In a moment of extraordinary candor earlier this month, President Donald Trump labeled the House Republican health bill “mean” and urged the Senate to improve the bill to make it “generous, kind [and] with heart.” He won’t get what he asked for.
A draft of the Senate version of the bill, which was written in secret with even many senators kept out of the loop, is expected to become public on Thursday. In the meantime, leaked details indicate that the meanest, least kind or generous faction within the Republican Party won the fight over how the bill will treat Medicaid. Reports indicate that the Senate opted for a proposal by Sens. Pat Toomey (R-PA) and Mike Lee (R-UT), which sought extraordinarily deep cuts.
The Senate bill will reportedly phase out the landmark health care program — which serves nearly 75 million Americans. And it will do so fairly quickly.
To explain, Medicaid is a federal/state partnership that is administered by state governments but largely funded out of the federal treasury. It provides coverage to many of the most vulnerable Americans, including the poor and many disabled and elderly patients. Currently, the federal government pays a set percentage of the costs arising under Medicaid — 64 percent, on average — and states cover the balance.
The Senate Republican bill repeals this structure and replaces it with caps on how much money a state will receive each year. Moreover, Bloomberg’s Sahil Kapur reports, the cap will effectively lose value over time.
According to Kapur’s source, “starting in 2025, Medicaid spending would grow at the rate of inflation (known as CPI-U).” This is a really big deal because the general rate of inflation is much slower than either the rate of inflation within the health care market or the expected rate of inflation within the Medicaid program.
Based on projections from the Congressional Budget Office, the cost of care for an individual Medicaid beneficiary will increase 4.4 percent each year. Meanwhile, general inflation will grow closer to 2.4 percent per year. So with each passing year, states will have fewer real dollars to spend on health care for millions of their most vulnerable residents. Over time, the entire Medicaid program will effectively phase out.
The House bill used a fairly complicated structure to determine how much each state’s Medicaid funding would increase each year, but states could opt for a cap which grew at a rate close to (although probably still slower than) Medicaid inflation.
Not long after the House bill, which would strip health coverage from 23 million people by 2026, passed Congress’ lower chamber, many commentators claimed that the “mean” health bill would inevitably become less harsh in the Senate. It now appears that the opposite has happened.
With Toomey and Lee driving the ship, the Senate is reportedly poised to wind down a program that serves 75 million Americans. Admittedly, this winding down will be gradual, but it will be much less gradual than it would have been under the House bill.