There are still huge questions about what this new system will look like, and when it might be enacted. In a new seventeen-page paper, “Obamacare Repeal and Replace,” the G.O.P. lawmakers outlined proposals that are familiar from a plan that Ryan put out last year. They included expanded health savings accounts, financial aid for the establishment of high-risk pools at the state level, and the replacement of income-based subsidies to purchase individual insurance with universal tax credits.
But the paper also contained some huge gaps. It didn’t say how large the new tax credits would be, or how they and other elements of the reform would be paid for. To pay for its provisions, the 2010 Affordable Care Act levied more than a trillion dollars in tax increases over a decade. The Republican replacement will, in all likelihood, cover millions fewer people than Obamacare, but it will still have to be paid for. Ryan and his colleagues were largely silent on where the tax burden would fall.
For all this deliberate obfuscation, though, House Republicans are now being very clear about one thing: whatever legislation emerges after the Senate and the White House have weighed in, it will almost certainly roll back the Obama Administration’s expansion of Medicaid, the federal health-insurance program for poverty-stricken and low-income households. Under the outline released on Thursday, the current Medicaid system would be replaced by block grants to the states, and the extra federal money that went to Medicaid as part of the A.C.A. would gradually be removed. In effect, the Medicaid expansion would be slowly suffocated.
For some reason, this fact has received less attention than other elements of the Republicans’ approach, such as the replacement of subsidies with tax credits. But in many ways the expansion of Medicaid has been Obamacare’s most successful element. Since the start of 2014, more than sixteen million Americans have been added to the rolls of Medicaid and CHIP, the children’s version of the program. That’s more than the roughly 12.7 million people who bought private insurance plans on government-run exchanges in 2016. The expansion was targeted at working families who aren’t officially in poverty but don’t earn enough to buy even subsidized private insurance plans—roughly speaking, these are households earning less than thirty-five thousand dollars a year—and it has been popular, uncontroversial, and cost-effective. Rolling it back would be cruel, and wrong.
The top-line numbers don’t even tell the full success story. Insuring people through Medicaid is much cheaper than enrolling them in private insurance: the cost differential is at least twenty-five per cent. So the 2014 Medicaid expansion not only played a key role in reducing the percentage of Americans who don’t have any insurance—from 14.3 per cent, in 2013, to 8.6 per cent, in January to March of last year—it did so in an economically efficient manner. Purely on this basis, you might think that Republicans who claim to like value for money would want to preserve the expansion. But, of course, they don’t.
Why not? In public, they claim Medicaid is too bureaucratic, fraud-plagued, and costly. “On its current path, the Medicaid program is on unsustainable financial footing,” the new G.O.P. paper says. “This is not merely a fiscal issue, but an issue that jeopardizes the ability of federal and state government to take care of the most vulnerable who actually rely on the program.”
Although rising health-care costs are a real issue, this argument doesn’t stand up. As health-care programs go, Medicaid is a cheap option, with relatively low costs and low rates of inflation. A recent analysis by the non-partisan Congressional Budget Office predicted that, if current policies are maintained, federal spending on all health-care programs will go from about 5.5 per cent of G.D.P in 2016 to 8.9 per cent in 2046. That’s a big jump. But the great bulk of the increase will be accounted for by the rising cost of Medicare as the population ages. Spending on the expanded version of Medicaid plus the other elements of Obamacare, if they were preserved, would go from 2.3 per cent of G.D.P. to 3.1 per cent—an eminently manageable increase.
Surely the real reason that House Republicans want to roll back the Medicaid expansion is the same reason that nineteen Republican-run states refused to participate in the expansion to begin with. These lawmakers are ideologically opposed to redistributive entitlement programs, and they are in hock to wealthy backers who don’t like paying for them. From this perspective, the fact that the Medicaid reform worked doesn’t justify keeping it: it’s a reason to get rid of it quickly, before public support for it becomes immutable.
Republican leaders are only too aware that once programs like Social Security, Medicare, and Medicaid get established, trying to get rid of them, or even downsize them, can be politically toxic. In this instance, Ryan and his colleagues appear to be betting that the Medicaid expansion can be safely reversed because it is still relatively new. There’s no assurance they are right, however, particularly because many of the people who stand to lose out are Trump voters.
Not all Republican-run states spurned the expansion. Some—such as Arizona, Michigan, New Mexico, North Dakota, and Ohio—chose to participate. As a result, many residents of these states now have health-care coverage for the first time in their lives. In other places, such as Arkansas and Kentucky, Republican governors have recently taken over from Democrats who approved the Medicaid expansion, and they have kept it in place. In fact, there are now fourteen Republican-run states that stand to lose a great deal if the Medicaid expansion is scrapped.
Under the approach outlined on Thursday, Ryan and his colleagues would seek to alleviate this problem by removing the federal funding only gradually, and giving states times to adjust. But this idea is already running into fierce opposition from the Republican states that never expanded their Medicaid programs. Why should their residents continue to pay federal taxes that will go to reward states that played footsie with Obama, some of their representatives are asking. In the words of Mark Sanford, a Republican congressman from South Carolina, there is an “incredible tug of war” on the way.
Still, the Republican Party’s internal machinations are a secondary matter. The key point is that G.O.P. leaders are intent on ripping up a successful and affordable reform that helped fill a gaping hole in the social safety net. In the process, they will endanger the health of a lot of Americans who don’t have the resources to protect themselves and their families. And that’s shameful.
Author: John Cassidy