- Associated Press - Tuesday, May 10, 2011

WASHINGTON (AP) — The House Republican budget would leave up to 44 million more low-income people uninsured as the federal government cuts states’ Medicaid funding by about one-third over the next 10 years, nonpartisan groups said in a report issued Tuesday.

The analysis by the Kaiser Family Foundation and the Urban Institute concluded that Medicaid’s role as the nation’s safety net health care program would be “significantly compromised … with no obvious alternative to take its place,” if the GOP budget is adopted.

The plan passed by House Republicans last month on a party-line vote calls for sweeping health care changes, potentially even more significant than President Obama’s insurance overhaul. So far, most of the attention has gone to the Republican proposal to convert Medicare into a voucherlike system for future retirees, but Medicaid also would be transformed.

The Republican budget has no chance of passing the Democratic-led Senate or being signed into law by Mr. Obama. But individual components could advance as part of debt reduction talks between Vice President Joseph R. Biden Jr. and congressional leaders.

Medicaid is a federal-state partnership that now covers more than 60 million low-income children and parents; seniors, including most nursing home residents; and disabled people of any age. Under the GOP plan, Medicaid would be converted from an open-ended program, in which the federal government pays about 60 percent of the cost of services, into a block grant that would give each state a fixed sum of money.

The budget also would do away with the right to Medicaid benefits under federal law and repeal a coverage expansion to low-income adults included in Mr. Obama’s overhaul.

Republican governors say they can save taxpayers billions through a block grant that would let them clear away federal red tape and design health care systems tailored to local needs. But the study cast doubt on whether governors would have enough money coming in from Washington to adequately meet the needs of their states and avoid sharp cuts in services.

Under current laws, Medicaid is expected to cover 76 million people in 2021, the end of the 10-year estimating window used in federal budgeting. Of those, some 17 million would gain coverage under Mr. Obama’s expansion.

The study estimated that 36 million to 44 million people would lose coverage from the combined impact of the block grant and repeal of Mr. Obama’s law. Researchers said they gave a range to account for different approaches that states might take to reduce their Medicaid rolls. Under the worst-case scenario, Medicaid enrollment would plunge by nearly 60 percent from current projected levels.

The study found that federal spending for Medicaid would decline by $1.4 trillion from 2012 to 2021, a reduction of about one-third from what is now budgeted. Southern and mountain states would face the steepest cuts. Florida, for example, would take a 44 percent hit, while Nevada would have a 41 percent reduction.

Hospitals, community health centers and other health care providers that serve low-income people would be disproportionately affected. In 2021, hospitals would face Medicaid funding cuts of $84 billion, the study said, at a time when growing numbers of uninsured people would be going to emergency rooms for treatment.