The Administration's Medicaid Cost Proposals Would Shift Costs to States

The Bush Administration's Medicaid cost savings proposals are projected to save the federal government $35 billion. The states' savings under this plan are projected to be ten times less. In addition to bringing minimal savings to the states, the Administration's plan shifts costs to the states that negate any state savings. The Administration's proposal will intensify costs on the states. The states will be left with three basic options to reduce Medicaid costs: 

• Limit eligibility
  
  
• Reduce benefits or increase beneficiary co-payments
  
  
• Reduce provider payment rates
  
  

This report projects that many states will take advantage of flexibility built into the recently-enacted budget reconciliation law to shift costs to beneficiaries by scaling back benefits, and increasing co-payments and premium charges.