WASHINGTON – Somewhere along the way, the Republican crusade to repeal “Obamacare” also turned into an effort to limit the future growth of Medicaid. That bit of mission creep is complicating prospects for the GOP, and could lead to deadlock.
The federal-state program for low-income people has long been stigmatized as substandard. But over time it has grown and changed to become a mainstay for hospitals, nursing homes, insurers, and now drug treatment centers confronting the opioid epidemic. With about 70 million enrolled, Medicaid covers more people than Medicare, from newborns to nursing home residents.
Republicans including Sens. Susan Collins of Maine, Dean Heller of Nevada, and Govs. John Kasich of Ohio, Charlie Baker of Massachusetts, and Doug Ducey of Arizona have all expressed misgivings about the Senate’s GOP health care bill. On Monday, the National Association of Medicaid Directors, a nonpartisan group that represents state administrators of the program, said in a statement from its board that the legislation is unworkable, and called it “a transfer of risk, responsibility, and cost…of historic proportions.”
“We would see dramatic reductions in federal Medicaid funding, which would result in large budget gaps for the states,” said analyst Caroline Pearson of the consulting firm Avalere Health.
A Congressional Budget Office estimate released Monday said the Senate bill’s biggest impacts on spending would come from Medicaid. In 2026, the federal contribution would be $160 billion lower than under current law, and 15 million fewer people would be covered through the program.
But Republican leaders are unlikely to retreat, due to political and practical reasons. Although the House and Senate bills differ on timing and some key details, they would basically achieve the same goals:
–Phasing out the extra financing that former President Barack Obama’s health care law provides to states that expand Medicaid. Thirty-one states have taken advantage of a generous federal matching formula, expanding their programs to mainly benefit low-income adults. About 11 million people have gained coverage. Under the GOP bill, states could continue to serve this group, but would have to accept a lower match from Washington.
–Putting a limit on future federal financing for the entire program, through a per-beneficiary cap that would be adjusted for inflation. That would effectively end Medicaid’s status as an open-ended entitlement, through which the federal government matches a share of what each state spends. The GOP formula for annual adjustments has sparked a particularly sharp reaction, with critics saying that the Senate decision to use a broad measure of annual inflation simply won’t keep up with faster increases in health care costs.
On the Medicaid expansion, there’s wide agreement among Republicans that Obama’s federal matching rate of no less than 90 percent amounts to wasteful spending. On average, the regular Medicaid match works out to about 60 percent.
More broadly, as a political principle, many Republicans are strong believers in limiting the future growth of federal health care programs. House Speaker Paul Ryan has long advocated a voucher-like option for Medicare that would also restrain spending. But President Donald Trump had promised not to cut the health program for seniors. That left Medicaid with total annual spending of more than $550 billion.
“The present system is unsustainable; we don’t have enough money to continue what’s being done,” said Sen. Mike Enzi, R-Wyo., the budget committee chairman. Medicaid “was set up for poor women, for children and disabled people. Obamacare used it as a dumping ground for able-bodied people.”
States would gain much greater flexibility over how to spend their Medicaid dollars under the Republican caps.
But liberals see another agenda. On the practical side, the Medicaid cuts in the GOP bills facilitate rolling back hundreds of billions in tax increases on upper-income people and corporations that helped finance coverage for Obama’s legislation.
“Cutting Medicaid leaves more room to repeal some of these taxes,” said Paul Van de Water, a policy expert with the Center on Budget and Policy Priorities, which advocates for low-income people.
Facing a growing outcry, the White House and some Republican leaders are pushing back hard, arguing that their legislation would not cut Medicaid, because spending on the program would keep growing, just not as fast.
“In fact, this is slowing the growth of Medicaid and allowing governors more flexibility,” White House counselor Kellyanne Conway asserted on Fox.
“I’m not going to allow people and detractors and Trump haters to call me a liar because they don’t want to do the homework and look at what is actually happening to Medicaid,” Conway added.
The claim involves some budgetary sleight of hand that both parties have resorted to.
If a bill changes the rules to reduce what government was otherwise expected to spend, that meets the definition of a cut.
In fact, Republicans called it a cut when Democrats reduced Medicare payments to providers to help finance Obama’s health overhaul. Democrats responded they were reducing wasteful spending to extend Medicare’s solvency.
But the argument worked in favor of Republicans, helping them win the House in the 2010 midterm elections.
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