‘Big Beautiful Bill’ Threatens Medicare, Medicaid Enrollees

Nearly 1.4 million medically fragile, low-income dual Medicare and Medicaid enrollees could find it harder to retain a valuable prescription drug subsidy if the Republican House reconciliation bill becomes law. And the consequences could be life-threatening.

Medicare’s Low Income Subsidy, or LIS program, covers Part D premiums, reduces copayments, eliminates deductibles, and saves limited-income beneficiaries about $6,200 a year in prescription drug costs.

But when dual Medicare and Medicaid enrollees, or “dual eligibles,” lost Medicaid coverage—and with it, their LIS—they filled fewer prescriptions and experienced a 4% higher mortality rate, on average, over an 11-month period, according to a study published May 14 in the New England Journal of Medicine.

That resulted in nearly 3,000 additional deaths that would not have occurred otherwise, said Eric Roberts, an associate professor of general internal medicine at the University of Pennsylvania and lead author of the study.

If the spending bill becomes law, nearly 1.4 million dual eligibles would lose their Medicaid coverage from 2025 to 2034, the Congressional Budget Office estimates. Based on that forecast, Roberts expects more than 18,000 preventable deaths a year among these former duals who’d also lose their automatic enrollment in the LIS program if they’re disenrolled from Medicaid.

“These are pretty big mortality effects in the context of what we’ve seen elsewhere in the literature,” Roberts said. “And I just think that small provisions of a very large bill can get missed. But we shouldn’t miss the human toll.”

The estimates are the latest research to illustrate the potential consequences of the GOP’s reconciliation bill, which would reduce federal Medicaid spending by $723 billion over 10 years. The nation’s estimated 12.5 million dual eligibles will be particularly challenged by any Medicaid cuts that affect their access to care.

Multiple Chronic Conditions

While some duals are relatively healthy, a disproportionate share are in poor health and have multiple chronic conditions, long-term care needs, physical disabilities, and mental illness and cognitive impairments, including dementia. About 40% are under age 65. In 2021, duals made up 14% of traditional Medicare beneficiaries but accounted for 30% of program spending, the Medicare Payment Advisory Commission reported.

Although duals who could be disenrolled from Medicaid under the GOP bill would retain their Medicare coverage, they would have to re-apply through the Social Security Administration to regain the low-income subsidy.

But many probably won’t because of complicated verification and eligibility requirements and other administrative barriers, said Rachel Gershon, a senior attorney at Justice in Aging.

“You have to know you need to re-apply. Who among us gets knocked off a program and thinks ‘Oh, I must be eligible and re-apply?’ It’s not intuitive,” Gershon said. Staffing cuts and diminished telephone access problems at the Social Security Administration won’t help, she added.

Duals’ costly care has prompted congressional proposals to better coordinate their Medicare and Medicaid coverage to help save money, eliminate inefficiencies, improve care, and simplify patient navigation of both programs, said Jeannie Fuglesten Biniek, associate director for the Program on Medicare Policy at KFF.

But those efforts, she said, have always centered on improving patients’ ability to access services “rather than restricting the ability for people to get the benefits, or the services they need.”

By “reversing course on that policy,” the reconciliation bill represents “a departure from what has been a longstanding consensus about how we need to improve these programs for the most vulnerable people on Medicare,” Roberts said.

Delaying Biden-Era Rule

The reconciliation bill would delay implementation of a two-part Biden administration rule finalized in 2023 and 2024 that aimed to simplify enrollment in cost-saving Medicare Savings Programs, or MSPs. The programs are eligibility groups through which Medicaid pays Medicare premiums and cost-sharing for Medicare beneficiaries with limited incomes.

MSPs pay Medicare Part B outpatient premiums for more than 10 million people and Part A hospital insurance premiums for 700,000, the Centers for Medicare & Medicaid Services reported.

The rule’s provisions were expected to add 860,000 individuals into MSPs who were already eligible, but not enrolled. In fact, only about half of those eligible for MSPs are enrolled due partly to a complex application and verification process, which the rule aimed to simplify.

It was designed to cut through “ridiculous red tape that older folks and their caregivers have to go through just to get access to the health care that they’re eligible for,” Gershon said.

But by delaying key parts of the rule’s implementation from 2027 to 2035, the reconciliation bill would save about $162 billion in federal Medicaid spending mainly by reducing program enrollment, according to CBO projections.

An estimated “2.3 million people would no longer be enrolled in Medicaid” if the rules are delayed, and “roughly 60% of the people who would lose Medicaid coverage”—about 1.38 million—“would be dual-benefit enrollees,” the CBO projected.

“It’s a savings built on the backs of seniors and people with disabilities,” Gershon added.