On May 10, the Kaiser Family Foundation released a brief examining the state-by-state implications of turning Medicaid into a block grant program and repealing the national health care reform law’s Medicaid expansion.  The authors estimate that the changes would reduce federal Medicaid spending by $1.4 trillion, or 34 percent, between 2012 and 2021.  In addition, the authors estimate that federal Medicaid funding for states would be reduced by $243 billion by 2021, a 44 percent reduction from projected funding levels.  KFF also projects that annual Medicaid hospital reimbursements would be reduced by up to 38 percent.  Finally, KFF estimates that the change would result in 31 to 41 million fewer individuals insured under Medicaid.

From the report:

With federal spending reduced compared to current law projections, the House Budget Plan is expected to result in federal savings of $1.4 trillion over the 2012 to 2022 period with approximately $610 billion in savings resulting from the repeal of ACA and an additional $750 billion in savings from converting Medicaid to a block grant and limiting federal spending growth rates. The Congressional Budget Office concluded that although “states would have additional flexibility to design and manage their Medicaid programs and might achieve greater efficiencies in the delivery of care than they do under current law, the large projected reduction in federal payments would probably require states to reduce payments to providers, curtail eligibility for Medicaid, provide less extensive coverage to beneficiaries, or pay more themselves than would be the case under current law.”3 Further, the fact that federal funds will no longer adjust to expanding enrollment will make it more difficult for states to respond during recessions.

Full report: House Republican Budget Plan: State-By-State Impact of Changes in Medicaid Financing (PDF | 630.27 kb)

Kaiser Family Foundation.  (2011).  House Republican budget plan: state-by-state impact of changes in Medicaid financing.  Holahan, J., Buettgens, M., Chen, V., Carroll, C. and Lawton, E.