The Coming War On Medicare and Medicaid

With the nomination of Tom Price as Secretary for Health and Human Resources (HHS), Trump has clearly signaled his support for an all-out Republican attack on Medicare and Medicare, two of the longstanding pillars of America’s health-care system.
Since 1966, when it was first established as a single payer, national social insurance program administered by the federal government, Medicare has grown to the point where it now provides health insurance for over 55 million Americans — 46 million people age 65 and older and nine million younger people with disabilities recognized by the Social Security Administration. The federal government contracts with about 30-50 private insurance companies across the U.S. to administer the program, and it is primarily funded by a Payroll Tax, premiums and surtaxes from beneficiaries, and general revenues to make up any shortfall. On average, Medicare covers about half of the health care charges for those enrolled. The enrollees must then cover their remaining costs either with supplemental insurance, separate insurance, or out-of-pocket. Out-of-pocket costs can vary depending on the amount of health care a Medicare enrollee needs, and uncovered services—such as for long-term, dental, hearing, and vision care—may be covered though supplemental insurance premiums.
Medicare, by contrast, is a needs-based health insurance program financed jointly by the federal government and the states, and administered by the states. It was first established as part of the 1965 Amendments to the Social Security Act. Beginning in the 1980s, many states received waivers from the federal government to create Medicaid managed care programs. Under managed care, Medicaid recipients are enrolled in a private health plan, which receives a fixed monthly premium from the state. The health plan is then responsible for providing for all or most of the recipient’s healthcare needs. Today, all but a few states use managed care to provide coverage to a significant proportion of Medicaid enrollees. As of 2014, 26 states had contracts with managed care organizations (MCOs) to deliver long-term care for the elderly and individuals with disabilities. Nationwide, roughly 80% of enrollees are enrolled in managed care plans.
Starting in 2014, the Affordable Care Act expanded Medicaid coverage, providing health care coverage to millions of additional Americans who previously were not eligible for government-sponsored health insurance programs. Under the law as written, states that wished to participate in the Medicaid program would be required to allow people with income up to 133% of the poverty line to qualify for coverage, including adults without dependent children. The federal government would pay 100% of the cost of Medicaid eligibility expansion in 2014, 2015, and 2016; with some funding by the states thereafter.
However, the Supreme Court ruled in NFIB v. Sebelius that this provision of the ACA was coercive, and that the federal government must allow states to continue at pre-ACA levels of funding and eligibility if they chose. Several states then opted to reject the expanded Medicaid coverage provided for by the act, which impacted over half of the nation’s uninsured living in those states, which include Texas, Florida, Kansas, Georgia, Louisiana, Alabama, and Mississippi. These states were followed by Alaska, Idaho, South Dakota, Nebraska, Wisconsin, Maine, North Carolina, South Carolina, and Oklahoma, which either decided to reject expanded coverage, or are likely to do so. Unsurprisingly, all or almost all of the states that have rejected expanded coverage through Medicaid under the Affordable Care Act are Red States that broke in favor of Trump in the 2016 Presidential election. This means that expanded Medicaid coverage under the ACA applies almost exclusively to poorer people in Blue States, which have the most to lose if the ACA and its expanded Medicaid coverage were to be repealed.
Republicans such as Speaker Paul D. Ryan and Tom Price have supported proposals to revamp the structure and to “privatize” Medicare by providing Medicare participants with vouchers that they can use to get health coverage with private insurance companies. If these proposals are pursued, they would severely hurt older and sicker Americans who rely upon Medicare for their basic medical coverage. Knowing that this attack on Medicare is coming, Democrats have already started mobilizing their efforts to resist these efforts as vigorously as necessary. Medicare is one of the basic compacts with American citizens, very similar to Social Security. In other words, if you have contributed with payments into the system through payroll tax deductions from your paycheck during you working years, then you are entitled to health coverage under Medicare when you reach age 65. Any Republican proposal to tinker with this basic compact should be met with a firestorm of protest across the country, and rightfully so.
The coming war to dismantle Medicaid will be much more troublesome, since the general public has less of an understanding of the Medicaid program than they do about Medicare, and since it is “needs based,” and is primarily designed to provide health benefits to those millions of children, seniors, working families and people with disabilities who are at the lower rungs of the economic ladder, the constituency of those supporting Medicaid is smaller and less well organized than for Medicare. Ironically, a substantial portion of those millions of Americans who voted for Donald Trump are receiving basic (but not necessarily expanded) Medicaid coverage in their respective states, and they would likely to be stripped of their health insurance coverage if the Medicaid system were to be dismantled.
The Republican effort to dismantle Medicaid is much more likely to be successful, if for no other reason than Medicaid recipients are generally poor, and this kind of “safety net” program and this demographic group has never been high on the list of those that the Republican Party and Mr. Trump have ever really cared about. Both Speaker Paul D. Ryan and Tom Price have made proposals to deeply cut Medicaid through arbitrary block grants or “per capita caps,” and during the campaign, Trump has also proposed block grants.
Trump will, no doubt, continue to make perfunctory reference to his commitment to the Forgotten Men and Women of America’s Heartland who voted overwhelmingly for him, but there can be no serious doubt now that his overall economic and fiscal strategy will be designed to benefit the mega-rich and well-to-do at the expense of the tens of millions of Americans who are living paycheck to paycheck, or who rely in government programs such as Social Security, Medicare or Medicaid to just scrape by.
Trump and HHS Secretary-designee Price will no doubt attack Medicare as a “bloated and wasteful system” that needs to be deeply pruned on fiscal responsibility grounds alone. Mr. Price’s own proposal, which he presented when he was the chairman of the House budget committee, would cut Medicaid by about $1 trillion over the next decade, and this cut would be on top of the reduction that would result from the repeal of the Affordable Care Act, which both Mr. Trump and Republican leaders are advocating. Together, full repeal and block granting would cut Medicaid and the Children’s Health Insurance Program funding by about $2.1 trillion over the next 10 years, amounting to a 40 percent cut. Even without counting the repeal of the A.C.A. coverage expansion, the Price plan would cut remaining federal Medicaid spending by one-third, or $169 billion, by the 10th year of his proposal, with the reductions growing more severe thereafter. In terms of the number of Americans who would be stripped of Medicaid coverage, the Henry J. Kaiser Family Foundation estimated that a similar Medicaid block grant proposed by Mr. Ryan in 2012 would lead to 14 million to 21 million Americans losing their Medicaid coverage by the 10th year, and that is on top of the 13 million who would lose Medicaid or children’s insurance program coverage under an ACA repeal. A large percentage of those who would lose their Medicaid coverage would be Trump supporters in Red States. Are they in for a big surprise as to what the election of President Trump has wrought!
Fortunately, Democrats and others who plan to resist the Republican stampede to gut Medicaid have facts and history on their side (to the extent that those are of continue relevant in a Trump “post-fact” world. The overwhelming weight of the evidence showing that Medicaid’s actual spending per beneficiary has, on average, grown about 3 percentage points less each year than it has for those with private health insurance. According to the Center on Budget and Policy Priorities, this long-term trend that is projected to continue. Since Medicaid is being managed relatively efficiently, this means that the imposition of any arbitrary spending caps being proposed by Mr. Price and Mr. Ryan would leave no alternative for states other than to impose harsh cuts in benefits and coverage.
The emerging Republican plan to “repeal, delay and replace” the ACA would only delay the disastrous consequences. Current Republican plans to eliminate the marketplace subsidies and ACA Medicaid expansion starting in 2019 would create what has been called a “health care cliff” where the disappearance of all Medicaid funds and subsidies for ACA in 2019 would mean that about 30 million people would lose their health care coverage. Democrats and any sensible Republican allies now have two years (2017 and 2018) to prevent this looming disaster.
This doomsday scenario would not only impact low-income families, but it would also hurt tens of millions of middle-income families who have a family member with a disability, such as autism or Down syndrome, or are in need of nursing home care. About 60 percent of the costs of traditional Medicaid come from providing nursing home care and other types of care for the elderly and those with disabilities. Trump and the Republican leadership are giving every indication that they are prepared with the political consequences such a drastic cut in coverage.
The big question is whether they can be stopped. Now is the time for the Democratic Resistance to start organizing for this coming battle and, who knows, only three Republican Senators need to be convinced of the righteousness of this cause for the Republican juggernaut and war against Medicare and Medicaid to be stopped in its tracks.