Bush Plans to Drastically Cut Medicaid

June 15, 2003

The Bush administration has proposed a basic restructuring of Medicaid and the State Children's Health Insurance Program (SCHIP) which would drastically cut funding and take away vitally needed health services from millions of children, low-income seniors and people with disabilities.

Right now, Medicaid and SCHIP are funded through a matching formula which requires the federal government to pay states from $1-$3 for every $1 dollar a state spends. This guarantee of federal matching funds is vital to the ability of each state to respond to changing health care needs such as rising costs for prescription drugs, emergencies and disasters, the aging of the population, etc. Today, especially when the economic crisis means that more people are losing private health insurance through unemployment or rising co-premiums, the states face increased demand for the Medicaid and SCHIP safety net. However Bush wants to substitute a set block grant or "allotment" for the current matching funds formula. Bush's proposal would cap federal Medicaid spending and this cap, in turn, would eliminate the current incentive for states to increase their own Medicaid funds as a way a receiving more federal assistance.

According to a recent report issued by Families USA, Bush's proposal would reduce funding for Medicaid and SCHIP by nearly $500 billion dollars over the next 10 years, resulting in a 16% cut in spending.

Bush's plan would also give states new authority to slash Medicaid and SCHIP benefits in a number of ways such as further limiting eligibility and enrollment, increasing premiums and co-payments required from recipients, reducing health services covered (such as mental health care, prescription drug coverage), etc.

Medicaid currently provides health and long-term care coverage to 51 million low-income Americans, including 12 million seniors and people with disabilities and more than 26 million children.

As the crisis of the private, for-profit health care system grows, millions more Americans are being denied vital medical services. This is a time when the government must increase not slash funding for public health programs so that everyone is guaranteed the basic human right to health care.