Potential Impact of Medicaid Cuts (Part 3)

In this 3rd post of 3 I discuss the potential impact of cuts to Medicaid being considered by Congress and the President.  Last week I explained that specific changes, such as imposing a work requirement, are directed towards Medicaid recipients receiving Medicaid health benefits.  They would not apply to those people receiving long term care benefits.

Other changes, however, would reduce federal funding.  Because Medicaid is a combination federal and state funded program, cutting federal funds would likely affect all of Medicaid’s various programs in indirect ways.  Each state manages its own program so Medicaid changes would affect each one in different ways.   If federal funds are cut, however, states would need to react by either increasing their funding to replace lost federal funds or cutting benefits.

For example, the bill just passed by the House of Representatives which now awaits Senate review would cut federal funding to states that have expanded their Medicaid programs and that provide Medicaid coverage to undocumented immigrants using state funds.  Federal funds could be reduced by 10% or more to states that don’t comply.

Any reduction in funding is bound to have some overall effect.  If states don’t replace federal funds then they could try to reduce the number of Medicaid recipients by making it more difficult to qualify in the first place or by terminating benefits for people already receiving benefits.

In my experience here in New Jersey, I have seen a decreased flexibility when dealing with many county Medicaid offices.  Deadlines to provide requested documentation have become more rigid, leading to more denials for “failure to provide information”.  Document requests have become more burdensome.  Annual redeterminations have resulted in more terminations for technical violations where only a year or two ago a warning would have instead been given and a recipient been permitted time fix it.

It wouldn’t be surprising to see a continued up tick in such state actions if the proposed cuts are approved.  These cuts won’t end Medicaid but it would make it harder to obtain and keep such benefits.