Date: September 20, 1995
For Release: Immediately
Contact: HHS Press Office, (202) 690-6343

Advisory: Impact of GOP Medicaid Cuts on Each State

The Department of Health and Human Services has prepared a state-by-state analysis of the impact of the $182 billion in Medicaid cuts proposed yesterday by House Republicans. That legislation is scheduled for consideration today by the House Commerce Committee.

The HHS analysis compares the projected baseline Medicaid budgets of each state with the amount provided for each state under the GOP proposal. It shows the net impact of those reductions during the 1996-2002 period as well as the impact in 2002 alone. Overall, the Republican plan translates into a 19 percent reduction in federal Medicaid spending. Individual state losses range from a high of 32 percent in Indiana and West Virginia to a low of 8 percent in Alabama and Pennsylvania.

A summary of the analysis follows. [For copies of the charts showing state-by-state impact, please call HHS Press Office, (202) 690-6343.]

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State-by-State Impact
of House Republican Medicaid Cuts

The House Republican Medicaid plan is designed to cut federal Medicaid spending by $182 billion below the Congressional Budget Office's projected Medicaid spending over the next seven years. The state-by-state allocation of federal spending -- and the cut below the baseline -- is based on an extraordinarily complex formula in the bill.

To assess the impact on states, it is necessary to compare two estimates: estimated federal Medicaid spending under the current law baseline, and estimated spending under the proposed plan. Pending further review and assessment of the just-released formula, this impact analysis is based on two publicly-released projections:

• Baseline spending estimate: the Urban Institute's projection of baseline Medicaid spending state-by-state was published in May and has been in public use since then.
  
  
• Spending under the plan: the General Accounting Office estimated the allocation of federal funds to states under the House Republican formula on September 19, 1995.

The difference between the two provides a preliminary estimate of the state impact. It shows:

• The plan achieves the target of $182 billion in cuts in federal spending over seven years -- 19 percent below the seven-year baseline, and 30 percent below projected spending in 2002.
  
  
• The range of state impact is extraordinary:
  
  
  • By the year 2002, one state -- New Hampshire -- has no cut. All the rest of the states are cut below their baseline estimate.
    
    
  • Five other states, however, suffer cuts of more than 40 percent below their 2002 baseline: Alaska (-41 percent); Indiana (-44 percent); Rhode Island (-42 percent); Washington (-43 percent); West Virginia (-42 percent).
    
    
• Financially, the greatest dollar impact is in the largest states -- New York and California.
  
  
  • New York is cut by $24.6 billion below its seven-year baseline estimate -- and 35 percent below its baseline estimate for the year 2002.
    
    
  • California is cut by $18.7 billion below its seven-year baseline estimate -- and 27 percent below its baseline estimate for the year 2002.
    
    
  • One-half of the total cut of $182 billion comes from eight states: California, Florida, Indiana, New Jersey, New York, Ohio, North Carolina, and Texas.

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