Medicaid, SNAP, and Safety-Net Questions

Perspective on claims of “draconian” cuts:

Total spending

  • Over the next ten years, the federal government will spend:
  • Current path: $46 trillion
  • Our budget: Over $41 trillion
  • Annual government spending (FY14 vs FY23):
    Current path: 5.0% avg annual increase
    Our budget: 3.4% avg annual increase
  • $41 trillion is enough. Increasing spending by 3.4% instead of 4.9% is hardly draconian.

SNAP and Medicaid spending

  • Under our budget, we still spend over $600 billion on food stamps over the next decade. We will spend $3 trillion on Medicaid. Hardly draconian.
  • Today, governments spend over $1 trillion a year on anti-poverty programs, and yet poverty rates are the highest in a generation.
  • Washington must stop measuring success by how much it spends. We should measure it by how many people we help. That is what our budget is focused on. Reforming our anti-poverty programs so they actually help the poor.

Q: Does the budget cut benefits for low-income families?

A: The President’s policies have slowed the recovery and brought us closer to a debt crisis that would hurt the poor the first and the worst. By contrast, House Republicans plan to repair the safety net. Spending on these programs would continue to grow, but states would have greater flexibility to tailor them to their people’s needs.

Q: How will this budget affect the disabled and people in nursing homes?

A: Freeing states from one-size-fits-all federal mandates will allow them to better allocate Medicaid dollars for their most vulnerable citizens. Rather than micromanage Medicaid from Washington, states will have the flexibility to ensure that the disabled and those in nursing homes receive the quality care they deserve. Elected leaders close to the people can better take care of these priorities than a federal government thousands of miles away.  

Q: Why do you cut Medicaid?

A: We strengthen Medicaid. The House Republican budget gives states the flexibility and resources to tailor a Medicaid program that meets their people’s needs.

Today, Medicaid has the same flaws that cash welfare had before we reformed it in 1996. The federal government provides an open-ended match to what the states spend on Medicaid, which gives them a perverse incentive to spend as much money as possible. The federal government pays an average of 57 cents of every dollar spent on Medicaid. Expanding Medicaid coverage during boom years can be tempting for state governments since they pay less than half the cost. Conversely, to restrain Medicaid’s growth, states that cancel a dollar’s worth of coverage save only 43 cents. Moreover, states lack the flexibility to achieve savings, though many governors have asked for a new approach. One-size-fits-all federal mandates limit innovation, and many times the only way states are able to save money is to cut payments to medical providers. Many doctors are refusing to treat Medicaid patients, because states have reduced their reimbursements below what it costs to treat them.

Q: How would repealing the new health-care law affect Medicaid?

A: The health-care law would force millions of Americans into a Medicaid system that is fundamentally broken. That would explode costs for the federal government and state governments alike. The best way forward is to follow the reforms in the House Republican budget, not expand a broken program. Repealing the new law and replacing it with true, patient-centered reforms will better serve Medicaid patients, while helping federal and state budgets.

Q: How would this budget affect other assistance programs such as food stamps?

A: The Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) is a good case study in how aid programs are in need of reform. Spending on SNAP has quadrupled in the past decade. It’s grown in good times and bad, because of the open-ended nature of the program. States get more money if they enroll more people. This setup encourages waste, fraud, and abuse.

This budget fixes the flawed incentive structure that poorly provides assistance to those in need. By capping open-ended federal subsidies and allowing states to develop innovative approaches to delivering aid, the budget’s gradual reforms encourage states to reduce rolls and help recipients find work. The budget also calls for time limits and work requirements like the reforms that helped reduce poverty nationwide in the mid-1990s. 

Q: If recipients of aid are being required to find work, shouldn’t the government be doing a better job at helping them reach the first rung on the ladder of opportunity?

A: Yes. This budget reforms our job-training programs to improve outcomes across the board. It calls for the consolidation of duplicative federal job-training programs into a streamlined workforce-development system. That system will have fewer funding streams and provide accountable, targeted career-scholarship programs. Instead of wasting money on duplicative administrative bureaucracy, this budget calls for job-training programs to be better coordinated with each other—and with the Pell program—to maximize every dollar for those who need it.

As for Pell, Congressional Democrats and the President have pushed Pell Grant spending to unsustainable rates. There is growing evidence that this new spending is simply enabling a rapid rise in tuition costs—college costs have risen at twice the rate of inflation and shot up by over 8 percent last year. This budget brings Pell spending under control and makes sure aid helps the truly needy, not university administrators.  At the same time, the proposed reforms ensure that we maintain the current maximum Pell award ($5,645) throughout the ten years of the budget.