The Republican plot to destroy Medicaid
And because Medicaid beneficiaries aren't a politically active, highly organized group, the GOP might get away with it
Medicaid — the program that provides health insurance mostly to people who are poor or near-poor — is the largest insurer in the country, with enrollment that now approaches 70 million, or over one in five Americans. And with their newfound power, Republicans are about to destroy it.
Make no mistake, this is something they desperately want to do. Paul Ryan wants it. Tom Price, President Trump's nominee for secretary of health and human services, wants it. It's the cornerstone of their effort to eviscerate the social safety net, which is the second-most-important Republican policy goal (after cutting taxes for the wealthy, which is always and forever number one). They've been waiting for this for a long time, and now they've finally got their chance.
The vehicle for the destruction of Medicaid as we know it is the conversion of the program to "block grants" which would be used to both cut benefits and kick enrollees off their insurance — by the millions. It may be the kind of wonky story most people pass over as they peruse the news, but it would be one of the most radical changes to the safety net in decades.
Some quick background: Medicaid is jointly administered by the federal government and the states, each of which pay about half the program's cost. Before the Affordable Care Act, every state could set its own eligibility levels, which meant that if you were lucky enough to live in a blue state, you could get the insurance if you were poor or near-poor, but if you lived in a red state, you might have to be practically eating cat food to survive before you could be eligible. For instance, in Texas an adult with children is only eligible if their income is below 15 percent of the poverty level, which means if you're in a family of four and you make more than $3,645 a year, you're too rich to get the benefit.
The ACA sought to change that by setting a new national standard under which anyone making under 133 percent of the poverty level, or $32,319 for a family of four, could get covered. Despite the resistance of Republican states (more on that in a moment), more than 12 million people have been newly enrolled in Medicaid as a result of the ACA expansion, one of the great triumphs of the law.
But the key point is this: Once you're on Medicaid, your state can't kick you off, and the program has comprehensive health benefits that are set by the federal government. It's an "entitlement," which means if you qualify you're entitled to the benefit. In the case of Medicaid, that means each state's program doesn't have a fixed cost. If someone walks through the door in December and is eligible, the state can't say, "Sorry, we used up all our Medicaid money for the year."
That's what block grants would destroy. Instead of an open-ended program serving anyone who qualifies, Republicans would like to give each state a block of money they can spend as they see fit. If you're the state of Texas and you want to kick half the beneficiaries off their insurance? Go ahead. You want to cut back on the benefits Medicaid provides in your state? Be our guest.
Indeed, for many Republicans, that's the whole point. They don't like big government programs, and they don't much like helping poor people. So they'd not only prefer to insure fewer people with skimpier coverage, they often want to impose things like drug testing and work requirements and make beneficiaries pay premiums, just to make it more difficult for them and discourage them from signing up.
Block granting almost always leads to cuts in the affected program, and in this case, that's exactly what Republicans have planned: As the Center on Budget and Policy Priorities noted, "The House Republican budget plan for fiscal year 2017, for example, would have cut federal Medicaid funding by $1 trillion — or nearly 25 percent — over 10 years, relative to current law, on top of the cuts the plan would secure from repealing the ACA's Medicaid expansion."
One word you'll hear a lot from Republicans as they talk about this is "flexibility," but when you hear them say they want states to have flexibility, you should ask: Flexibility to do what? Because in most cases, what it means is flexibility to cut benefits and kick people off Medicaid entirely. Under current rules, states can't do that. But with the "flexibility" of a block grant, they could. Many states — particularly those run by Democrats — wouldn't do that, but states run by Republicans would.
We know that because of how they reacted to the ACA's expansion of Medicaid. Nineteen Republican-run states refused to accept it, even though the federal government was offering them a huge pot of money to insure their poor citizens at almost no cost to them. Indeed, independent analyses by groups like the RAND Corporation showed that accepting the expansion would save state governments money, because they'd have a more productive workforce and they wouldn't have to pick up the cost of uncompensated care (i.e. uninsured people turning up in emergency rooms). But these Republican states refused, because they would rather see their own citizens go without insurance than give Barack Obama the satisfaction of seeing them helped by his law.
And the trouble is that unlike the other two most high-profile entitlements, Social Security and Medicare, Medicaid's beneficiaries aren't a politically active, highly organized group with an immensely powerful lobby to advocate for them. Which means that Republicans are much less afraid of the political backlash than they are when they contemplate gutting those two programs (which they'd also like to do).
As it happens, early in the presidential campaign Donald Trump promised, "I'm not going to cut Medicare or Medicaid." But in fairness, the likelihood that he had any idea what he was saying is extremely low, which makes that promise about as meaningful as all his others. Republicans in Congress and the administration probably believe that setting this bomb off under the health coverage 70 million Americans depend on is something they can get away with. We're going to find out.