(Photo: Richard Bednarski/Nevada Current)
Democrats for weeks have been raising alarms about the devastation that potential federal cuts to Medicaid could have on Nevada. On Wednesday, Republican Gov. Joe Lombardo publicly acknowledged he too is concerned, and said he is urging Congress to take a “measured and responsible approach” to changes in Medicaid funding.
The governor’s office announced he’d sent a letter to U.S. Sen. Mike Crapo of Idaho and U.S. Rep. Brett Guthrie of Kentucky, who are leading Republicans on a budget reconciliation process.
The governor’s announcement Wednesday afternoon was issued mere minutes before a joint hearing of the state Senate and Assembly committees on health and human services, which heard presentations from the Nevada Department of Health and Human Services about the possible impacts.
Approximately 800,000 Nevadans are covered by Medicaid, and the program has a total biennial budget of more than $15 billion.
Lombardo wrote that an “abrupt reduction in federal funding would not only disrupt care for those who rely on Medicaid, but would also destabilize public and private healthcare providers, leading to workforce reductions, service limitations, and financial strain on already overburdened health care facilities.”
He wrote that, while he supports eliminating wasteful federal spending, “federal funding cuts to essential programs alone will not solve Washington’s spending problem or the rising cost of health care.”
At the joint committee hearing, Nevada Medicaid Administrator Stacie Weeks told lawmakers that only 3% of that budget goes to administrative costs and the rest is payments to medical providers.
“This is not money in somebody’s pocket,” she said. “It is going to provider reimbursement.”
Absent an infusion of new revenue, the state is limited in how it can respond to federal funding cuts, Weeks explained. The state could reduce or cut benefits, but only for services the federal government considers optional. It could reduce eligibility, though some groups (like people with disabilities) must be covered. It could reduce provider reimbursement rates, though there are also some limitations on that.
Assembly Speaker Steve Yeager, a Democrat, said the money “just isn’t there” to cover some of the cuts being pondered at the federal level.
For comparison, Nevada’s Rainy Day Fund is around $1.24 billion.
Some congressional Republicans have played down the size and impact of Medicaid cuts needed to help pay for $4 trillion in tax cuts desired by President Donald Trump. At the same time, a budget blueprint House Republicans approved this week calls for the House panel with jurisdiction over health care to cut $880 billion over ten years, a target analysts say is impossible without slashes to Medicaid.
Lombardo’s announcement Wednesday was of a piece with warnings from some Republicans House members in competitive districts across the nation, who have expressed concerns that cuts to Medicaid could place serious hardship on some of their constituents, particularly in rural areas.
Nevada Rep. Mark Amodei, Nevada’s only Republican in Congress, did not mention Medicaid in a statement following this week’s House vote on the budget framework. “While some have used their time distorting the truth about this resolution,” Amodei said, “Republicans have prioritized designing the playbook to put our country back on track.”
What exactly are they proposing cutting?
Approximately 300,000 of the 800,000 Nevadan on Medicaid are qualified through what’s known as Medicaid expansion. Gov. Brian Sandoval opted the state into Medicaid expansion in 2014.
The federal government currently pays for 90% of costs for Medicaid expansion, compared to around 60% for people covered by the traditional Medicaid match.
The traditional Medicaid match — known as FMAP, or Federal Medical Assistance Percentage — is a complicated formula that relies on state economic conditions, including per capita income, to provide more assistance to states doing worse economically. Nevada’s FMAP in recent years has averaged around 60%.
One idea being floated at the federal level is reducing the federal government’s share of Medicaid expansion down to the traditional FMAP. Nevada DHHS estimates that would mean a reduction of $1.85 billion in federal funding over the upcoming biennium.
Another proposal being floated in Washington DC is to remove a provision requiring the federal government to pay at least 50% of Medicaid costs. Weeks testified that Nevada would likely not be impacted by the removal of the 50% minimum.
Alternatively, the Republican-controlled U.S. Congress could change the funding formula model to what’s known as a “per capita cap” model, where instead of paying a percentage of actual costs they set a per enrollee cap and the state is obligated to pay anything above that.
Estimating the impact of that is difficult because it would depend on what the federal government based their payment on, said Weeks. But two scenarios modeled by Nevada Medicaid suggest a negative budget impact between $590.2 million to $3.15 billion over the biennium.
If both a per capita cap model and reduction in Medicaid match were to happen, those figures would balloon even higher.
Other proposals, such as making changes to provider tax programs that allow states to access supplemental Medicaid funding or establishing work requirements for those considered able bodied, also had estimated impacts in the hundreds of millions of dollars over the biennium.