McCarthy responded, “We’re not taking a benefit away. Nobody on Medicaid is going to be taken away.”

Considering that the American Health Care Act would reduce anticipated Medicaid outlays by $839 billion, or almost 25 percent, over the next 10 years, what is he talking about?

The Facts

Matt Sparks, a spokesman for McCarthy, offered this explanation: “There are no changes until 2020. Then states will continue to receive the enhanced federal match for current enrollees.”

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Hmmm.

McCarthy’s claim hinges on the phrase “current enrollees.” The Congressional Budget Office, in its evaluation of the first version of the AHCA, said the reduction in funding would result in 14 million fewer Medicaid enrollees by 2026, a decline of about 17 percent compared with current law. Much of the decline would stem from the proposal’s termination of the enhanced federal match for new enrollees in states that choose to expand Medicaid, as well as a new per-person cap on federal payments to states. A new, lower federal match rate would apply to new enrollees after Dec. 31, 2019.

The CBO anticipated that some states that had expanded Medicaid to people equal or below 138 percent of the poverty line would decide to no longer offer that coverage. Meanwhile, states that might have expanded coverage would decide not to do so.

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In any case, current enrollees are grandfathered in, right? Well, the problem is that people cycle in and out of Medicaid all the time, as they change or lose jobs. The CBO concluded that the reduction in spending would increase quickly as the grandfathered enrollees cycle off the program and are replaced by new enrollees. Indeed, historical data cited by the CBO indicated that fewer than one-third of those enrolled as of Dec. 31, 2019, “would have maintained continuous eligibility two years later.”

Of course, people who might have been on Medicaid previously, but then got off for a while because, say, they qualified for health care from an employer, would not be considered grandfathered if they once again sought to become eligible for Medicaid.

The per-capita cap might also lead states to restrict eligibility for enrollment, the CBO said. Currently, the federal government reimburses a portion of the state expenses, with the reimbursement for medical services open-ended. But the AHCA would limit the reimbursement to an average per-person cost.

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The CBO said that might lead states to cut back on eligibility – further reducing options for previously grandfathered enrollees to get back into the system. The per-capita cap might also force states to cut back on other services that Medicaid provides, such as special-education services for children with disabilities.

(Note: We originally quoted a New York Times article that asserted “a little-noticed provision” of the bill says that states would no longer have to consider schools to be eligible Medicaid providers. But we have since determined that the Times article was wrong and there is no such provision. A coalition of education groups have argued that the per-capital caps will force states to drop schools for reimbursement in favor of hospitals and physicians. But that is not the same as a specific section of the bill.)

The Pinocchio Test

McCarthy threads a thin needle here. In arguing that no one is going to lose their Medicaid benefits, he is referring to people currently on Medicaid. But Medicaid, like all health insurance markets, is constantly churning enrollees, so very quickly people currently on Medicaid will have left the system. If they try to get back into the system, however, the planned reductions in funding may mean they no longer find themselves eligible for the program — or that their benefits have been scaled back.

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Given the magnitude of the funding reductions for Medicaid contemplated by the AHCA, potentially forcing difficult decisions on the states, McCarthy shouldn’t try to hide behind such technical, misleading language.

Three Pinocchios

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