House GOP Medicaid overhaul targets blue states like Minnesota

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Minneapolis, MN (MinnPost)

WASHINGTON -- House Republicans have targeted "blue" states that provide health care to undocumented immigrants by cutting Medicaid payments to those states in an effort to shrink the government health plan for the poor and disabled.

Legislation released by the House Energy and Commerce Committee late Sunday would cut the share the federal government gives Minnesota and 13 other states, including California, Illinois and New York, from 90% to 80% because these states offer health care coverage to undocumented immigrants.

This cut in federal money, and other new restrictions proposed by the panel as part of a mega-budget bill, will likely force states like Minnesota to revamp how they fund the joint federal-state Medicaid program or cut benefits.

Gov. Tim Walz's office and the Minnesota Department of Human Services did not have an immediate response to the proposed cut in the federal matching rate for those who have been able to enroll in Medical Assistance through the Affordable Care Act's expansion of Medicaid.

The state's options include paring back eligibility, reducing benefits, ending coverage for undocumented immigrants or making up the loss with state funds.

"I would hope Minnesota would implement (the changes) in a humane way," said Jonathan Watson, CEO of Minnesota Community Health Centers.

He estimated the reduction in the federal matching rate would cost Minnesota more than $325 million a year.

Full health coverage of undocumented immigrants, initiated in Minnesota on Jan. 1, has been criticized by state GOP lawmakers because it is funded solely with state funds. Federal law prohibits the use of Medicaid dollars on coverage of undocumented immigrants.

The Energy and Commerce Committee was required to find $880 billion in savings over 10 years in the programs that come under its jurisdiction. In its preliminary estimate, the CBO determined that most of the savings would come from the panel's proposed changes to Medicaid, which it said would lower the federal government's spending on the program to $715 million.

The change in the reimbursement rates is just one change the committee has proposed to Medicaid.

House Republicans say the changes would root out fraud, waste and abuse from the program.

But the new restrictions on Medicaid, proposed as part of President Donald Trump's "big, beautiful" budget bill, will result in the loss of Medicaid coverage for millions of Americans, even as a pushback from moderate GOP lawmakers pared back some initial proposals.

"This is the largest Medicaid cut, ever," said Laura Mortenson, spokeswoman for the Minnesota Budget Project.

Mortenson said more details of the plan would be made public when the House Energy and Commerce Committee marks up its bill Tuesday afternoon. Democrats on the panel will try to reverse some of the changes, but they are in the minority.

If the panel votes out the bill, which is expected, the legislation would go to the full U.S. House for a vote as part of the budget bill.

About 1.3 million Minnesotans, or about 23% of the state's population, rely on Medicaid, known in the state as Medical Assistance, for their health care.

Democrats on Sunday released preliminary estimates by the Congressional Budget Office (CBO) that determined more than 8.6 million people would go uninsured if the changes to Medicaid become law.

One big impact on beneficiaries is a new work requirement that supporters say would lift low-income individuals out of poverty by motivating them to get jobs.

The CBO has estimated that requiring beneficiaries to work or study for at least 80 hours a month could save over $100 billion over the next decade -- by excluding more people from Medicaid so the government won't have to pay for their medications and care.

Yet the Kaiser Family Foundation has determined that most Medicaid recipients, 92%, are already working full- or part-time and others are exempted from the work requirement because they have caregiving responsibilities, illnesses or disabilities or are attending school.

David Hilden, an internal medicine doctor at Hennepin Health, said the few states that imposed work requirements on Medicaid recipients did not result in an increase of employed beneficiaries.

"It just did not work," Hilden said.

What did happen, he said, is that many recipients could not keep up with the paperwork that showed they had a job, were looking for work or were part of an exempted category. "All it did was make people lose their coverage," Hilden said.

So work requirements, which Hilden called disastrous, are expected to reduce the number of recipients. So is another change, which would require Medicaid beneficiaries who earn more than the federal poverty limit -- around $15,650 for a single person -- to pay higher co-payments for doctor visits.

The bill would also increase paperwork requirements, allowing states to check the income and residency of certain beneficiaries more often and ending coverage for those who don't respond promptly.

The legislation was panned by medical groups and organizations that represent patients, including the American Cancer Society, which called the proposal "catastrophic" and "alarming."

"This is going to put community health centers in a more perilous situation," Watson said.

He said the state's community health centers receive about 40% of their revenue from Medicaid.

The legislation would also cut funding for groups that provide abortion services, like Planned Parenthood, and ban the use of Medicaid dollars for gender-affirming care for youth.

It would also reassess the way assets are determined to qualify patients for Medicaid-funded nursing home care and repeal Biden administration reforms for staffing at nursing homes.

This story is provided as a service of the Institute for Nonprofit News’ On the Ground news wire. The Institute for Nonprofit News (INN) is a network of more than 475 independent, nonprofit newsrooms serving communities throughout the US, Canada, and globally. On the Ground is a service of INN, which aggregates the best of its members’ elections and political content, and provides it free for republication. Read more about INN here: https://inn.org/.

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