WASHINGTON, D.C. - This week, the U.S. Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation (ASPE) released a report, finding provider tax and state-directed payment policies in the Working Families and Tax Cuts (WFTC) are expected to reduce health care prices by up to 3.5 percent and reduce costs in Medicaid, commercial insurance, and Medicare—noting an additional $29 billion in savings for Medicare and commercial coverage for every $100 billion in Medicaid savings. Congressman Brett Guthrie (KY-02), Chairman of the House Committee on Energy and Commerce, and Congressman Morgan Griffith (VA-09), Chairman of the Energy and Commerce Subcommittee on Health, issued the following statement in response to ASPE's findings:
"Despite Democrat rhetoric, evidence continues to show that our Working Families Tax Cuts will protect patients by not only restoring the long-term security of the Medicaid program, but also lowering costs for patients. By ending abuses of financing gimmicks, we help save taxpayer dollars and ensure federal funding is being used for the most vulnerable.
"It's no secret that the abuse of provider tax schemes and state directed payment arrangements had become an open-ended checkbook for states to shift more and more costs to the federal government, driving unsustainable and unaccountable growth in the Medicaid program. In a new report released by the Department of Health and Human Services, not only will these policies safeguard the Medicaid program and its beneficiaries but will also lower health care prices by 3.5 percent and reduce health care spending for Americans with private commercial insurance and Medicare. Because of Republicans' commonsense policies, we are protecting our most vulnerable and lowering health care costs for all Americans," said Charimen Guthrie and Griffith
BACKGROUND:
- Last year, the House Committee on Energy and Commerce rooted out over a trillion dollars of waste, fraud, and abuse through policies that strengthen, secure, and sustain our Medicaid program.
- Health care provider taxes have been used to fund Medicaid supplemental payments like state-directed payments (SDPs), drawing down additional federal Medicaid funding to support higher provider rates without additional expenditures from state general funds.
- SDPs increased considerably during the Biden Administration, with managed care organizations receiving $43 billion in payments in 2021-an amount that more than tripled to $144 billion by 2025.
- Without the WFTC, payments were expected to exceed $300 billion by 2034.
- By 2025, the average service covered by an SDP was compensated at 186 percent of the Medicare rate, meaning often we were paying significantly more to care for able-bodied adults than our seniors.
- Policies in the WFTC that reduce the abuse of provider taxes and SDP gimmicks are projected to reduce non-Medicaid prices by up to 3.5 percent, benefiting non-Medicaid payers by $502 billion to $875 billion from 2025-2034.
- Once fully phased in, these policies are expected to lower annual health care spending by $100 billion to $175 billion.
- Some of the savings to non-Medicaid payers also accrue to the federal government, saving an additional $97 billion to $169 billion beyond its savings on Medicaid and reducing total federal health spending by an average of 2.9 percent to 5.1 percent, when fully phased in.
- This isn't just savings for taxpayers; ASPE projects the changes to provider taxes and state directed payments under the WFTC could lead to reduced premiums in commercial insurance markets, making employer-sponsored insurance and Marketplace coverage more affordable for Americans than they would have been without the WFTC.
Read additional coverage on this report HERE.