CBO: New GOP Bill Would Boot Kids From Medicaid Rolls

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From Congressional Quarterly (subscribers only):

May 11, 2011 – 8:43 p.m.

By Emily Ethridge, CQ Staff

Tens of thousands of children might lose health coverage temporarily under a Republican bill that would allow states to tighten their Medicaid rolls, according to a Congressional Budget Office report released Wednesday.

The CBO found that the bill (HR 1683), to be marked up in a House subcommittee Thursday, would lead to a significant — but temporary — increase in the number of the uninsured before the new state exchanges that are part of the health care overhaul law start in 2014.

The legislation, which would remove requirements that states maintain current eligibility standards for Medicaid and the Children’s Health Insurance Program (CHIP), would save $2.8 billion between 2012 and 2016, the CBO found. But the bill also would leave about 300,000 more people without insurance in 2013, many of whom would be children.

“In the short term, children would be the overwhelming biggest losers in terms of lost coverage if the House passes its bill,” said Bruce Lesley, who is on the board of directors of the First Focus Campaign for Children, a group that advocates for children’s issues.

Lesley said the bill would put children’s coverage at risk by moving them off CHIP and into the insurance exchanges, part of the overhaul law that Republicans are committed to repealing.

Republican governors have asked lawmakers to lift the requirements, saying they need more flexibility to reduce costs for the shared federal-state program that provides coverage to the poor, disabled and elderly.

The House Energy and Commerce Subcommittee on Health plans to mark up the bill, introduced Thursday by Rep. Phil Gingrey, R-Ga. Senate Democrats say they will block similar legislation (S 868) because it would leave thousands of low-income people without coverage.

The CBO also found that the increase in the uninsured would reverse beginning in 2014 under changes made by the health care overhaul law (PL 111-148, PL 111-152), when the state insurance exchanges come online and Medicaid eligibility is expanded to individuals whose income is at 138 percent of the federal poverty level.

This move would make individuals previously dropped from Medicaid eligible for the program again, the CBO said. In addition, some individuals would qualify for federal subsidies to buy through the insurance exchanges.

The bill “would have no significant effect on the number of adults or children eligible for Medicaid after calendar year 2013,” the office found, because the CBO already estimates that at that time, states will eliminate Medicaid coverage for adults with income above 138 percent of the poverty level.

While the Republicans’ bill would reduce Medicaid and CHIP enrollment and spending, it would greatly increase both in the insurance exchanges. Spending on exchange subsidies would increase $4.8 billion over 10 years, the CBO found, while outlays for CHIP would decrease $8.8 billion over 10 years and those for Medicaid would decrease $1.5 billion over the same period.

Those federally financed exchange subsidies give states the incentive to end participation in CHIP, in which states share the cost with the federal government, the CBO said. Under the bill, about half of states would drop CHIP by 2016, and those who remain in the program would reduce their eligibility levels.

CBO estimated that CHIP enrollment would decline in 2016 by 1.7 million individuals, and enrollment in exchanges and employment-based coverage each would increase at the same time by 700,000. Compared with current law, approximately 300,000 more people would become uninsured in 2016 under the bill, the CBO added.

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