The House GOP’s not-so-sneaky plan to destroy Medicaid

Wonky terms hide a simple swindle.

House Speaker Paul Ryan (R-WI) CREDIT: AP Photo/Paul Sancya
House Speaker Paul Ryan (R-WI) CREDIT: AP Photo/Paul Sancya

About 74 million Americans from the most vulnerable pockets of the country would see their access to doctors and medicines rapidly curtailed under the House GOP’s proposed health insurance overhaul.

Peel back the wonky jargon at the core of the bill’s Medicaid provisions, and you’ll find a straightforward idea: America should spend far, far less than it does to get health insurance coverage for poor people.

The bill would freeze Medicaid expansion beginning in 2020, and start paring back federal support for the program that same year.

More than 11 million people have gained health insurance coverage since 2013 through Medicaid expansions in 31 states and the District of Columbia. That large jump in enrollment owes to one of Obamacare’s most generous provisions, whereby states that chose to expand Medicaid eligibility were assured the costs of the expansion would be covered by federal funds rather than coming from their coffers.

The House Republican plan would end the Affordable Care Act’s eligibility expansion, erasing the guaranteed federal money states used to insure those 11 million people. At the same time, the bill would change how Medicaid funding works across the entire system, regardless of where beneficiaries live. The radical change to funding rules would threaten coverage for the other 63 million people who are signed up to Medicaid under pre-expansion eligibility rules.

The House Republican plan would disburse Medicaid payments based on an automated formula tied to enrollment levels rather than to actual health care spending. That formula would lock in a permanent definition of what it costs to cover a Medicaid patient for a year, and then set future federal payments based on Medicaid enrollment figures from the beginning of 2020.

Wonks refer to the policy mechanism as a “per-capita cap” on Medicaid funding. But while that phrase implies that funding levels would keep pace with enrollment rates over time, the House Republican bill does not provide such flexibility for the future. People who qualify for Obamacare’s expanded Medicaid system sometime after the start of 2020 will not be factored into the House plan’s funding formula thereafter.

States would receive only as much money as the formula dictates, in perpetuity. If more people enroll, or people move off the program more slowly than anticipated, tough. The federal government will only pay states what the formula says they should have needed as of January 2020.

House leaders are making it as hard as possible to explain the bill’s immiserating impacts to anyone by preventing the Congressional Budget Office from analyzing the bill.

But one analysis estimates the per-capita cap change alone would dump more than a quarter-trillion dollars in new costs onto the 50 state governments over the next decade. The 39 states that took advantage of Medicaid funding to cover more people would face an additional $280 billion in new costs to maintain service after the bill ends the Obamacare expansion. The two Medicaid changes give state leaders more than half a trillion reasons to start booting poor people off their health insurance.

Seven states that expanded Medicaid would automatically cut newcomers off of the program should the House language become law, because the laws which expanded Medicaid in those states contain triggers to end the expansion if federal contributions drop too far. The rest of the expansion states “also would have to end their expansions, or close them to new enrollees,” the Center on Budget and Policy Priorities writes in its estimates of the bill, simply because the states could not afford to keep going under the House GOP bill.

That’s up to 11 million people rapidly dropped from insurance coverage just from killing the expansion. A separate analysis from Standard & Poors suggests that 4 to 6 million Medicaid patients will lose their coverage in the first few years of the House plan — and notes further coverage losses would be likely “if states reduce reimbursement rates to offset their greater burden of the cost.”

Regardless of just how steep the Medicaid expansion cliff actually is, that’s only the first half of the Medicaid screw-job. The other 63 million Americans covered through Medicaid would be next against the wall, as states face the slow, quarter-trillion-dollar python squeeze of the per-capita cap rule.

The proposal for a “per-capita cap” system of Medicaid funding is slightly different from Paul Ryan’s old plan to convert Medicaid (and almost every other federal aid program for the less well off) into a block grant. Block grants are easier to exploit by redirecting funds to other purposes. Supporters of low-income people’s access to health care will welcome the shift, as the per-capita cap at least keeps federal Medicaid dollars more closely tied to providing actual Medicaid services.

But the new-look Republican plan for Medicaid leads to the same place as the old one: State budget crises, reduced coverage, and struggles to find a doctor who will see you even if your family does remain insured through the 50-year-old health insurance backstop.

Four Republicans in the Senate have already harumphed about the sweeping Medicaid cuts, underscoring the political toxicity of voting to push millions of people off the insurance rolls.

But for the bulk of the GOP caucus, the House bill’s Medicaid cuts may not even be extreme enough. Staffers to the 170-member Republican Study Committee have slammed the bill in an internal analysis, Bloomberg reported, in part because letting Obamacare’s Medicaid expansion continue even just for the next few years is objectionable to hardliners within the party.

If the RSC analysis is indicative of broader conservative thinking — and it seems to be, with multiple prominent right-wing groups coming out against the House bill — then Republicans in the House are likely to push for even harsher Medicaid cuts.

The people most directly affected by the Medicaid changes Republicans are mulling will have a hard time making their objections known. Low-income families have far less influence in our politics than they do in our health care economy.

Out of every $6 Americans spend on health care nationwide, $1 comes from Medicaid. The disguised cuts to Medicaid funding in the GOP bill would swing an ax at a load-bearing pillar of the overall health care system.

Something would have to give. In this case, the toll would fall on human beings who cannot afford health insurance based on their income. They would be left to forgo treatment or take on crushing medical debts.

Worse, the House Republican plan would not save the pennies it pinches from Medicaid in the future. It would give them to people who already have lots and lots of pennies. The bills offer tax cuts for the richest participants in the same system that produces such ghastly choices for the poorest among us.