Senate plan cuts Medicaid even more

Now that health care legislation has moved to the Senate, debate has shifted from pre-existing conditions coverage to cuts to Medicaid. This is fortunate. As important as it is to preserve pre-existing condition protections, in the House this debate took place at the expense of proposed changes to Medicaid.

Our own Senator, Pat Toomey, has been thrust into the midst of this debate. Toomey, along with Rob Portman (R. Ohio), has been tasked with finding a way forward on Medicaid. Using a complicated formula, Toomey would transfer even more responsibility to the states than the House bill: the Medicaid expansion would be eliminated, and increases in Medicaid spending would be linked to the Consumer Price Index for Urban Consumers, or CPI-U, rather than the more generous Medical CPI in the AHCA. The effect of this would be to transfer $608 billion in Medicaid costs to the states over 10 years, rather than the $370 billion in the House bill.

Obamcare expanded Medicaid by raising the threshold for Medicaid eligibility and expanding the Medicaid-eligible population. Prior to the expansion, families making less than the federal poverty level (about $23,500 a year for a family of four) were eligible for Medicaid benefits; childless adults were not. Under the ACA expansion, adults making up to 138% of poverty ($32,500 for a family of 4) qualify. This expansion accounts for about 11 million of the 23 million who stand to lose their health insurance under the ACHA, or any legislation like it (Kaiser Family Foundation). The plan favored by Toomey would, like the ACHA, freeze the expansion beginning in 2020. It would also tie increases in benefits to an index drastically lower than even the House bill. The most vulnerable Americans would have their benefits reduced, or would be ineligible for benefits beginning in 2020.

Legislation being considered by Republicans would convert Medicaid funding to either a per capita cap system, or to block grants; states would receive a fixed amount, indexed to 2016 spending levels. Currently, federal funds can be increased to take into account unanticipated costs due to growth in health care expenses, epidemics like the opioid epidemic, and new treatments. Under a block grant, or per capita cap system, state grant amounts would vary based only on the size of the Medicaid population. Increases in cost per beneficiary would be the responsibility of the states.

According to the Center on Budget and Policy Priorities, the ACHA “would shift an estimated $370 billion in Medicaid costs to states over the next ten years.” Tying increases to the CPI-U would shift nearly twice that amount to the states. Since most states are required by their constitutions to balance their budgets, they would be forced to pass on costs to providers and beneficiaries by raising eligibility requirements, reducing payments to providers, and restricting benefits.

Transferring so much Medicaid funding to the states would make it possible to repeal all ACA taxes, including taxes on the wealthiest taxpayers and on pharmaceutical manufacturers and high cost employer-sponsored plans. This would allow for enormous tax breaks for the wealthy: millionaires would get 80% of the resulting tax breaks. Taxpayers with incomes above a million dollars would receive average tax cuts of $49,370. Middle-income households, those who make between $43,000 and $83,000, would get an average tax break of $80 (CBPP). The non-partisan Congressional Budget Office projects that the AHCA would insure 23 million fewer people by 2026. This reduction “would stem in large part from changes in Medicaid enrollment. Huge tax cuts for the rich along with unprecedented reductions in Medicaid spending would represent a barely-concealed transfer of wealth to the top.

Medicaid is the nation’s medical safety net program. Low income and disabled Americans and the elderly, who would otherwise be uninsured, qualify for health benefits based on their income. According to the Urban Institute, the ACA’s Medicaid expansion reduced the number of uninsured in the 32 states that accepted the expansion by 7.5 million in its first year. It has the additional benefits of job creation (35,000 in Pennsylvania), savings to hospitals for uncompensated care ($550 million a year in Pa), and reducing budget shortfalls for states (The Rand Corporation). Congress needs to find a way to maintain these benefits by keeping Medicaid eligibility at 138% of poverty, and continuing to offer states open-ended federal funding for Medicaid.

And they need to pay for this vital program before they think about providing tax breaks to those who least need them.

Doug Gunn Phoenixville