How Kids Would Fare Under the American Health Care Act

The Republican bill, now in the Senate’s hands, would constrain the health-care safety net for children who need it most.

A child's doll in an operating room at Children's Hospital in Boston (Brian Snyder / Reuters)

Since the American Health Care Act’s passage in the House, the future of U.S. health policy now rests in the hands of the Senate. What happens next is unclear: The Senate’s version of the legislation could move to the left or right, or the chamber could draft an entirely new bill as a starting place. Still, the broad strokes of Republican health-care reform—a repeal of insurance mandates under the Affordable Care Act, massive cuts to long-term Medicaid spending, federal grants for state high-risk pooling, loosening of restrictions on insurers, and a private-insurance tax-credit scheme that makes care more expensive for poor people and the most costly patients—seem unlikely to change.

Given those elements, it’s possible to predict how the GOP’s reform would affect the groups of people most in need of affordable health care. For one such group—children—the AHCA or a similar plan represents a drastic change to how care is typically delivered and how health-insurance coverage works.

One statistic puts the potential impact of the AHCA on children in stark relief: Children make up about a quarter of the U.S. population, but are about half of the entire Medicaid population. They constitute the single largest eligibility group in the Medicaid program and would be affected by changes to its funding structure the most. And the AHCA certainly aims to change that funding structure: Its rollback of the Obamacare Medicaid expansion and its changes to Medicaid financing would slash the program even below pre-Obamacare levels, to the tune of a cumulative $880 billion reduction between 2017 and 2026.

“In the American Health Care Act, there are two ways that federal funding for Medicaid can be capped,” said Samantha Artiga, an associate director at the Kaiser Family Foundation. One of those ways is a per-person cap on states’ annual funding, which under the AHCA would begin in 2020. The capped amount would increase over time according to inflation, but would not factor in variations among the states in terms of, say, growth of health-care costs or increased spending for public-health crises.

The AHCA would also allow states the option of further capping funding via a block grant specifically for children, pregnant women, and parents. It would dole out a fixed total amount of annual Medicaid funding per state for these groups—on top of enrollees’ per-capita allotment—while leaving an open-ended funding structure for more expensive groups, like people with disabilities. Not only would this option exacerbate the cost concerns of the per-capita cap, but it would also diminish states’ ability to adjust according to increases in enrollment. According to Artiga, that means “that states would be at risk for both higher-than-expected health-care costs,” because they’d have to pick up more of the bill, and “higher-than-expected enrollment.”

Both of these financing-reform mechanisms could slash benefits and enrollment for children on Medicaid. One of the program’s crucial pieces for children is the Early Periodic Screening Diagnosis and Treatment benefit, or EPSDT, which outlines a set of services essential for childhood growth. Those services go beyond those required by law for adults, including testing for lead poisoning and in-home care. Based on the existing AHCA language, that benefit would likely be erased in states that accept the Medicaid block grant, which could translate to children on Medicaid receiving less comprehensive care. The block-grant scenario would also erase protections in place that limit premiums and out-of-pocket spending on behalf of children, which means that states would be free to make up for Medicaid shortfalls by cutting benefits and making kids’ parents pay more. The effects of those changes “could be particularly significant for children with the most extensive health-care needs,” Artiga said.

On the enrollment side, while all the groups of low-income people traditionally covered by Medicaid—disabled people, pregnant women, children, and their parents—have mandatory minimum-income qualifications under the federal program, states are currently free to make theirs more ample. All of the states have made at least some of their minimum thresholds for children more generous than those under Medicaid and the Children’s Health Insurance Program. But that means that under the AHCA, and given the volume of kids covered, perhaps the greatest flexibility states have to cut costs comes from children’s expanded eligibility. Under the AHCA, making Medicaid less comprehensive and expansive for low-income children might not just be a necessity for states to make ends meet—because of simultaneous cuts to federal contributions—but it also appears to be incentivized.

The House bill would also change the way health care is delivered to children. Children’s hospitals are reliant on Medicaid funding; half of the patients at these institutions are enrolled in the program. Because they need the money to keep the lights on, slashing covered benefits and enrollees would decrease revenues. It’d diminish the kinds of care these hospitals are able to provide children regardless of their insurance, and reduce their ability to provide uncompensated care for uninsured kids. Also, schools are reimbursed by Medicaid for certain services, such as speech-language pathology and occupational therapy for students with disabilities; a reform like the AHCA would diminish cash-strapped schools’ overall ability to respond to these needs.

Although most of the AHCA’s effects on children would come through its major Medicaid reforms, the law’s reduction of enrollment across different insurance types and its uneven cost distribution would affect children insured through other means as well. Most children receive insurance through their parents’ jobs, and the AHCA is expected to decrease enrollment in employer-sponsored health insurance. And while the law’s tax credits might make private coverage on the exchanges more affordable for young parents, older and sicker parents—or grandparents serving as primary caretakers—might have to do without if faced with skyrocketing premiums. The children who lose coverage under these scenarios might normally enroll under Medicaid, but the program’s ability to function will be necessarily constrained.

Of all the non-elderly age groups in the country, children have come the closest to achieving universal coverage, as only five percent of the population is uninsured. A reform like the American Health Care Act, or similar frameworks under consideration in the Senate, would be a setback for that goal, and perhaps make it impossible. Low-income children and children with special needs would face special pressure under such a law. Yet those are exactly the groups of people programs like Medicaid—and the greater American safety net—were originally intended to help.