WASHINGTON — Medicaid emerged Monday as perhaps the singular issue on which the Republican bid to overhaul the Affordable Care Act will live or die.
House Republicans unveiled their official plan to repeal and replace much of the health care law, including dramatic changes to Medicaid, the insurance program that covers low-income Americans and that was expanded under Obamacare. Republicans want to convert the program from the open-ended entitlement it is now to a program with a hard spending limit.
Only hours earlier, however, a critical group of Senate Republicans released a letter rejecting earlier leaked versions of the House plan because of the Medicaid provisions. They each represent states that chose to expand Medicaid under the health care law, after the US Supreme Court made the expansion optional instead of mandatory in a 2012 ruling.
Why Medicaid is so politically important
That letter — from Senators Rob Portman of Ohio, Cory Gardner of Colorado, Lisa Murkowski of Alaska, and Shelley Moore Capito of West Virginia — exemplified why the Medicaid issue is so tricky for Republicans. Their states and two dozen others have expanded the program under Obamacare, and more than 10 million Americans have been covered that way through the law.
The senators weren’t satisfied with the leaked GOP plans, which would have ended the generous federal funding that has made the expansion possible. Portman and Capito also represent two states that have been devastated by the opioid crisis, and recovery advocates worry that ending the Medicaid expansion could cut off coverage for many people seeking treatment for drug addiction.
“As the largest payer of mental health and substance use services in the United States, it is critical that any health care replacement provide states with a stable transition period and the opportunity to gradually phase-in their populations to any new Medicaid financing structure,” the senators wrote in their letter.
Republicans can’t afford to lose those four votes. Under the complicated Senate rules that they need to use to pass a bill without any Democratic support, they need 50 votes to pass their plan in the upper chamber. There are 52 Republicans in the Senate, so their margin for error is slim.
What Republicans want to do to Medicaid
GOP leaders have long said that they believe Medicaid is fiscally unsustainable and a spending cap is necessary to fix its finances. The bill released Monday finally puts those ambitions into official, detailed legislative language.
Starting in 2020, the Republican plan would change how the program is financed. Right now, the federal government’s commitment is open-ended, depending on how many people are enrolled and how much care they receive. (Currently, upwards of 70 million people are covered by Medicaid.) States are required to match a certain percentage of those federal funds.
Under the GOP plan, states would receive a set amount from the federal government for each person eligible for the program. Any costs above that cap would fall on the states. States would receive a different amount for different populations; they would receive more money for each blind and disabled person, for example. The federal spending cap would increase ever year through a formula that is based on overall health care costs.
In the past, analysts have usually projected that spending caps like those in the Republican plan would lead to fewer people being covered and less generous benefits. The new proposal has not yet been officially reviewed by the Congressional Budget Office.
The new plan does appear to include an olive branch to senators in expansion states worried about their constituents. It would maintain the generous federal funding for that population established by Obamacare — but only if the people are enrolled by 2020 and as long as they never go more than a month without being eligible for Medicaid. Otherwise, the law’s Medicaid expansion would end, and people would likely fall out of coverage over time.
The Republican bill includes some other provisions aimed at doctors and hospitals in the states that did not expand Medicaid under Obamacare, providers who have therefore not seen the same increase in insured customers.
Those states would receive a boost in federal funding, which they can use to increase payments to providers that treat Medicaid patients. The bill would also immediately undo Obamacare’s cuts to Medicaid payments for hospitals that treat a disproportionate share of poor and uninsured patients. For states that did expand Medicaid, those cuts would not be repealed until 2020.
So is the problem solved?
Portman told reporters Monday that if the GOP plan found a way to continue the Medicaid expansion population, then it would be “a step in the right direction.”
Sen. Portman says if Medicaid expansion in new house bill grandfathers in enrollees, that would be a "step in the right direction."
— Tarini Parti (@tparti) March 6, 2017
Does the new Republican bill do enough to assuage those concerns? It seems like an opening bid to bring reluctant senators onboard. That will be perhaps the question for GOP leaders going forward.