White House: Medicaid Cuts Would be “Devastating,” Aren’t On the Table

Making cuts or changes to the Medicaid program isn’t on the table for the Obama Administration as it puts together a budget proposal for 2014, said a senior White House advisor last week during a D.C. conference sponsored by liberal health policy group Families USA. 

Budget cuts for Medicare or Medicaid would be “devastating” to healthcare, especially as healthcare reform tries to take off, said Gene Sperling, director of the National Economic Council and assistant to the president for economic policy. 

“The right answer and the best answer for reducing entitlement savings is to reduce the cost of healthcare in a way that does not compromise quality,” Sperling said, according to coverage of the conference by MedPage Today.  


Nursing home operators—many of whom are already being underpaid by Medicaid—may be able to draw at least a partial sigh of relief at the announcement, although they may still be facing low operating margins. 

As of early 2012, about 63% of nursing home residents were Medicaid beneficiaries, according to the American Health Care Association (AHCA), while a Georgetown University Long-Term Care Financing project revealed that Medicaid contributed about 45% of the total nursing home bill in 2007.

Medicaid underpaid nursing home providers by more than $7 billion in 2012, according to a report by Eljay, LLC released by AHCA in December, and more cuts could further strain operators. 


Republicans have suggested transforming Medicaid into block grants, where states are allotted a certain amount of federal funding, rather than the current system where state spending is matched with federal funds. They estimate this would cut program spending by about a third, says MedPageToday.

Sperling called this an “attack” on the program, however, advocating instead for efforts under the Affordable Care Act and in the private sector to improve care coordination and save money through initiatives such as accountable care organizations (ACOs) and bundled payments. 

“The more that we win the battle of lowering overall healthcare costs, the less you will have to do in terms of more difficult budget choices,” Sperling said.

At the end of the day, the budget does need to be balanced, though, and it might force policymakers toward tough decisions elsewhere—including the possibility of changes to Medicare, whether it’s raising the eligibility age or increasing premiums for wealthier beneficiaries. 

President Obama’s far-reaching healthcare reform bill calls for expanding the Medicaid program to include individuals between the ages of 19 up to 65 with incomes up to 138% of the federal poverty level, but many state governors have expressed concern about adopting the expansion, worried about the possibility of slashed federal support that would leave states to pick up the bill. 

Sperling addressed this during the conference, trying to assuage those fears.

“They will not make this step and then find later Medicaid is the first place or even the last place people are going for serious deficit reduction,” he said. “Medicaid savings and Medicaid cuts for this president are not on the table.”

Written by Alyssa Gerace