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A Breakdown of Medicaid Spending Caps

Updated on June 13, 2011
Originally posted June 8, 2011

Talking Points: Block Granting of Medicaid

Use NAMI's talking points with your Congressional delegation and Governor and to discuss how federal block-granting, or capping, of the Medicaid program would affect seniors, children and people living with disabilities, including many with serious mental illness.

Talking Points: Block Granting of Medicaid.

41 Senators Go On Record Against Cuts to Medicaid

As of June 13, 2011, 41 Senators have signed a letter to the President making clear their opposition to deep cuts to Medicaid and against any effort to convert the program to a block grant to the states. This effort was led by Senator Jay Rockefeller (D-WV). The fact that 41 Senators signed this letter is significant since 60 votes would be needed to cut off debate and pass any Medicaid block grant proposal. While this is an important milestone in the effort to stop a Medicaid block grant proposal, advocates cannot let up pressure on all members of Congress, including both the House and Senate.

Read the letter signed by 41 Senators.

Advocates are encouraged to contact their Senators that signed this important letter to thank them for standing up for Medicaid funded public mental health services.

Global Spending Cap

The notion of a global spending cap has been promoted by fiscal conservatives as a long-term solution to reducing federal spending. Under this scenario, both discretionary programs (such as biomedical research, the Mental Health Block Grant program, housing, homelessness and veterans programs) and entitlement programs (including Medicaid) would undergo steep cuts to bring total federal spending to within a certain percentage of Gross Domestic Product.  In future years, if spending grew above this limit, automatic, mandatory, across-the-board cuts would be imposed on all federal programs, including Medicaid.  This scenario would likely force Medicaid to be converted to a block grant, since the program as currently designed could not support such funding reductions.

Health Spending Caps or Entitlement Spending Caps

Proposals to set a cap only on federal health spending or only on entitlement programs could have the same effect on Medicaid as a global spending cap: mandatory reductions to program funding and the potential for Medicaid to be converted to a block grant.  It is important to note that previous deficit reduction efforts from the 1980s and 1990s included similar global constraints on both mandatory and discretionary spending.  However, what made these policies different was that each of them exempted safety net programs for the most vulnerable in general, and in particular shielded the Medicaid program from cuts. 

More information on the impact of a global spending cap on Medicaid is available at the Center on Budget and Policy Priorities:

Medicaid Maintenance of Effort Repeal

This proposal, suggested both as stand-alone legislation and as a rider to the debt limit bill, would repeal the requirement under health reform that states maintain 2010 eligibility levels until 2014, when the Medicaid expansion and state health insurance exchanges take effect. Given the current budget shortfalls many states are facing, a MOE repeal would likely result in 300,000 Americans losing Medicaid coverage, according to the Congressional Budget Office (CBO).

Current Status of these Proposals

Many of the current negotiations on the budget are taking place in secret, meaning that information about how Medicaid fares in any compromise deal may not be available until a final agreement is announced.  At this point, it appears likely that the debt ceiling debate will include tens of billions of dollars – if not more – in spending cuts, and Medicaid is a likely target.  Support for the MOE repeal appears to be growing in both the House and the Senate, and a vote on the proposal could come as soon as this month.

What You Can Do to Fight for Medicaid

Advocates are strongly encouraged to contact their House members and Senators to urge opposition to any global cap on entitlement spending that does not specifically exempt safety net programs for the most vulnerable, including Medicaid.  NAMI is working hard in Washington to fight against these proposed cuts to Medicaid – but it is critical that members of Congress hear from constituents like you that typically can have the most sway over legislators’ votes.