Importance of Medicaid in public health emergencies

U.S. Senate, July 2017

H.R. 1628


This Act may be cited as the “Better Care Reconciliation Act of 2017.”




(A) IN GENERAL.—During the period that begins on January 1, 2020, and ends on December 31, 2024, the Secretary may exclude, from a State’s medical assistance expenditures for a fiscal year or portion of a fiscal year that occurs during such period, an amount that shall not exceed the amount determined under subparagraph (B) for the State and year or portion of a year if—

(i) a public health emergency declared by the Secretary pursuant to section 319 of the Public Health Service Act existed within the State during such year or portion of a year; and

(ii) the Secretary determines that such an exemption would be appropriate.

(B) MAXIMUM AMOUNT OF ADJUSTMENT.—The amount excluded for a State and fiscal year or portion of a fiscal year under this paragraph shall not exceed the amount by which—

(i) the amount of State expenditures for medical assistance for 1903A enrollees in areas of the State which are subject to a declaration described in subparagraph (A)(i) for the fiscal year or portion of a fiscal year; exceeds

(ii) the amount of such expenditures for such enrollees in such areas during the most recent fiscal year or portion of a fiscal year of equal length to the portion of a fiscal year involved during which no such declaration was in effect.

(C) AGGREGATE LIMITATION ON EXCLUSIONS AND ADDITIONAL BLOCK GRANT PAYMENTS.—The aggregate amount of expenditures excluded under this paragraph and additional payments made under section 1903B(c)(3)(E) for the period described in subparagraph (A) shall not exceed $5,000,000,000.


Medicaid And The Latest Version Of The BCRA: Massive Federal Funding Losses Remain

By Sara Rosenbaum
Health Affairs Blog, July 14, 2017

Where Medicaid is concerned, the most notable thing about the latest version of the Better Care Reconciliation Act (BCRA) is that despite the drama of the past two weeks—the flood of news coverage regarding the potential impact of the losses; mounting concerns raised by Senators from expansion and non-expansion states alike; and the massive outcry from hospitals, physicians, insurers, and health care organizations—the new iteration leaves untouched the fundamental Medicaid contours of the earlier version.

By 2036, CBO reports, federal Medicaid funding would be about 35 percent below current law, a catastrophe of epic proportions.

The Illusion Of A Public Health Emergency Exemption To The Per Capita Cap

One of Medicaid’s most important dimensions is its irreplaceable role in addressing the immediate and long-term effects of public health crises. Medicaid is by far the nation’s biggest single source of health care financing for dealing with critical public health threats. These threats may begin with an initial, recognized period of a formally declared emergency. They then can morph into events with very long-term effects felt for years or decades after. This was the case with the World Trade Center attacks, which led to an immediate surge in health care spending, followed by years of elevated spending to address the long-term health fallout triggered by the emergency itself. One need think only about Zika or the opioid crisis now gripping the nation to understand the near-term/long-term nature of public health threats.

Medicaid enrollees are disproportionately likely to live in poor communities, and poor communities are disproportionately likely to face public health threats ranging from environmental hazards to infectious disease. These communities also are inherently less likely to have resources to cope with the effects of an emergency. Thus, a program such as Medicaid is crucial in its ability to deploy health care financing resources to the hardest-hit populations. Indeed, two thirds of all Louisiana Medicaid beneficiaries lived in the parishes affected by Hurricane Katrina.

Section 319 of the Public Health Service Act authorizes the HHS Secretary to declare the existence of a public health emergency arising from events such as a “disease or disorder,” “significant outbreaks of infectious diseases or bioterrorist attacks,” or other events identified as public health emergencies by the HHS Secretary. Whether to declare an emergency is entrusted to the Secretary’s judgment, and during the immediate emergency period, the Secretary enjoys expanded powers to deploy resources to designated populations or geographic areas. These special powers end when the declared emergency period ends. In the aftermath, states and local communities effectively are on their own, relying on the resources they have.

In and of itself, a loss of federal health funding as large as that imposed by BCRA elevates the threat risk. This risk grows exponentially when a true crisis hits, if Medicaid is crippled in its ability to provide a large-scale surge in public health care spending both during the emergency and thereafter. To understand how little the revised bill does to mitigate the crippling impact of the initial draft one need only look carefully at what the revisions would do when a true emergency strikes.

The press release accompanying the new draft states that “if a public health emergency is declared, state medical assistance expenditures in a particular part of the state will not be counted toward the per capita caps or block grant allocations for the declared period of the emergency.” But a close read of the actual bill text reveals its fundamental inadequacy.

First, the period of exemption lasts only five years, from January 1, 2020 through December 31, 2024. Emergencies happening after this date won’t qualify for the spending adjustment. Second, the bill provides no additional federal spending during the period of a declared emergency. The draft simply allows states to eventually qualify for additional federal funding in the years following the emergency if they can prove to the Secretary that their spending on the affected population went up compared to prior years and then only for immediate emergency costs. What state will have the money in advance? And what state will be able to take a chance on spending more given the purely speculative nature of whether an emergency will be declared and emergency expenditures recognized?

Third, states would receive no additional funding ever unless the HHS Secretary actually declares an emergency in the affected portion of the state or for the state’s affected populations. Many public health threats may not rise to a level that triggers a formal Secretarial determination, and the Secretary may be inclined not to make such a determination because of other, spillover effects that come with such a determination, such as the elevated demand for other types of resources.

Fourth, the additional amount of federal funding made available would be limited to the difference between what the state spent on the population in connection with the emergency and the state’s previous expenditures for the same population. Expenditures to cope with the emergency aftermath would not count, and of course these expenditures likely would not occur simultaneously with the emergency expenditures. For example, Zika has triggered emergency expenditures aimed at preventing the spread of the virus, but the true costs of Zika will roll out slowly in the form of babies left permanently and severely disabled by the virus.

And here is where the public health implications of BCRA become clear: other than exempting state expenditures on children classified as disabled from the caps, the revised bill, like its predecessor, makes no adjustment for long-term consequences. To be sure, as just mentioned, BCRA does exempt state expenditures on severely disabled children from the federal cap. But because the vast majority of children qualify for Medicaid based on poverty, this type of cramped classification system for measuring exemptions is sure to exclude spending for millions of children in severely compromised health from the exemption process.

Fifth, the bill allows only $5 billion in the aggregate for all additional federal funding over the five-year time period covered by the emergency exemption. In other words, the bill essentially creates a five-year, $5 billion mini-block grant to help all states address Medicaid spending for all emergencies occurring during this time period. The incredibly small size of the block grant alone would be likely to incentivize the HHS Secretary to avoid declaring emergencies out of concern that the money won’t be there to cover them.

In the end, the newest iteration of BCRA does nothing to alleviate the catastrophic effects of its predecessor: the difference in magnitude between what Medicaid can do today and what it will be capable of doing in the future is incalculable.



By Don McCanne, M.D.

Based on some of the rhetoric being tossed around during the debate on repealing and replacing the Affordable Care Act you might think that the politicians currently in charge of the process do not believe that the government should play much of a role in health care. However, based on today’s excerpt from their “Better Care Reconciliation Act,” it almost seems that they do believe that the government should step up during a public health emergency. Or do they?

There are many government agencies that might play a role during a public health emergency. One of the more important is providing victims with Medicaid funding during these emergencies and for the essential services required in followup. Yet the massive reductions proposed for the Medicaid program by the Republican legislation (close to a trillion dollars over the next decade - "a catastrophe of epic proportions") would cripple this important resource for emergency coverage.

The Republicans seem to have been caught off guard by the intensity of the reaction to the cruelty inherent in their reform proposals. Taking a second look at what they crafted, it apparently occurred to them that their substitute legislation should be modified to be sure that public health emergencies were covered.

So what did they propose? A mini-block grant capped at a maximum of $5 billion over five years, and, at that, with many restrictions. As Sara Rosenbaum states in her Health Affairs article, “the incredibly small size of the block grant alone would be likely to incentivize the HHS Secretary to avoid declaring emergencies out of concern that the money won’t be there to cover them.” Based on his track record, it would not be difficult to imagine HHS Secretary Tom Price withholding funds for an emergency just because there wouldn’t be any funds left over for inevitable public health emergencies to come, providing him with an excuse for being the heartless skinflint that he is.

Thus, amongst the many other profound deficiencies, the Republicans in their repeal and replace legislation do not make a serious attempt to ensure that the government would have the ability to respond in fulfilling one of the more crucial essential functions of government - providing assistance in a public health emergency. These guys really don't believe in government.

We need to replace not only the health care financing infrastructure with one that ensures that government will be there for us when we have health care needs, but we also need to replace the stewards of the program with people who understand that we are all in this together and we take care of each other in times of need. We do believe that don't we?

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