First Article in The House of Medicaid Series
As the U.S. House of Representatives returns from its District Work Period, its top priority will be to assemble its budget reconciliation package. The House Budget Resolution has charged the Committee on Energy and Commerce to produce $880 billion in savings over the next 10 years. The Congressional Budget Office (CBO), the nonpartisan scorekeeper for Congress, has informed leadership and members that this level of savings cannot be achieved without reductions in spending levels to the Medicaid program.
The Five Pillars
Medicaid, along with all forms of health insurance products, can be organized and visualized according to the following five pillars:
Eligibility
Financing
Benefits
Service Delivery
Administration
The challenge for Brett Guthrie (KY-02), Chairman of the House Energy and Commerce Committee will be to find savings among the pillars without causing the House of Medicaid to collapse. This series will examine each of the five, focusing on 2030, the mid-point in the 10-year budget window.
Eligibility
In the CBO baseline forecast, the average monthly enrollment by eligibility category and their percentage of federal spending are illustrated in Table 1 below:
Table 1. Enrollment and Federal Benefit Payments by Eligibility Category in 2030[1]
| Eligibility Group | Average Monthly Enrollment | Enrollment as Percentage of Total | Federal benefit Payment | Benefit Payment as Percentage of Total | Average Spending Per Enrollee |
| Aged | 9 million | 10.9% | $162 billion | 22.8% | $18,570 |
| Blind and Disabled | 10 million | 12.2% | $238 billion | 33.5% | $24,190 |
| Children | 31 million | 37.8% | $84 billion | 11.8% | $2,720 |
| Adults (traditional categories) | 18 million | 21.9% | $81 billion | 11.4% | $4,500 |
| Adults (made eligible by ACA) | 15 million | 18.3% | $145 billion | 20.4% | $10,000 |
| Total | 82 million | $710 billion |
Observations
More than half of Medicaid spending (56.3%) is for 23.1% of the population (aged, blind, and disabled).
Children and traditional adults account for 59.7% of the population and 23.2% of the spending.
The federal share of spending on the ACA adults is more than twice the amount per enrollee than for traditional adults. The most obvious explanation is that the federal government provides a 90% match rate for all these adults compared to an approximate average of 67% for traditional adults.
Traditional Adults Compared to ACA Adults
The difference in the match rate is only a partial explanation for the higher costs attributed to the ACA adults. This group includes adults up to age 65. This group is older and more likely to have health issues compared to traditional adults, who must have a dependent child living in the home to qualify. Few 50+ year olds have a dependent child.
The 2025 poverty guidelines for a single person are $15,650 (average $1,800 per month).[2] The income limit for the ACA adult group is 138% FPL or $21,597. Thus, a 50-year-old single adult at this income level is likely to be unemployed or under-employed because of poor health.
If the ACA adult group were to be eliminated, that would not mean that the federal government would achieve all the savings. Many ACA adults would find a pathway to a traditional Medicaid group, especially through a category related to disability, pregnancy, dependency, or “medically needy” in which an individual’s medical expenses exceed the person’s income. As a safety net, this Medicaid eligibility group is “catching” people before they are completely disabled and do not work at all.
Further, the disruption in the continuity of care for people in this eligibility category who have cancer, heart disease, and other chronic conditions would be devastating. Simply cutting eligibility without a mitigation plan would be problematic, to put it mildly.
Finally, the elimination of the ACA adult category would create a situation in which individuals below the poverty level would be the only group of American citizens to not be eligible for some type of subsidy to enable them to participate in the health insurance system.
The 14 million Americans made eligible by the ACA represent 4.2% of all Americans. Individuals at or above 100% FPL and not eligible for Medicaid can receive subsidies to purchase coverage in the individual Marketplace. So, assume that 2 million of the projected 14 million will be able to access subsidized coverage because they have income greater than 100% FPL. And another 2 million will make the cross-over from the ACA adult category to another traditional Medicaid. That leaves 10 million Americans, or 3%, living in poverty without access to subsidized health care coverage. At this point, the national discussion becomes greater than only a matter for the federal budget.
Next up: Medicaid Benefits
Data integrity, visualization, and independence are critical to having a clear lens when making decisions on Medicaid policy, including eligibility.
HORNE is a professional services firm founded on the cornerstone of public accounting. Our CPA heritage brings trust and discipline to our brand. HORNE was founded in 1962, three years before the Social Security Amendments of 1965 were signed into law, establishing both Medicare and Medicaid. Our founders, realizing the magnitude and complexity of this legislation to the American people and our Country, dedicated our Firm to be knowledge leaders and flag bearers for integrity and transparency for federal and state governments and providers alike.
Our team of leaders, consisting of certified public accountants, attorneys, certified fraud examiners, former federal OIG and IRS investigators, former state Medicaid directors, GIS analysts, data modelers and data visualization experts, is leaning in to help equip legislative bodies with transparent facts to create better outcomes through one of the United States’ most complex and critical programs.
