President Obama Releases New Deficit Plan

The President’s Plan for Economic Growth and Deficit Reduction (pdf) provides a blueprint for the Administration’s proposal for reducing the deficit. The plan, sent to the Joint Committee on Deficit Reduction, proposes $72 billion in savings for Medicaid and other health programs. More specifically, Obama’s plan calls for simplifying the federal Medicaid payment formula for the States, a savings of close to $15 billion over the next ten years. As CWLA has mentioned before, the implications of such a formula remain largely unknown. Currently, States receive different Federal match rates for Medicaid and the Children’s Health Insurance Program (CHIP). Under the President’s “blended rate” proposal,  the current formulas would be replaced with a single matching rate specific to each State. As is the case under current law, States will continue to receive an increased match whenever enrollment in the Medicaid and CHIP programs rise. According to the President’s plan, this new rate would not affect the newly eligibles (those eligible under the new Medicaid expansion) who will be covered at a 100% federal match under the Affordable Care Act, for the first years (2014-2016).

This recent development comes at a time when many advocates were concerned that the blended rate would not take into account the Administration’s commitment to assisting states in providing for the health care of their Medicaid recipients. For some in Congress, there remain reservations about this proposal. Senator Jay Rockefeller (D-WV) recently said that such a proposal would devastate the CHIP program, claiming that Governors will be reluctant to pay more for the CHIP program once the new rates are established (currently the federal government picks up the majority of the match for the CHIP programs). CWLA will continue to monitor the process and work with Congress and the Administration on ways to continue to strengthen both the Medicaid and CHIP programs on behalf of the millions of beneficiaries who depend on these programs for health care coverage.

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