To replace ‘Obamacare,’ try Medicaid

In defending their efforts to repeal the Affordable Care Act, Republican leaders in Congress argue that the insurance marketplaces created by the law are failing. They aren’t completely wrong.

Trouble began with faulty websites during the rollout in 2013. Since then, enrollment continues to be below expectations. “Obamacare” plans often have higher premiums and out-of-pocket expenses than expected. Some markets, mainly in rural areas, may not attract a single insurer in 2018. And insurers that stay are likely to impose double-digit premium increases.

The Republican plan to replace Obamacare would do little to stabilize the exchanges. But there is a better way to provide insurance to the 11 million beneficiaries of Obamacare plans: Allow them to buy into the Medicaid system. For President Donald Trump, “Medicaid for more” would be both good policy and good politics.

Let’s start with a political puzzle. Why has Medicaid become the nation’s largest health insurance program, with more than 70 million enrollees, even though both conservatives and liberals criticize it? First, it has surprisingly strong support from hospitals and nursing homes, insurers and states, which receive federal funds to help finance care. Second, since Medicaid is administered in different ways by different states, it cannot be labeled a monolithic national program. Third, its cost is shared among federal, state and local governments. Finally, Medicaid works: It provides access to good-quality care for low-wage Americans and more secure funding for the medical safety net.

So why does Medicaid have a bad reputation in both parties? The answer is that both conservatives and liberals buy into a series of Medicaid myths.

Many conservatives mistakenly believe Medicaid is an out-of-control entitlement and want to cap federal Medicaid spending. But Medicaid provides low-cost care to millions of the nation’s oldest, sickest and most vulnerable populations. In 2013, a report by the Urban Institute demonstrated that if an average adult on Medicaid had traditional private insurance instead, the cost of care would be over 25 percent higher.

Another myth is that states need more freedom to develop innovative Medicaid policies. But states already have flexibility to shape their programs, and the Trump administration could give them even more without changing the law. Indeed, nearly every state is experimenting with novel approaches to the delivery of care, benefits packages and provider payments. This means New York can pay immigrant-aid organizations to provide health screenings, while Indiana experiments with high-deductible plans and health savings accounts.

The notion that Medicaid is a “big government” program is yet another myth. More than 60 percent of Medicaid beneficiaries are enrolled in private managed-care plans now. Medicaid is actually a successful public-private partnership.

Some liberals have proposed using Medicare, the federal health care program for the elderly and disabled, as the basis for providing universal health insurance. But Medicaid is the better fit. It has a more generous benefits package, is less costly and is developing more innovative care-management strategies. Moreover, the integration of the Obamacare exchanges into Medicaid would be relatively seamless: Many health plans are already in both markets.

Of course Medicaid is not perfect. Doctors and hospitals complain about low reimbursements, beneficiaries often have trouble finding high-quality care, and the stigma of the program as being a form of welfare persists. In reality, however, the program is much more than that, providing care to children, seniors, the working poor and welfare recipients.

Trump has consistently argued that he will ensure decent coverage for all. He even praised the Australian system of universal coverage on the same day the House voted to replace the Affordable Care Act with a program that would cut Medicaid by $880 billion over a decade and end the law’s extension of Medicaid coverage to more people.

Moderates in both parties recognize that the chance of success for an insurance marketplace that serves only the self-employed, part-time workers and small businesses, as Obamacare does now, is small. So why not eliminate the insurance exchanges — enabling Trump to claim he “repealed” Obamacare — while allowing exchange beneficiaries to buy into Medicaid, using tax credits to pay the premiums. Recent surveys showing that Medicaid beneficiaries are generally satisfied with their coverage, more so than their exchange counterparts, makes the case even more persuasive.

The conservative House Freedom Caucus would surely object if Trump endorsed “Medicaid for more,” but moderates on both sides of the aisle might join him. The result would be better health coverage for more Americans and a clear path toward an American version of affordable coverage for all.