Contact FreedomWorks

400 North Capitol Street, NW
Suite 765
Washington, DC 20001

  • Toll Free 1.888.564.6273
  • Local 202.783.3870
LISTEN NOWThe Freedom Files Podcast Episode 5 featuring Stephen MooreListen Here

Blog

Only in Washington Can Limiting the Growth of a Government Program Be Called A "Spending Cut"

06/29/2017

The Congressional Budget Office released a report Thursday on the long-term spending effects of the Senate version of H.R. 1628, the Better Care Reconciliation Act. Unfortunately, Democrats and some in the mainstream media are already spinning the report, claiming that it shows that the bill will cut Medicaid spending. That's wholly inaccurate.

We've already seen this stories related to Medicaid spending. When White House adviser Kellyanne Conways said the Better Care Reconciliation Act (BCRA) didn't cut Medicaid, Time ran a story with the headline, "Kellyanne Conway Says the Senate Health Care Bill Doesn't Cut Medicaid. That's Not True." Politifact claimed her statement was "mostly false."

Another round of stories are hitting the Internet now, and they're making similar claims; that the BCRA cuts Medicaid spending.

The report from the Congressional Budget Office (CBO) offered a look at Medicaid spending under the BCRA in second ten-year window, 2027 through 2036. Currently, Medicaid is an open-ended entitlement program, which means that there are no real limitations on the amount of federal funding for it. The BCRA doesn't repeal Medicaid expansion, though the Federal Medical Assistance Percentages (FMAP) would be reduced from 90 percent to 85 percent in 2021, from 85 percent to 80 percent in 2022, and from 80 percent to 75 percent in 2023.

The bill would, however, change this in 2025 and after by limiting the rate of growth of Medicaid to the Consumer Price Index for All Urban Consumers (CPI-U), which, for 2016, was 2.1 percent. Between 2010 and 2016, Medicaid grew at a 5.6 percent rate. Gross domestic product (GDP), in nominal dollars, grew by 3.5 percent. Between 1962 and 2015, Medicaid grew at a 16.9 percent rate, while nominal GDP growth was almost 6.8 percent.

The CBO report doesn't state that there will be an overall cut in Medicaid spending. What the report says is that the program will grow at a slower rate compared to its extended baseline projections, which can be found in its July 2016 publication, The 2016 Long-Term Budget Outlook.

"In CBO’s assessment, Medicaid spending under the Better Care Reconciliation Act of 2017 would be 26 percent lower in 2026 than it would be under the agency’s extended baseline, and the gap would widen to about 35 percent in 2036." the CBO explained. "Under CBO’s extended baseline, overall Medicaid spending would grow 5.1 percent per year during the next two decades, in part because prices for medical services would increase. Under this legislation, such spending would increase at a rate of 1.9 percent per year through 2026 and about 3.5 percent per year in the decade after that." (Emphasis added.)

Again, Medicaid spending will continue to grow. It will only grow at a slower rate that exists under current law. As OMB Director Mick Mulvaney said back in May, "There are no Medicaid cuts in the terms of what ordinary human beings would refer to as a cut. We are not spending less money one year than we spent before."