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‘Repeal And Replace’ Seemingly Small Cap On Medicaid Isn’t Small At All

‘Repeal and replace’ seemingly small cap on Medicaid isn’t small at all

Senator Mitch McConnell, Republican of Kentucky, is pursuing a repeal and replace of the Affordable Care Act.

According to the Congressional Budget Office (CBO), the House version of “Repeal and Replace” would cut federal health care expenditures by $1.2 trillion over the decade 2017-2026, result in 24 million fewer Americans having medical insurance by 2026, and impose a cap on federal Medicaid expenditures that is estimated to reduce the annual growth rate by 0.7 percentage points.

This restraint on Medicaid spending growth, which is less stringent than the cap in the Senate bill, might seem like small potatoes compared to the legislation’s other effects (which include a separate provision that eliminates enhanced federal support for the Medicaid expansion).

Federal Medicaid expenditures, under current law, are matching contributions: the federal government matches state Medicaid expenditures, for traditional beneficiaries, dollar-for-dollar in rich states and nearly three-to-one dollars in the poorest state. The House bill would tie federal matching expenditures to the rise in the consumer price index for medical services (CPI-M) since 2016, with the cap going into effect in 2020; the Senate bill would tie the cap to the slower growing CPI.

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