Myths and facts about Medicaid cuts
There is a lot to process in H.R.1, also known as the “One Big Beautiful Bill Act” (OBBA), including significant changes to the way Medicaid is funded and administered. It can be challenging to fully understand the nature of those changes and what they mean to our state and nation, which is why it’s important to set the record straight about Medicaid and the provisions of the bill. The following can help clarify some of that confusion and point out useful sources of additional information so Nebraskans can better understand this legislation.
What is Medicaid?
Medicaid is a federal-state collaboration that provides the largest source of health care coverage for eligible persons of low income, including children, pregnant women, seniors and people with disabilities. Medicaid expansion, a provision of the Affordable Care Act (ACA), also extends Medicaid coverage to eligible working adults of low income in Nebraska and 40 other states, including the District of Columbia. The federal government is the primary source of Medicaid funding for individual states, which supplement federal funds with state dollars, determine their own eligibility standards, scope of services and payment rates within general federal guidelines. About 346,000 Nebraska children and adults are enrolled in Medicaid.
Myths and facts about Medicaid and H.R.1
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FACT: Under federal law, undocumented immigrants are already ineligible for traditional Medicaid coverage, although some states use their own, non-federal funds to subsidize health care coverage for this population. Federally funded Medicaid does reimburse hospitals for administering emergency care in highly urgent or life-threatening situations to anyone, including undocumented persons, meeting certain eligibility standards. This accounted for less than 1% of Medicaid spending between 2017 and 2023.
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FACT: Claims that Medicaid is riddled with fraud are misleading. While fraud does sometimes occur, it is mostly perpetrated by a small minority of unethical service providers billing Medicaid for non-existent or unnecessary services. Because Medicaid does not (in most cases) directly compensate enrollees, very little fraud is actually perpetrated by beneficiaries — less than 2% of convictions in 2023. Further, data concerning improper payments refers to errors in the way the system is administered; it does not measure fraud. Roughly 74% of improper payments are due to missing or insufficient documentation, not because beneficiaries are ineligible for Medicaid services. Beneficiaries and taxpayers are the true victims of fraud in the Medicaid system—nevertheless the OBBBA proposes to reduce fraud and improper use of Medicaid funds through measures that specifically targets beneficiaries rather than addressing the systemic issues that cause these problems.
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FACT: Research and actual examples of work requirements show the opposite. In Arkansas, 18,000 people lost Medicaid coverage because of confusing, difficult documentation processes and red tape, not because they weren’t working at all. In the end, there was no measurable increase in employment. Estimates from the Congressional Budget Office suggest that nearly 5 million people nationally could lose coverage by 2034 due to the work requirement provision in the OBBBA.
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FACT: Ensuring accountability for public systems like Medicaid is important. But more frequent eligibility redeterminations greatly increase ‘churn’ — that is, people cycling on and off Medicaid due to procedural issues or frequent changes in their eligibility status, especially in less financially stable families whose monthly income tends to fluctuate more often. Shortening the intervals between redeterminations from once per year to every 6 months will come at a cost to taxpayers by creating extra paperwork and increasing staffing needs to keep up with the increased administrative pressure on state agencies, health plans and service providers. More frequent eligibility redeterminations also increase the likelihood that eligible beneficiaries will be disenrolled due to procedural complications. For families, even temporary interruptions in coverage would negatively affect parents’ ability to manage their own, ongoing health care needs as well as those of their children.
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FACT: Medicaid cuts matter to all Nebraskans. While both state and federal funds sustain Medicaid, federal funds are the largest source of support for health care coverage under Medicaid in Nebraska. The provisions of the OBBBA would reduce federal Medicaid expenditures over the next 10 fiscal years, shifting more of the health care funding burden to state budgets. The provisions of the bill would increase administrative and staffing costs and limit our state’s ability to leverage Medicaid dollars to sustain care facilities and hospitals, especially in rural areas. The increased pressure on Nebraska’s budget would force state lawmakers to either compensate by cutting state funding from other critical programs, or allow thousands of Nebraskans to lose health care coverage. If enacted, OBBBA could lead to an average annual reduction in Medicaid enrollment between 23,000 and 37,000 eligible Nebraskans.