Excerpt: “This letter provides the Congressional Budget Office’s estimates you requested for five policy options concerning Medicaid and explains how the agency projects that states would respond to those policies. Under the first four policy options, federal contributions to the Medicaid program would be smaller, reducing federal budget deficits. CBO anticipates that states would respond in four ways:
• Spend more themselves on Medicaid, mainly using a mix of revenue increases and reduced spending on other programs for financing,
• Reduce payment rates to health care providers,
• Limit the scope or amount of optional benefits, and
• Reduce enrollment in Medicaid.
Under a fifth policy option, which also would reduce the federal budget deficit, only Medicaid enrollment would be reduced as a result of the policy change. The options and CBO’s estimates are explained below.”
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