Trump Medicaid proposal sparks bipartisan warnings

Republicans and Democrats alike are warning that a recent proposal from the Trump administration could lead to billions of dollars in cuts to Medicaid, forcing states to eliminate benefits, reduce enrollment or cut payments to health providers.

In a rare sign of unity, hospitals, insurers, patient advocates and members of both political parties are on the same page in their opposition to the Trump administration’s plan, and most have urged the administration to withdraw a proposal they say would “cripple” Medicaid, the federal-state partnership that provides health care for the poor.

The proposal hasn’t received as much attention as the administration’s other efforts to reform Medicaid, such as implementing work requirements, but it could have the most damaging effect because of how far-reaching it is, experts argue.

“This is high stakes,” said Matt Salo, executive director of the National Association of Medicaid Directors, whose board urged the administration to completely withdraw the proposal.

Trump allies have also voiced their concerns.

“The Medicaid fiscal accountability rule is a concern to my governor, and the stakeholders are worried the rule as proposed could lead to hospital closures, problems with access to care and threaten the safety net,” Sen. John Cornyn (R-Texas) told Department of Health and Human Services Secretary Alex Azar last week during a hearing on the agency’s fiscal 2021 budget request.

Sen. Mark Warner (D-Va.) warned during the same hearing that the proposal could “dramatically affect Medicaid eligibility” and “wreak havoc on budgets in red states and blue states all across the country.”

The proposal would overhaul the complex payment arrangements states use to raise money for their Medicaid programs — funding that is then matched by the federal government.

The administration argues some states use questionable methods of raising funds so they can leverage more money from Washington. One approach used by states consists of taxing providers who stand to benefit from more Medicaid funds flowing into the state.

But governors and state Medicaid directors argue those long-standing arrangements are both legal and necessary as states look for ways to keep up with escalating health care costs.

The proposal would allow the Centers for Medicare and Medicaid Services (CMS) to limit the extra payments from states to providers serving high numbers of uninsured patients or Medicaid patients. Opponents say such changes could result in providers deciding not to accept Medicaid patients.

Dozens of states wrote public comments to CMS Administrator Seema Verma, urging her to withdraw the proposal, including conservative states that are typically supportive of her work.

“If the rule is finalized as proposed, it will immediately disrupt the Medicaid program in Alabama and we believe across the country,” wrote Stephanie McGee Azar, commissioner of the Alabama Medicaid Agency, who is not related to Alex Azar. She added that it would have “unintended consequences that will affect access to care in Alabama to our most vulnerable populations.”

Florida Gov. Ron DeSantis’s (R) administration warned the effect of the proposal would be “immediate and crippling.”

Meanwhile, a letter signed by state Medicaid officials in Michigan, Missouri, New York, Oregon, Pennsylvania, South Carolina, Tennessee, Illinois, Louisiana, Colorado, Pennsylvania and Washington argued the proposal would likely “force states to cut Medicaid eligibility, benefits and/or provider payments, which would have the effect of decreasing low-income individuals’ access to important health care services.”

The public comment period closed Jan. 31. CMS now needs to go through the 4,000 comments before deciding whether to finalize the rule.

Verma and her supporters argue the proposal is not intended to cut Medicaid but instead aims to improve transparency and accountability in the $600 billion a year program.

“It’s not surprising providers and the states are objecting when they are getting federal money for free,” argued Brian Blase, who previously served on President Trump’s National Economic Council, where he worked on health care issues. “They don’t want transparency and they don’t want their financing gimmicks checked.”

Blase predicted the rule, if implemented as proposed, would reduce Medicaid spending by a “very small amount.”

Verma also pushed back on opponents, criticizing a study commissioned by the American Hospital Association that estimated the rule could reduce Medicaid funding by as much as $49 billion annually.

“This proposed rule is not intended to reduce Medicaid payments, and alarmist estimates that this rule, if finalized, will suddenly remove billions of dollars from the program and threaten beneficiary access are overblown and without credibility,” she wrote in a blog post last week.

Some experts disagree with her, pointing to other actions the administration has taken on Medicaid, including work requirements.

“I think one should view this rule not in isolation, but in combination with the broader agenda of this administration on Medicaid,” said Edwin Park, a research professor at Georgetown University McCourt School of Public Policy. “Their ultimate agenda is about cutting the Medicaid program, changing the Medicaid program as it currently stands.”

State officials have complained that they were not asked for their input before the proposal was released, nor did CMS conduct a regulatory analysis of potential effects.

A nonpartisan agency that advises Congress on Medicaid policy wrote to Alex Azar advising he not implement the rule because CMS has not fully assessed the possible effects.

“The Commission is concerned that the proposed changes could reduce payments to providers in ways that could jeopardize access to care for Medicaid enrollees,” the advisory group wrote.

For example, Maine’s Department of Health and Human Services has planned to make $86 million in supplemental payments to hospitals in fiscal 2020, which began July 1.

The rule “would require significant changes to MaineCare and could force the State to cut back on eligibility or services,” Jeanne Lambrew wrote in the department’s public comment.

The administration hasn’t given any signals that it plans to back down from the proposal, despite considerable pushback from stakeholders, states and bipartisan members of Congress.

“We will work with states to help them recreate their practices in ways that are in conformity with the statute and try to be fair and equitable in all our dealings with states,” Alex Azar told lawmakers last week on Capitol Hill.