A Whirlwind of Damage from Republican Budget: Increased Costs for All, Hospitals and Lives at Risk

The House-passed reconciliation bill is garnering new scrutiny as analysts calculate the ripple effects the proposed cuts on Medicaid, Medicare, and Affordable Care Act (ACA) access will have across the entire health care system. This includes estimates of millions of people losing their health coverage, tens of thousands losing their lives, billions of dollars shifted to state budgets, worsening the direct care workforce crisis, and damage to the health care system’s infrastructure, including closures of hospitals, nursing facilities, assisted living facilities, and more.

Terminating Coverage for Millions

As we have previously covered, the most obvious health care pieces in the budget bill would terminate coverage for nearly 11 million people through Medicaid cuts, plus additional millions through failure to extend ACA tax credits. Together, this would increase the number of uninsured by 50%, to approximately 16 million people.

Most of these losses take the form of punitive red tape that denies eligible people access to the care they need and qualify for, forcing them to complete endless paperwork and income verification, or punishing them for job loss, illness, disability, or caregiving.

Other provisions would strip the power from states to provide coverage to immigrants using state-only funds by taking away Medicaid dollars.

The red tape burdens would affect millions of people with Medicare who need help paying for Medicare premiums and cost sharing. They would have to jump through hoops to get and keep Medicaid and Medicare Savings Program assistance, as well as their enrollment in the lifesaving Part D Low Income Subsidy (LIS) program.

Driving Up Costs of Coverage and Care for Everyone

As bad as the direct coverage losses are, they are not the whole story. The repercussions of people going without health insurance will ripple throughout the health care system. The National Association of Insurance Commissioners decries the changes that will result from fewer people having coverage, changes to insurance risk pools, and providers going uncompensated for care: “Policy changes embedded in the House-passed reconciliation legislation would have a significant and ongoing negative impact on the health insurance markets we regulate and the health care system as a whole…. With fewer people covered by Medicaid and private insurance, we expect the legislation to result in more uncompensated care for health care providers and higher costs for those remaining in the market.”

The repercussions of people going without health insurance will ripple throughout the health care system.

These projections echo other analyses that predict providers would lose $1 trillion from these cuts, with $408 billion of that amount coming from hospitals. In addition, providers would see an increase of nearly $300 billion in uncompensated care, as millions find themselves without coverage.

Shifting Costs to States Will Lead to Older Adults and People with Disabilities Losing Vital Services

The ripple effects would not stop there. The bill would shift billions of dollars in costs to state budgets in both health care and food assistance.

Cuts to federal Medicaid funding force states to carry more of the burden, and one CBO letter clearly lays out the state options: “1. Spend more state funds using a mix of revenue increases and reduced spending on other programs for financing; 2. Reduce payment rates to health care providers; 3. Limit the scope or amount of optional benefits, and; 4. Reduce enrollment in Medicaid.” Ultimately, the result will be the same: The cuts will force states to trim expenses in Medicaid or other vital programs and services and leave many people unable to meet basic needs.

The CBO’s Option 3, cutting “optional benefits,” is especially likely. This has happened before, when state funds have dried up due to shortfalls and recessions, and older adults and people with disabilities have taken the brunt of the cuts. Priceless Home- and Community-Based Services (HCBS), which allow people to age in place in their homes and communities, are “optional,” under Medicaid rules, meaning states can cease providing them if they choose. With little else to trim, states will be forced to cut these optional services in order to keep paying for those they are required to cover.

Health Care Workforce at Risk

The cuts in the bill will put even more pressure on an imperiled health care workforce, especially direct care workers who assist older adults and people with disabilities in many facilities and home care settings. These workers are often very low-wage workers who rely on Medicaid for their own coverage. Experts in this space foresee a cascading crisis as providers lose revenue and more care workers leave the market as their job quality worsens: “Facing a shortage of direct care workers, family members—disproportionately women—will be forced to cut their hours or leave their jobs entirely to care for loved ones.”

Hospitals, Especially in Rural Areas, in Danger

Rural hospitals are already on the brink in many areas, especially in the 10 states that have not expanded access to Medicaid. Increased uncompensated care costs from patients without coverage and with no ability to pay will only drive these hospitals closer to closure. The American Hospital Association puts it bluntly: “Hospitals—especially in rural and underserved areas—will be forced to make difficult decisions about whether they will have to reduce services, reduce staff and potentially consider closing their doors.”

Though the cuts in the package may seem contained and targeted to lower-income Americans, this legislation poses dangers to the health, lives, economic stability, and quality of life of everyone in the United States who will ever need health care or insurance coverage.

Tell Your Senators: No Cuts to Care

The Senate is currently discussing next steps, with the goal of passing a bill this month. Recent reports indicate they may be considering even deeper cuts to health care programs, including Medicare. Your senators need to hear that you oppose the House-passed bill and any rollbacks to programs on which older adults and people with disabilities rely. Contact them today!