Medicaid Cuts Remain Center Stage as Experts Address Industry Challenges

While work requirements were initially expected to dominate the Medicaid debate this year, Jennifer McGuigan Babcock, senior vice president for Medicaid policy at the Association for Community Affiliated Plans (ACAP), was not surprised that large-scale budget cuts became a primary focus after its announcement in February.

In a conversation shared earlier this month with Managed Healthcare Executive, Babcock noted that the budget committee had been considering significant reductions in federal Medicaid funding for months.

“The budget options document that started circulating a couple of months ago did actually lay out what could be really significant cuts,” she said. “We thought that work requirements probably still are a hot topic and have been. The way ACAP has been looking at this is there's been this long list of options, all of which could have a significant impact (on Medicaid's future).”

These proposals range from reducing federal funding to altering eligibility requirements, all of which could have major impacts on beneficiaries and healthcare providers.

What This Means for Hospitals and Providers

The uncertainty surrounding these changes raises concerns about access to healthcare for millions of low-income individuals.

In the same conversation, Gabe Scott, a partner at K&L Gates Health Care Group, explored the consequences that chopping down Medicaid benefits and programs could have on hospitals and healthcare providers.

If states are required to shoulder more Medicaid costs, hospitals and healthcare providers may face financial strain, particularly in states with trigger laws.

Scott explained that 12 states have laws that would automatically end Medicaid expansion or require changes if federal funding decreases.

“States would have to find new revenue sources for their Medicaid programs, or they could end expansion altogether, increasing the number of uninsured adults,” he said.

A reduction in Medicaid funding would force states to make difficult choices, including limiting covered benefits.

Scott shared that this could lead to provider closures, as Medicaid reimbursement is a critical revenue stream for hospitals and primary care providers.

“At some point, if services are not reimbursed or not reimbursable, then you start to see, you know, provider closures or providers just being unwilling to accept Medicaid,” Scott warned.

The downstream impact could include higher emergency room usage and worse health outcomes for vulnerable populations.

Confronting the Cuts Head On

To battle these proposed cuts, ACAP is actively engaging in bipartisan discussions, public education and allied coalition-building through a multi-faceted approach in outreach, Babcock said.

“We’re talking to people on both sides of the aisle," she said. "We're trying to figure out what the actual proposals will be in an eventual budget reconciliation package, gather intel, and let them know what we think about the Medicaid program. We're engaging in a ton of education about what Medicaid really means."

ACAP represents 84 Safety Net Health Plans, which are helping to amplify messaging on Capitol Hill and in local districts, Babcock shared.

Recent advocacy efforts included a coordinated fly-in event where health plan representatives met with legislators and phone calls from home districts.

In addition, ACAP is working with communications teams to publish op-eds in local publications, ensuring that Medicaid’s value is highlighted at every level of government.

“We are using all of the tools in the advocacy toolkit,” Babcock added. "We’re trying to do everything that we can to spread the importance of the program.”