The War on Medicaid: Still Going After All These Years

Last week was War on Medicaid Week.  The House Budget Committee majority, the Chairman of the Senate Committee on Homeland Security and Government Affairs, and a group of conservative think tanks all called for restricting the program through block grants and/or per capita caps coupled with deep cuts in federal funding.  In addition, the Office of Management and Budget released a plan to reorganize the federal government that would, among other things, rebrand the Department of Health and Human Services as the Department of Health and Public Welfare. Not subtle.

There’s no realistic possibility that any of these proposals will be enacted before the mid-term election on November 6.  (The post-election lame duck session may be another matter). But because they were crafted, at least in part, to shape the public narrative on Medicaid, and because the timing of their release may not have been entirely coincidental (19 states will hold primaries in August and September), it’s worth looking at how these proposals talk about Medicaid and what they would do to it.

Let’s start with the House Budget Committee Republicans’ budget plan (technically their budget resolution for FY 2019 – FY 2028) released on June 19 and adopted on a party-line vote three days later. The plan states that Medicaid is on “an unsustainable path;” that it wants “to protect this vital safety-net program for low-income children, parents, pregnant women, and seniors;” and that in order to do so, the Congress should enact the “reforms” of the American Health Care Act passed by the House in May of last year by a 217 to 213 vote. That, readers of Say Ahhh! Blog will recall, is the bill that would have capped federal Medicaid payments to states, cut them by $834 billion over the first 10 years, and reduced program enrollment by one sixth, or 14 million, by 2026.  The plan projects savings from cuts in “Medicaid and other health” programs (not including Medicare) of $1.5 trillion over 10 years, which tracks closely to the $1.4 trillion Medicaid cuts in the Trump Administration FY 2019 budget and to the $1.4 trillion increase in the deficit resulting from last December’s tax cut legislation.

Also on June 19, the Health Policy Consensus Group, an affiliation of conservative think tanks facilitated by the Galen Institute, released its recommendation to repeal the Medicaid expansion and the ACA premiums and cost-sharing subsidies and replace them with a block grant to states. As my colleague Edwin Park explains, the result would be sharp cuts in federal funding and a dramatic increase in the number of uninsured Americans. Here’s the Group’s rationale: “States would have better incentives to protect the most vulnerable instead of chasing federal Medicaid expansion dollars to add new enrollees while neglecting those already on the program and in need.” The clear implication: Medicaid expansion parents and other adults are not in need.  This will likely come as a surprise to the 12 million Medicaid expansion beneficiaries.

Then there is the report issued by the Chairman of the Senate Committee on Homeland Security and Governmental Affairs, Senator Ron Johnson (R-WI) on June 20.  The 23-page screed criticizes the Centers for Medicare & Medicaid Services (CMS) for being a “poor steward” of federal Medicaid funds. It contends that CMS “has not taken basic steps to fight Medicaid fraud,” that “evidence indicates that Medicaid fraud is rampant,” and that the ACA “worsened the problem of Medicaid fraud and overpayments.”  The report also repeats the claims of an earlier Chairman’s report that the structure of Medicaid creates incentives for opioid abuse (claims that find no support in last week’s report to Congress from the Medicaid and CHIP Payment and Access Commission (MACPAC).  The report’s bottom line – Surprise! – is that Congress should “transition Medicaid to a block grant funding mechanism for existing Medicaid expansion populations, instead of the current open-ended federal entitlement.”  

Finally, there is OMB’s government “reform” plan to move the nutrition assistance programs, SNAP and WIC, into HHS and to rebrand it as the Department of Health and Public Welfare.   Within the new DHPW (this acronym will take some practice) would be a Council on Public Assistance with the authority to grant waivers and to design and impose uniform work requirements across all welfare programs.  CMS, as one of the “agencies that administers public benefits programs,” would be a charter member of the Council. It’s not stated, but the long-term goal of this new administrative platform is clearly to lay the groundwork for converting Medicaid into a block grant to states by relinking through common work requirements to cash and nutrition assistance programs like TANF and SNAP. Much as it might want to, OMB can’t by itself restructuring HHS this way; it will require Congressional action, which will not happen before the mid-terms.  

In short, under all of these proposals, Medicaid needs to be “reformed” in order to “protect” those who are “truly in need,” to enable states to design programs that “best meet the needs of their citizens,” and to eliminate “fraud”. In each case, “reform” means capping and cutting federal payments to states through block grants or per capita caps (or both).  These caps on federal Medicaid payments could apply just to funding for the expansion adults (Senator Johnson, Galen Institute et al.), or to funding for all Medicaid beneficiaries (House Budget Committee). Of course, block grants initially limited to the expansion adults can, once in place, be readily expanded to children, parents, pregnant women, individuals with disabilities, and the elderly.  And, once in place, the block grants or per capita caps can be dialed down by future Congresses to extract more federal savings at the expense of states and localities.  

The War on Medicaid has been going on since at least 1981, when President Ronald Reagan first proposed (and nearly succeeded in) capping federal Medicaid payments to states.  What we may be witnessing now is the beginning of yet another run at this long-sought conservative Holy Grail.  For the sake of the nation’s 72 million Medicaid beneficiaries, let’s hope for the same outcome this time around.  

Andy Schneider is a Research Professor at the Georgetown University McCourt School of Public Policy.