Trump Budget Embraces Medicaid Changes Proposed by House GOP Leaders

By Michelle Hackman Features Dow Jones Newswires

One of the big ways President Donald Trump's proposed budget would save money is by overhauling Medicaid, the federal-state health program for the poor and disabled, which the president wants to cut by more than 40% over a decade.

Continue Reading Below

The proposal could run into trouble in Congress, where some GOP lawmakers have balked at smaller cuts to the program. But it's a clear statement, and a notable shift, for a president who vowed on the campaign trail not to touch Medicaid.

Mr. Trump's budget embraces Medicaid changes proposed by House GOP leaders as part of their health-care overhaul, which would eventually end the program's expansion and limit how much the federal government would pay the states each year. That approach would significantly reduce the program's cost over time, with the nonpartisan Congressional Budget Office estimating it could save about $840 billion, a quarter of the program's total cost, over the next decade.

The Trump budget also suggests additional savings of $610 billion, mostly from further reducing the amount Medicaid pays out each year to shift more costs to the states. Some of the savings could also come from work requirements for recipients, which the Trump administration expects would help shrink Medicaid rolls.

White House Budget Director Mick Mulvaney said Tuesday the administration is only proposing a slowdown in the program's growth.

"There are no Medicaid cuts, in terms of what ordinary human beings would refer to as a cut. We are not spending less money one year than we spent before," Mr. Mulvaney said. "What we are doing is growing Medicaid more slowly over the 10-year budget window."

Continue Reading Below

The move would introduce the largest restructuring to the program, which serves about 74 million low-income and disabled Americans, since its founding in 1965. The budget would not make changes to Social Security or Medicare, the other two major safety-net programs.

Like the House GOP health bill, the budget would let states beginning in 2020 choose between two funding mechanisms for Medicaid, a block grant or a cap tied to the number of enrollees.

John Baackes, chief executive of L.A. Care, a nonprofit insurer that operates a Medicaid managed care program in southern California with 2.1 million members, said capping the program would hurt his customers.

"If the state can't [make up for the loss of federal funds], it will result in us needing to reduce compensation to doctors and hospitals, or the state may direct that we reduce benefits or that we become more aggressive in determinations of whether people are eligible," he said.

Republicans say the cuts would provide an incentive for states to develop new solutions to save costs and improve enrollees' health.

But the House Republicans' Medicaid proposal, which is nearly identical to the Trump budget's approach, has already met resistance in the Senate, where GOP lawmakers are hammering out their own health-care bill. A large group of centrist-leaning Republicans, led by Sen. Rob Portman of Ohio, oppose diverting so much money from the program.

"My goal is prioritizing efforts to protect the most vulnerable, and that's what I'm trying to accomplish with health care reform," Mr. Portman said, in response to a question about Mr. Trump's proposed Medicaid reductions.

Rep. Greg Walden (R., Ore.), chairman of the House Energy and Commerce Committee, which oversees Medicaid, threw cold water on the cuts that go beyond the House bill.

"The chairman believes that the reforms in the [House GOP plan] represent the most balanced and sustainable way to address the long-term funding structure of the Medicaid program," a spokesman said.

Stephanie Armour contributed to this article.

Write to Michelle Hackman at Michelle.Hackman@wsj.com

(END) Dow Jones Newswires

May 23, 2017 18:32 ET (22:32 GMT)