Trumpcare and Medicaid

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Updated 11/21/2016

President-Elect Donald J. Trump’s Position On Medicaid & Medicaid Expansion

Donald J. Trump’s healthcare reform outline states in Step #6 that the Federal Government should no longer provide financial support to the states to fund the Medicaid program. President-Elect Trump believes that there’s a lot of fraud, abuse and financial misuse happening in the Medicaid program today and that if the states were responsible for funding the program entirely, they would get that fraud and waste under control.

President-Elect Trump also anticipates that the number of people on Medicaid would decrease as the economy improves and people start earning more money and get better jobs and inevitably become ineligible for medicaid based on their higher earning. It is unknown how long he believes this would take before a large percentage of those on medicaid return to the workforce and obtain employer provided health coverage. It should be noted however that a large percentage of those receiving medicaid benefits are Americans actually working full time jobs, but who simply can not afford employer sponsored coverage.

How is Medicaid funded by the Federal Government presently?

The Medicaid program is funded by a number of different sources.

The first way that the Medicaid program is funded through the Federal Medicaid Assistance Percentage (FMAP). This is a payment that the Federal Government allots to the state that depends on the amount of money that the state spends on the Medicaid program. At the bare minimum, the Federal Government will pay $1.00 for every dollar the state spends. For states made up of citizens with an overall negative growth rate in overall incomes in a given year, the Federal Government will give more money to the state under FMAP because it would mean that, hypothetically, more people in that state are being covered by Medicaid. If a state has a more positive growth rate in incomes in a given year, the Federal Government may not give more than the standard $1:$1 bare minimum ratio.

The second way that the Medicaid program is funded is through the Affordable Care Act. As previously explained, if a state voluntarily chose to expand the eligibility requirements for the Medicaid program, meaning that consumers who earn less than 133% of the Federal Poverty Level will be able to enroll in Medicaid coverage. If a state did expand the eligibility requirements they also received more funding from the Federal Government. Under the law, the Federal Government will pay for 100% of the costs associated with the now newly eligible Americans – those who make between 100% and 133% of the Federal Poverty Level. This full reimbursement is not indefinite and will slowly step down over the years starting in 2016 until 2020 when the Federal Government will only reimburse the states for 90% of the costs associated with the newly eligible Americans to the Medicaid system.

The third way that the Medicaid program is funded is by Medicaid Disproportionate Share Hospital Payment. This is a payment made to hospitals that offer a lot of medical assistance to Medicaid and uninsured Americans to make up for the lack of or lower payment they receive for those services. This payment also ensures that there are hospitals that will continue to provide quality care to Medicaid recipients.

The final significant way that the Medicaid program is funded is not actually by the Federal Government, but rather by state funds that are allotted to miscellaneous projects and programs.

About Medicaid And The Affordable Care Act

Medicaid is a program administered and managed by the states to provide health insurance coverage to low income consumers. Before the passing of the Affordable Care Act, also known as Obamacare, the cutoff to receive coverage under Medicaid was approximately 100% of the Federal Poverty Level. Obamacare called for all states to expand Medicaid and allow people who made under 133% of the Federal Poverty Level to receive coverage. It also required Medicaid to expanded to all groups of low income Americans and not just to pregnant women, children, seniors, disabled people and some parents as was the standard prior to the law’s passing.

On June 28, 2012, the Supreme Court of the United States released its opinion on National Federation of Independent Business v. Sebellius, which not only ruled that the individual mandate was Constitutional, but also that the law’s requirement that all states expand Medicaid was an overstep and fell beyond their powers. Accordingly, it was up to the states whether they wanted to expand the eligibility requirements of Medicaid and if they did, they would receive more money from the Federal Government to fund the program for those newly eligible Americans in addition to the other monies they already received from the Federal Government. There are a number of ways that the Federal Government presently funds the Medicaid program and those ways will be outlined in detail below after explaining Mr. Trump’s position on the matter.

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