Hearings to examine the reality of Medicaid.

Good morning. This uh hearing of the Senate Budget Committee will come to order. Um I I want to welcome everybody. I certainly want to thank the witnesses for appearing. Appreciate your testimony. I've I've read it thoroughly. Uh L- longer than normal, but uh I think it's a important, a very important topic. Uh I'll tell you just right up front what prompted this hearing as as our first hearing, it was the CBO release of the first three quarter spending in in Medicaid. And uh, the result is, year over year we're at forty nine billion dollars, which is a ten percent increase over what we spent in fiscal year twenty twenty five. Um, now again I'd I'd like to be as cooperative as possible, but one of one of the reasons I wanted to hold the hearing is is, um, I I wanted to counter the the false accusations that the Republicans cut and slapped Medicaid to the bone it it's simply not true um so just a real quick history of Medicaid uh passed in nineteen sixty five uh there were four designated groups of people that qualified uh aid to for families to dependent children qualified um aid to the elderly aid to the blind aid to the permanently and totally disabled uh states could optionally cover people medically needed who had income levels above the threshold set and also children less than twenty one that were not on afdc and so that was the the core group of people uh that medicaid was initially designed to cover now through the nineties and a little bit again in the in early two thousands eligibility continue to expand as did enrollment as did uh the dollars and cents uh we're we're gonna have a little bit of dueling charts here i think uh the committee should get used to my using of charts. But let's again uh The problem solving process always begins with you have to admit you have a problem. Now now now my guess is we have two definitions of the problem on each side of the dais here. Uh, personally I think Medicaid spending is out of control, and I will kind of prove that case. My guess on the other side of the dais, we're probably not spending enough. But anyways, set that aside, the next step is you have to define the problem, you have to agree on common facts. And what I like today's hearing to be about is laying out the basic facts we can all agree on. Once we do that, we can start doing root cause analysis, we can start taking a look at uh what what kind of policy changes are required. For something I hope we all agree with is prevent the massive fraud we're starting to uh this been revealed here over the last uh few months. But let's start with uh my my I'll call this a PowerPoint presentation. Uh everybody at their see it has the the final chart of this uh build-up but it starts with this chart, which just shows spending from nineteen ninety to nineteen ninety eight. Now again, this is thirty three years into the program. We are spending less than a hundred billion dollars. And there's about thirty two million people enrolled, which is around twelve percent of the population. Next chart. Now, I've I've been spending enough talking an awful lot about uh uh different budget baselines, you know, take what actual expenditures, increase them by population inflation growth is just a reasonable baseline control over, you know, what should we be spending. Had we done that to nineteen ninety eight spending under Clinton, this year, last year, twenty twenty five, we'd be spending two hundred forty eight billion dollars. K, next chart. This shows actual spending, then on top of that, those uh projections, uh not really projections, but again the baseline, Uh through twenty fourteen, the first year that Obamacare kicked in and Medicaid expansion kicked in. Uh you'll you'll notice we we were we were growing under the Bush administration, slightly higher than that, population growth and inflation. Uh under the Obama administration, tho- those expenditures increased pretty significantly above beyond that and of course twenty fourteen, it really took off. Next chart. This is what we'd be spending if we took the twenty fourteen spending again, which is already first year into Medicaid expansion, and just increase that by population and inflation. We'd be spending four hundred forty one billion dollars in tw- if it's year twenty twenty five. Next chart. This shows again actual spending on top of that inflation population growth uh from twenty fourteen through twenty nineteen, the year before the pandemic. Again, we're running ahead of of of that baseline. Next chart. So so let's say you take twenty nineteen spending, increase that by population inflation, this year, twenty twenty five we'd be spending five hundred thirty six billion dollars. Final chart, this one in front of you. We're actually spending six hundred sixty eight billion dollars. So again, that's just the financial facts. And instead of two, instead of spending two hundred forty eight billion under a Clinton nineteen ninety eight baseline, or four hundred forty one billion under a Obama after Medicaid expense was already instituted of four forty one. Or five hundred and thirty six from the pre-pandemic baseline, we're spending six hundred sixty eight billion dollars. I just think that indicates the program out of control. You combine that with the fact that now we have the Nick Shirley videos of the outrageous fraud uh uncovered in Min- Minnesota um with child learing centers, and autism centers, and transportation. I mean, all these things are defrauding Medicaid, and - and the problem with that is when you're spending billions of dollars on fraud, those are billions of dollars that can't be spent on the people who actually need it. And I think we'll hear from witnesses today, too, that a lot of the McC- uh, Medicaid expansion, the - the - Let me back up. Medicaid was initially established as a federal match to a state administered program. You know, where where the state's has significant amount of skin in the game. Currently, for every dollar the state spend on a disabled child, they get about a dollar thirty-three in benefits from the federal government. Obamacare changed that for single, working age, able-bodied, childless adults. And for every dollar the state spends on that category of individuals again, not disabled child, not blind, not elderly, States get nine dollars in funding. I mean, we'll talk about it, but it makes no sense. I would say a lot of that has fueled some of the fraud. There's there's just no incentive for states to really be checking eligibility, or really be investigating fraud. So, we'll talk about that. But, anyway, huge disparity in terms of the the dollars spent, we we've seen now the fraud. Uh, you know, we talked, I mean, this is generally Medicare, but uh, four hundred hospice centers, in los angeles a third of all hospice centers apparently were in l. l. a. doctor ross defunded four hundred of them not one of them complained so again i hope we can get bipartisan agreement that we need to figure out how to eliminate this fraud i can't tell you how much it is we don't do very good job tracking we we don't have the controls in place we design these programs to really be out of control which is what we've got uh final charts just talk about uh the enrollment uh you can see it's it's uh it has skyrocketed it has different uh you know, points in time when it's done it through the nineties, early two thousands, but it really uh skyrocketed after uh uh Obamacare and Medicaid expansion. Um, and I think the last chart you also have in front of you, um, thi- this is a similar type of uh depiction, as - as I've done in the other baselines. If you took the nineteen ninety-eight enrollment, increased it only by population, we'd be looking at about uh forty million people on - on medicaid it'd be about twelve percent of our population uh if you just take again two thousand fourteen after medicaid expansion so you've already had one year of medicaid expansion uh you'd be at about seventy million about twenty percent of our population but in fact uh we're about eighty eight point two which is over a quarter of our population is on medicaid again i don't think medicaid was ever designed to cover twenty five percent of population but that's where we are today so again these just the basic facts um if we're gonna solve a problem again i would hope on a bipartisan basis we'd like to at least eliminate the fraud in the program make sure the dollars we spend are going to the people who truly that we truly need it truly need it we all wanna provide that kind of help we can hopefully eliminate the fraud but yeah these are just the numbers that indicate something's amiss here that needs to be addressed with that i'll turn it over to senator merkle

uh thank you very much mr. chairman and we're we're bringing different perspectives to bear and that's the uh beauty of uh having hearings and debate and the perspective that uh uh many democrats are bringing to this and i'm probably a few republicans as well is that prior to two thousand nine we had a tremendous uninsured population in a in america both because uh essentially there were lot of holes in the medicaid program as to who was was covered and then there was a gap above the qualif income qualification for Medicaid, where people still couldn't afford insurance unless insurance came through their their company. Uh, and then you had uh folks above that who couldn't afford the insurance either, so essentially we did two things. We said let's expand uh Medicaid, fill in the holes, address the still low, less affluent population above it, and let's create tax credits to help them people buy private insurance in a marketplace. And in in Oregon, I don't have the exact number in front of me, but I think we had roughly twenty-five percent of the population without insurance before we made those changes. And we were over ninety-five percent who had insurance uh afterwards. So the result of that is not only a big reduction in stress for families, because they had insurance, But we ended a lose-lose situation. Folks without insurance uh simply would postpone getting treatment for medical problems, cuz they couldn't afford to pay the bill. And then the problems become bigger and more expensive. And that's a problem for their health, but it's also a problem for the cost of the medical system. And then when they did go to get medical help, they went to the emergency room, which is the least efficient and highest cost piece of the entire system. And then, because they didn't have insurance they often couldn't pay the bill, which meant there was no revenue to cover the the the provision of services. So here we are with this lose, lose, lose proposition because we don't have comprehensive uh health care. So that's the the vision that was undertaken. Uh what we will see and lay it out is essentially when we're looking at the rising costs in Medicaid it's it's uh essentially because the rising costs of health care per person, in every aspect, of of healthcare that is in individual insurance provided through medicare and and also through uh private insurance last year the republican majority used a bill that's a simple majority bill uh and so they said essentially we don't like this medicaid program we're not all in on this vision of health insurance for less affluent families so we're going to cut it and they slashed what will become more than a trillion from the healthcare system. And it will kick more than fifteen million Americans off health insurance. And it will skyrocket the out-of-pocket costs for millions more. And where was the savings applied to? Tax breaks for billionaires. It was a very simple proposition. Less affluent families lose, and billionaires win. And that's not a philosophy that many of us, uh, share many of us disagree with that philosophy we think we should have a foundation for families to thrive not a a families lose billionaires win uh strategy now i'll partner with anyone to tackle fraud invest in audits absolutely uncover and stop fraudulent charges have significant penalties for that absolutely stop upcoding you bet and i've introduced a bill on upcoding upcoding is a huge fraudulent practice But where? In Medicare uh Advantage. But deliberately reducing health insurance coverage for less affluent families isn't, that's not tackling fraud, that's simply destroying health care for less affluent families. It's back to where we were in a lose, lose, lose strategy for our nation. Now, the Trump administration has proceeded to protect fraudsters. How? By cutting off funding for Medicaid fraud control units. i would suggest, mister chairman, we should have a hearing on on that. and by pardoning convicted fraudsters, including one executive who generated two hundred and five million dollars in false medicare claims. we should have a hearing on that. so i'm all in on uh tackling fraud but when the conversation about fraud is used as a strategy to wipe out health insurance uh for families and recreate a lose lose lose uh foundation in america Uh, that I'm not all all in. The vision of the red carpet for the rich and red tape for the poor is a bad vision for America. We've already wiped out under what Trump called the big, beautiful bill and we called the big, ugly betrayal, uh, health care for two million children and eight million people. And certainly the two million children who have been booted off Medicaid are the children's they weren't committing health care fraud. But, I'll tell you what they were doing, they were going to the doctor when they needed medical treatment and the clinic and the hospitals were getting paid. Uh, that's a win-win. So let's reject the lose-lose-lose strategy and and adopt the win-win strategy. Without health insurance, people will delay getting care, develop more serious health issues, be more expensive to treat, go to the most expensive car at the emergency room, provide less revenue to our clinics and and hospitals. And when revenue drops, hospitals and clinics close, reducing care for the entire community, regardless of what type of insurance you have. So, proceeding to, well, uh, take away health insurance for the less affluent actually has a profound impact on everyone's ability to have uh healthcare treatment. And you know where it's really scary? Rural America. If you wipe out the flow of revenue for a clinic or hospital in urban America, well, there's another clinic or hospital nearby. But when you do it in a rural area, and the next clinic or hospital is seventy miles away or a hundred miles away, that's certainly out west, that's not uncommon at all, then you're having a profound impact. on the health of the entire community if you have a health attack or a that is a heart attack or a stroke you don't have time to drive a hundred miles to see a doctor get to a hospital get to emergency room as of april of this year two hundred and sixteen hospitals and clinics have already closed due to the provisions in the big beautiful bill last year or dramatically reduced services more than one thousand hospitals clinics and nursing homes are at risk of closing or cutting because of the cuts to Medicaid. And here's more bad news. There's even more devastating cuts coming in twenty twenty seven, cynically scheduled to kick in after this November's election. An independent analysis by the non-partisan Congressional Budget Office shows that this law will end coverage for seven point five million Medicaid enrollees by creating a thicket of red tape burdensome reporting requirements and extra costs. like the thirty-five dollar copays for Americans who are already struggling to afford the cost of gas and groceries. It's just wrong. Let's recognize that these cuts hit rural America the hardest. My state of Oregon is a big rural state. In rural Malayork County in southeast Oregon, fifty-two percent of residents are covered by Medicaid. And if you compare the number of children in rural Oregon, who are dependent on Medicaid, the Oregon health plan, compared to the rural, it's much higher in the rural areas. Compare that to folks in Washington County, just west of Portland, where only twenty-five percent of residents instead of fifty-two percent are covered by the Oregon Health Plan that is our version of Medicaid so again, it really attacks uh rural Americans. Now let's look at at the numbers and I I share an affection with the chair of of using numbers. Let's put up the uh first chart. Medicaid spending has grown slower than overall US health spending. And you can see it from this chart. The blue line is much flatter than the red line. It's as simple as that. Since two thousand and seven, all health care spending has gone up, but Medicaid spending has gone up at a much lower rate. And now let's look at a forecast going forward. CMS forecasts that this year the per-person costs of private insurance will increase more than the per-person costs of Medicaid. Not to mention that Medicaid makes up just eighteen percent of national health spending. Between two thousand and twenty twenty-three, while Medicaid's enrollment roughly doubled, Medicaid's share of national health spending ticked up just three percentage points. Three percentage points from sixteen percent to nineteen percent. So the problem isn't Medicaid, it's our overall health care system driving across across the board. private insurance you see it in medicare and yes you see it in medicaid as well but you see it uh going up more slowly in medicaid than in these other arenas cbo has found that every additional dollar we spend on children's medicaid coverage today reduces federal deficits by roughly two dollars in the future why is that because healthier kids grow into healthier adults reducing their demand on the healthcare system while increasing their contributions in taxes uh More creating a better foundation for children to thrive by making sure that they have insurance. That's critical to my state of Oregon, where nearly sixty percent of their kids get their health care through Medicaid or CHIP, Children's Health Insurance Program. But it's not just the kids who are threatened by these cuts. The big ugly betrayal law, passed last year on a partisan basis, is also forcing states to slash home and community-based services for seniors and people with disability. Here's how it's affecting real people. In Minnesota, an autism therapy provider had to sell her cattle herd and lay off staff just to afford keep serving children who have nowhere else to turn. In California, because of in-home support services, a mother has been able to take care of her disabled son instead of having to work an additional job. And as she said, and I quote, " Without this, people become homeless. They lose their income. They lose their stability. Whatever tiny safety net they had is gone. It's just cruel." And of course I think everyone is familiar that we're the only developed country where people are still going bankrupt because of the costs of health care. We have failed to provide the same firm foundation provided in every other developed country. In Oregon, one of my constituents wrote to me about her two forty year old sons with disabilities, who since they were eighteen have lived in group homes and attended day programs. Her plea to us was simple, don't force families like hers back towards institutionalization. by cutting Medicaid funding for these programs. And institutionalization is always more expensive. In her words, it would be insane, inhumane, and a crime against humanity. Insane is right. This isn't about fraud. If it was, this hearing would be about the president pardoning convicted fraudsters, encouraging fraud, and cutting funding for Medicaid fraud control units. This hearing is about the red carpet for the rich and red tape for the poor. Health care is a right for all, not a privilege for the wealthy. Let's reject the strategy of families lose and billionaires win, and replace it with a strategy of a foundation for every family to thrive, and that includes health insurance.

Thank you, Senator Merkley. You might have missed the fact that we provided fifty billion dollars for a rural health care fund in the, in the reconciliation bill. And I'll just remind everybody Medicaid spending is up ten percent this year. I don't think there's any projection that shows medicaid spending being cut or declining at all so it's just going through the roof but uh again appreciate your opening statement uh now

definitely just not have to worry about it

uh it is tradition in this committee to swear in witnesses would you all stand and raise your right hand the story of the testimony you'll give before this meeting be the truth the whole truth and nothing but the truth so help you god

sure

please be seated Our first witness is Mister Brian Blaise. Mister Blaise is the president of Paragon Health Institute. He was a special assistant to the president for economic policy at the White House's National Economic Council from two thousand seventeen, two thousand nineteen, where he coordinated the development and execution of numerous health policies and advised the president NEC director and senior officials. After leaving the White House, Mister Blaise founded Blaise Policy Strategies and served as the CEO. Mister Blaise.

Chairman Johnson, Ranking Member Merkley, and members of the committee, thank you for the opportunity to testify. Medicaid is an important welfare program. But too often, it fails the truly vulnerable. Children, pregnant women, seniors, and people with disabilities. The federal-state Medicaid partnership is broken. Over the past dozen years, states have shifted hundreds of billions of dollars of Medicaid costs to the federal government. Washington now pays more than seventy percent of Medicaid spending, up from the historic sixty percent. I will focus my remarks on two major problems, the Affordable Care Act's expansion of Medicaid to able-bodied working age adults, and the legalized money laundering apparatus that results in massive corporate welfare through Medicaid. The ACA created a powerful financial incentive for states to prioritize expansion enrollees over traditional enrollees. on average, when a state spends one dollar of its own money on a traditional medicaid enrollee, the federal government contributes a dollar thirty-three. But for one dollar of state spending on an expansion enrollee, the federal government contributes nine dollars. Thus, Washington pays states seven times more for each state dollar on expansion adults, than for people medicaid was created to serve. Multiple studies show that Medicaid expansion has made it harder for traditional enrollees to obtain physician appointments. It's increased wait times and forced more patients to rely on emergency rooms for routine care. Medicaid should prioritize the most vulnerable. Instead, its financing formula discriminates against them. The same misguided incentives explain the surge in improper Medicaid enrollment. Yesterday, Paragon released a study by Liam Segal estimating that nearly half of the twenty million Medicaid expansion enrollees were likely ineligible in twenty twenty four. This imposed roughly thirty-three billion dollars in improper federal costs, with a major cost shift from states to the federal government. A few states like California and New York have exceptionally high improper enrollment, but the problem exists in virtually every expansion state. Congress should end the discrimination against the most vulnerable and equalize federal reimbursement rates for all enrollees within each state. President Obama proposed equalizing reimbursement rates after the ACA became law.

Right.

A second major problem is Medicaid money laundering. The clearest example is provider taxes. Former Oregon State Representative Mitch Greenlick called these, quote, " dream taxes for states." Quote, " We collect the tax from the hospital, we put it up as a match for federal money, and then we give it back to the hospitals." To be clear, this is not a tax. It is legalized money laundering mechanism for shifting costs from states to Washington while generating windfalls for politically powerful providers. In twenty eleven, then Vice President Joe Biden called provider taxes a, quote, scam and said they should be eliminated. Senator Durbin has called them a charade. The Simpson-Bowles Commission, set up by President Obama, recommended ending them. President Obama proposed limiting provider taxes, and the one big, beautiful bill basically adopted his proposal. Broken Medicaid incentives have led to a new form of corporate welfare, state-directed payments. Under the Biden administration, CMS allowed Medicaid insurers to pay hospitals up to average commercial rates. or more than two and a half times Medicare rates. Medicaid should not pay hospitals more than Medicare. Such excessive Medicaid payments distort the program's purpose, and threaten seniors' access to care. In the one big, beautiful bill, Congress appropriately limited Medicaid payments through insurers to Medicare rates. Most Medicaid spending now runs through health insurance companies, generating enormous revenues for them. Yet there is remarkably little evidence that Medicaid managed care has improved access, health outcomes, or reduced costs. Increasingly, Medicaid managed care functions as a financing intermediary for corporate welfare. Medicaid's perverse incentives have also let created a lucrative consulting industry devoted to helping States maximize federal reimbursement by gaming Medicaid's complicated financing rules. This does not improve patient care. Medicaid is an essential program. But Congress must improve the core incentives, reward States for serving the most vulnerable, not for maximizing federal reimbursement. End the financial discrimination against the most vulnerable. Eliminate the Medicaid money laundering schemes. And root out corporate welfare. Those reforms will help return return the balance to the federal-state Medicaid partnership and improve Medicaid for America's most vulnerable citizens.

Thank you, Mr. Blase. Our next uh witness will be Mr. Jonathan Ingram. Mister Ingram is the Vice President of Policy and Research at the Foundation for Government Accountability. Prior to joining FGA, Jonathan served as the Director of Health Policy and Pension Reform at the Illinois Policy Institute and as Editor-in-Chief of the Journal of Legal Medicine. He holds a Bachelor of Science in History in English, an Executive Master of Business Administration, and a Juris Doctor. Mister Ingram.

Chairman Johnson, ranking member of Merkley, and members of the committee, um, Jonathan Ingram, Vice President of Policy and Research at the Foundation for Government Accountability. Criminals steal billions from Medicaid every year. Last summer, prosecutors charged a Russian-led, Russia-led crime syndicate that stole the identities of more than a million Americans and then billed Medicare and Medicaid more than ten billion dollars. In May, prosecutors charged fifteen defendants in Minnesota in the largest Medicaid autism fraud case in American history. In Ohio, fraudsters built networks of shell home health companies, uh, built Medicaid for care that they never delivered, and then posted videos of themselves drinking champagne on private jets. Those cases made headlines because prosecutors could bring charges. Many Medicaid losses never get that far. Bureaucrats wrote rules that enroll people without verifying eligibility, and pay providers that nobody has screened. It's fraud by design. The fraud has two faces, criminacle- criminal syndicates billing from overseas and rules quietly manipulated from cubicle. But the victims are the same. American families pay their taxes, trusting Congress to spend their money carefully. And the people this program was built for, senior citizens, pregnant women, children with disabilities, are left competing for resources that were stolen or diverted by bureaucrats before they ever arrived. Start with the scale. More than one in five Medicaid dollars is spent improperly. And before the one big beautiful bill, taxpayers were on track to lose more than two trillion dollars over the next decade. More than eighty percent of those improper payments traced to eligibility errors. Five policy choices made that possible. First, bureaucrats stopped verifying applications. More than forty states take an applicant's word on residency, more than a dozen take their word on income, and officials in at least thirty states now uh want to take enrollees' word on work requirement exemptions and compliance. Second, states stopped rechecking eligibility. Nationwide, states renewed sixty-nine percent of recent cases without asking enrollees a single question. North Carolina renewed ninety-nine point five percent of their two point two million cases this way. Third, states let hospitals enroll patients before anyone verifies eligibility. In California, hospitals neem deemed nearly five hundred thousand people presumptively eligible for Medicaid. When the state finally completed its full eligibility rev- reviews, only a hundred and fifty-five thousand of those actually qualified. Thirty percent. Federal taxpayers never got any of those dollars back. Fourth, bureaucrats import errors from other welfare programs, enrolling people in Medicaid based on their food stamp enrollment. Bureaucrats have built these one-door systems that merge enrollment across programs. Minnesota brags that it built a single app that signed someone up for as many as nine welfare programs, in under fifteen minutes. One wrong answer cascades through the entire program, through every program at once. And fifth, bureaucrats built an on-ramp for illegal aliens. States enroll applicants while they verify immigration status, a grace period meant to last ninety days. Seven in ten of those temporary cases now last longer. One Utah enrollee has collected Medicaid for five thousand, eight hundred, and twenty days, sixteen years, without ever proving immigration status. Enrollment through this loophole grew more than four hundred percent under the Biden administration. The results match the design. federal auditors have flagged millions of ineligible and potentially ineligible enrollees. Providers get the same free pass. Federal law requires states to re-screen every Medicaid provider at regular intervals. Illinois went three years without re-screening a single one, and some providers have gone seventeen years without a revalidation. When CMS forced Minnesota to re-screen nearly six thousand high-risk providers, the state disenrolled more than sixty-two percent of them. They failed background checks, they failed site visits, and they refused to turn over information. And when investor- investigators do catch providers, states keep paying them anyway. States are supposed to suspend payments to any provider who's credibly accused of fraud. New York issued waivers to keep paying ninety-six percent of them. Massachusetts suspended payments for fewer than one in ten. So why do states run their programs this way? It's the money. Every dollar a state spends on Medicaid draws at least one federal dollar. And Obamacare supercharged that math. Washington pays, states nine dollars for every dollar they spend on able-bodied adults. As Doctor Blase mentioned, an average of a dollar thirty-three on the truly needy. Then states launder the rest, shifting more state costs onto federal taxpayers. So bureaucrats treat federal dollars Medicaid as free stimulus. They treat stopping fraud as budgetary malpractice. Every dollar of fraud that they stop is a dollar less of free federal money coming into the state. Many go further and game the match itself, misclassifying enrollees into Obamacare expansion to claim the higher rate. Bureaucrats designed this fraud over decades, but Congress can fix it. Require states to verify identity, income, immigration status before enrollment. not after, require eligibility reviews, and provide a rescreening on schedules that states cannot ignore. And end the funding formula that pays states more to cover able-bodied adults than children with developmental disabilities. Thank you.

Thank you, Mister Ingram. Our final witness is uh Mister Schneider. Mister Schneider is a research professor of the Practice Center for Children and Families, McCourt School of Public Policy at Georgetown University. Most recently he served under the Obama administration as a senior advisor at the centers for Medicare and Medicaid services, which he focused, where he focused on program integrity issues in Medicaid. He is a graduate of Princeton University and the University of Pennsylvania Law School. Mister Schneider.

Thank you, Chairman Johnson, Ranking Member Merkley, and members of the committee, appreciate the opportunity to testify. So, let me tell you about CCF, the Center for Children and Families. an independent non-partisan policy and research center found in two thousand five with a mission to expand and improve high quality affordable health care coverage for america's children and families as part of the McCourt school of public policy at georgetown university we conduct research develop strategies and offer solutions to improve the health of america's children and families particularly those with low and moderate incomes ccf is responsible for raising external funding to conduct our work The full list of our current funders is available on our website. CCF does not accept any government, foreign or corporate funding. Our work is funded primarily by phil- philanthropies. Testimony and views I'm presenting today are my own, not those of Georgetown University or the court school. Here's the reality of Medicaid. It's a hugely important health insurance program for sixty-seven million low-income Americans. It covers nearly forty percent of our nation's children. nearly half of all children with special health care needs forty percent of births it's also the largest payer for long-term care services and supports for people with disabilities and seniors accounts for three-fifths of long-term care spending it's particularly important to children and families in rural America and to hospitals and physicians that serve them in the communities in which they live non-elderly adults and children in small towns and rural areas are more likely than those living in metro areas to rely on Medicaid for their health insurance. Medicaid means access to needed health and long-term care services, as well as protection from medical debt, for children and families, and for all the other populations it serves. So it comes as no surprise that Medicaid is very popular with the American people. A January twenty twenty-five KFF tracking poll found that seventy-seven percent of voters had very or somewhat favorable views about Medicaid, including sixty-three percent of Republicans and eighty-one percent of Independents. In my written testimony, I discussed the role of Medicaid in our health care system. It's important to children and families. The harm that last year's budget reconciliation bill will do to millions of Americans who rely on Medicaid for access to health care and protection against high health care costs. And the reasons for federal and state spending, uh, why that spending is growing. I also explained that actually reducing fraud against the Medicaid program requires collaboration between the federal government and the state. not withholding federal funds or partisan attacks. In closing, I want to sound one alarm. We at CIC have closely monitored child enrollment in Medicaid. Our latest tracking, updated as of last Friday, finds that since January twenty twenty five, the number of children enrolled in Medicaid has dropped by two point three million. That's two point three million. That's as many children as in the states of Alaska, Delaware, Maine, Montana, New Hampshire. North Dakota, Rhode Island, South Dakota, Vermont, Wyoming, and the District of Columbia combined. This is a statistic that should alarm every policy maker who cares about the well-being of children. We know that declines in Medicaid coverage mean increases in the number of uninsured children. We know that uninsured children are children without access to preventive or primary care. We know that their families have no protection against medical debt. if their children become sick or injured and need to go to the emergency room. At a minimum, CMS should be working with states to understand the root causes for this trend, and take immediate steps to reverse it. Instead, CMS leadership seems laser-focused on withholding federal funds from California and Minnesota. Two point seven billion and counting through repeated deferrals. That is the reality of Medicaid today, And it does not have to be this way. I hope the members of this committee will work with CMS to change course. I look forward to your questions.

Thank you, Mr. Schneider. Uh, Mr. Blase, let's quick address that issue, uh, the two point three million children that have, uh, lost coverage under Medicaid. Can you explain that?

Yeah, it's a, uh, deeply misleading, uh, statistic. If you look at combined Medicaid and CHIP enrollment from before the pandemic, to twenty twenty six there's actually a higher percentage of children on Medicaid and SHIP in the first part of twenty twenty six than before the pandemic one of the issues is we have fewer uh one year we have fewer births in the us because of the fertility decline then we have children who are um moving off the Medicaid program because they they age off of it so when you account for those factors and you look at it as a percentage of all kids there's actually a higher percentage of kids enrolled in Medicaid and SHIP and for a pandemic.

OK, well appreciate you explaining that. Uh, Mister Schneider, there were four primary reforms in the first reconciliation package. The first one was uh requiring states to redetermine eligibility every six months rather than years. That, do you have a real problem with that? I mean, do you want people who are ineligible to be on these programs?

I believe that the program should be only for people who are eligible.

So, is there anything wrong with states rechecking redetermining eligibility cause lot of states obviously don't they haven't been

i think the state should have some flexibility in how they administer their programs the previous remote

you're you're not answering the question i mean do you is there a problem with rechecking eligibility there there's nothing there's nothing draconian about that correct

there's

there's nothing there's nothing draconian about that correct there's not a problem with rechecking eligibility it

ok good next are provider taxes and provider fees are those is that healthcare

States are sovereign political entities.

Is is provider, our provider, does that, is that health care?

Health care is in part how it gets paid for.

The the answer is is no. Mister Blase. So when states charge a provider, provider fees and taxes, correct? For a Medicaid recipient, this, the provider gets reimbursed that. amount right but again the states are charging that for uh services across the board correct so isn't it true then those provider fees and taxes artificially drive up the cost of healthcare for people on private insurance or for people on medicare

they do we actually have a study from looking at a a tax that california imposed um that it increased uh commercial prices by about four percent

so isn't it true that and you said in your testimony president biden called that a scam president obama recommended doing exactly what we did in the one big beautiful beer that that's not cutting and slashing medicaid right that's just actually implementing what both president biden and obama recommended so so that's the second reform the one big beautiful bill

that's correct

uh state directed payments this one is is kind of baffling uh can you describe a little bit more what that is and and intergovernmental transfers where the states juice you know plump up what they charge or reimburse like their ambulance, their their state-owned ambulance services. I mean, can you describe that?

Yeah, so let me do state-directed payments first. Um, on the fee-for-service side of Medicaid, there is a cap at Medicare rates. Um, it's called an upper payment limit. That cap does not exist on the managed care side. So, as states have moved Medicaid enrollees into coverage through insurers, um, they've realized that they can create these provider tax and financing gimmicks, um, get the federal funds and then lavish much higher payments, um, on the big hospital systems. So what the one big beautiful bill did was extend the limits that were on the fee-for-service side of Medicaid to the managed care side.

So, so, Mister Schneider, does it make any sense to you whatsoever to for every dollar a state spends on a disabled child or blind elderly individual they get reimbursed again in the, in the federal match they get reimbursed dollar thirty three but for every dollar a state spends on a single childless working age able-bodied adult states get nine dollars in reimbursement from the federal government that's forty trillion dollars in debt does does that make any sense at all that disparity to a buck thirty three for a disabled child but nine dollars for a some you in many cases should be working does that make any sense to you at all

it's a policy choice that congress has made it's there's there's similarly there are differentials

again uh that's not the question does it make any sense to you it it apparently didn't make any sense to president obama cause he he recommended equalizing that treatment correct

he did in a twenty twelve budget proposal uh called the blended rate proposal he proposed equalizing the match rates

now would he would he if he would if he increased the reimbursement for disabled children or we just dropped that to a reasonable level like no if we're gonna reimburse uh disabled children for a buck thirty three that's what we reimburse for a daily

so he so he had it as part of a deficit reduction plan it would have um brought up the traditional uh federal reimbursements for those traditional categories and roles

you know how by how much from buck thirty three

i i don't recall

ok ok well that's uh what i've got for the time being uh senator merkway

yeah thank you uh mr. chairman um can you tell us uh mr. blaas blaize

mister blaise

blaise uh what is the federal poverty level for a mother and two children

the federal poverty level um for a household of three is probably around twenty five thousand dollars a year

yeah that's approximately uh right and uh mister schneider is it hard for mother and two children to live on roughly twenty five thousand it's slightly higher it's twenty seven thousand but close enough is it difficult for a mother and two children to to live on that

so you're looking on a at a monthly income of two thousand a month depending on the on the area of the country that the mother and child live in yes

that's extremely

i don't understand how they make sense to me

extremely difficult uh and uh they're probably aren't too many people in this room living at that level and struggling and is it correct mr. schneider that when people are at that income level it often varies tremendously in the course of a year because they get another part-time job or the boss at one part-time job has a scheduled arrangement that doesn't work with the other part-time job or child care problems intervene so changes there's a lot of fluctuation in the in the in the level of income

that's correct senator

and am i correct that medicaid for expanded medicaid covers a hundred and thirty eight percent of federal poverty level

for in in states that have accepted the option for adults yes and

yes so that's one point three times roughly twenty seven thousand or roughly thirty six thousand dollars still a very low income for a mother and two children the point i'm making here is the uh the the chairman asked a question about reauthorizing the income level every six months uh i will tell you one of the enormous stress factors for very low income families is the refiling paperwork continuously and the states have estimated that there is a massive uh uh overhead and essentially people bump up bump down with every little job fluctuation and so i would say to my my colleague when you understand uh the challenge of less affluent families uh certifying it every year might make sense you get more often than that and you're just catching the fluctuations and creating enormous uh anxiety of of qualifying not qualifying qualifying not qualifying which doesn't serve low income children or their their families uh well and um i wanted to uh turn to this question of the impact on rural america is it correct mister schneider that there are lot more folks on medicaid in rural america than in urban america

the

in terms of the percent of the population

yeah yeah in terms of the coverage yes it's yes