President Trump released his new budget proposal Tuesday, and it includes a $610 billion cut over 10 years to the Medicaid budget.
That proposal is in addition to the $839 billion cut written into the American Health Care Act, should the bill become law. It was passed by the House earlier this month. That’s far from a sure thing, given big questions about the Senate’s plans for health care reform.
But if Medicaid is going to be slashed, it’s worth taking a look at exactly how the program spends its money now. After all, Medicaid accounts for $1 out of every $6 spent on health care in the US. But there are major differences in what that spending looks like on a state-by-state level. And certain services cost Medicaid far more than others.
Here’s a breakdown based on fiscal 2016 spending, in order of most to least expensive service.
Managed care plans
As a share of spending, nothing costs Medicaid more than managed care and health plans: Costs here account for nearly 46 percent of program spending.
This covers health insurance run through managed care organizations, which set up contracts with area health care providers to provide care for members at a discounted rate. Those organizations accept a set monthly fee from Medicaid for each member.
The states spending the most on managed care and health plans? California, New York, and Texas — the first, fourth, and second most populous states, respectively. (Florida, the third most populous state, accounts for the fifth-highest level of spending in this category.)
Acute care for everyone on Medicaid
On Medicaid and go for a doctor’s appointment or an X-ray? Need prescription drugs or dental work? All that counts as acute care spending in Medicaid’s budget, and it makes up the second-biggest line item in the program’s spending. Medicaid shelled out more than $145 billion in 2016, or about 26 percent of its entire budget, for acute care for enrollees.
The top spenders by state: Vermont, Alaska, and Oklahoma. (As the Kaiser Family Foundation notes: Some of Vermont’s long-term care spending is actually reported as acute care, which affects the rankings.)
Long-term care for the elderly and disabled
About 20 percent of Medicaid spending goes toward covering long-term care such as nursing homes. Most private health insurance doesn’t cover long-term care, meaning the elderly and disabled often have to pay out of pocket or rely on federal programs such as Medicaid to afford those services. Long-term care payments cover nursing homes, care facilities for individuals with intellectual disabilities, and home health care, among other services.
Help for hospitals that treat a high proportion of low-income patients
The federal government helps some hospitals cover the costs of treating a disproportionately high number of low-income individuals who are either on Medicaid or are uninsured. It’s what’s known as a disproportionate share hospital payment, or DSH payment.
Payments here make up a relatively small amount of federal Medicaid spending: just over 3 percent. That said, spending on DHS payments varies widely by state. They account for nearly 15 percent of Medicaid spending in Louisiana, the state with the highest rate of Medicaid spending on safety net hospitals.
Individuals who can’t pay Medicare premiums
Some individuals are eligible for both Medicaid and Medicare, the federal health insurance program for people age 65 and older.
Those individuals might not be making enough money to cover their premiums, deductibles, and other insurance costs. About 3 percent of Medicaid spending goes toward paying premiums for Medicare enrollees.
This story has been updated to reflect budget proposal numbers.