Cutting Back: Sebelius Proposes Medicaid Cuts For States That Expanded Medicaid

Kathleen SebeliusIn a report by the American Action Forum (AAF), states that have adopted Obamacare’s Medicaid expansion are working through thousands of backlogged applications. Now, the Obama administration is suggesting that Medicaid cuts will be their solution for states dealing with backlogs.

As the Daily Caller reported, outgoing Health and Human Services Secretary Kathleen Sebelius is proposing that funding be cut for states that have found themselves in a pickle for expanding Medicaid under Obamacare.

During a recent Senate Finance Committee hearing, Sebelius suggested that the Centers for Medicare and Medicaid Services (CMS) would temporarily cut federal funding for Medicaid administrative tasks to states that are struggling with a backlog. Sebelius theorized that looming cuts would incentivize states to get their backlogs under control as soon as possible.

Cutting administrative funding to states already struggling with insufficient administrative infrastructure would appear to make the problem worse, according to American Action Forum health care policy analyst Angela Boothe.

“In order to encourage states to move through their backlogged applications more quickly, [CMS] may decrease the federal matching rate for Medicaid — with the cut expected to come in the forms of reductions to administrative Medicaid funding,” Boothe told The Daily Caller News Foundation. “States that are still reporting an inability to connect with the federal marketplace, and are therefore seeing applications back-up in the determination process, are subject to these cuts.”

But, the report points out that threat of cutting funding is not so much an incentive, as it will only lead to additional staffing pressures and slowdowns for the system. Sebelius’ move, the AAF reports, will put all of the burden on states.

“States are bringing their eligibility systems up to date and hiring new staff to handle the additional beneficiary volume,” the AAF reports. “Decreasing funding for administration of the program will force states to scale back on the current pace of progress.”

Funding for Medicaid beneficiaries comes via state and federal funding. How much federal funding a state receives to assist in the administrative duties of running the program is set at 50 percent of federal dollars and 50 percent of state dollars. Therefore, by decreasing the amount of federal funding, as Sebelius is proposing, the application process will become even slower.

Noted by the Daily Caller, federal systems have wreaked of turmoil in their attempts to transfer accurate information to state Medicaid agencies. And, it is not known to HHS if the issue “lies within federal or state technology or both, but HHS’ seems to be putting the onus on state agencies to solve any problems on their own,” according to the DC.

Whether states received a Medicaid expansion or not, customers already qualified for traditional Medicaid programs have increasingly come out of the woodwork and signed up thanks to publicity surrounding the Obamacare debate. Many state administrative functions are already swamped.

The Washington Post reported in January that software defects in HealthCare.gov’s back-end systems were preventing over 100,000 Americans from being fully enrolled in Medicaid or the Children’s Health Insurance Program. HealthCare.gov couldn’t properly communicate eligible Medicaid applicants’ information to state agencies, preventing them from verifying the applications and creating thousands of backlogs themselves.

Even today, major back-end components of HealthCare.gov have still not yet beenbuilt.

The AAF said it could not identify how many individuals were stuck in the middle of the process.

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