item is changing federal Medicaid spending from an open-ended matching system to a capitated payment system to states. Republicans estimate this policy will save $913 billion over ten years. They expect a total of $2.3 trillion in savings from changes to Federal Medicaid spending from this and other policies such as work requirements.
The list does not include drastic changes to Medicare spending, but it does include some important policies such as site-neutral payments and changes to how Medicare compensates providers for bad debt.
This list would allow the enhanced eligibility for Affordable Care Act (ACA) premium assistance to expire after 2025. Under this change, ACA premium assistance would be capped at people earning up to 400% of the federal poverty level beginning in 2026.
It is important to note that these are internal savings estimates that were not produced by the Congressional Budget Office (CBO). These savings estimates were quickly criticized for being overly optimistic and failing to account for how the policies impact each other. Also, Republicans will not necessarily include all of these provisions in their budget reconciliation bill.
Last year, the CBO published a report outlining policy options to reduce the federal deficit. Many of these are included in the Republican reconciliation list. However, savings estimates differ for some provisions, and the list lacks detailed explanations for its proposed policy changes. While these details and estimates may evolve, the list offers a clear preview of the Republican approach to the healthcare portion of their budget reconciliation bill.
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