Republicans’ Medicaid Reforms Are Just What the Doctor Ordered

Obamacare is in jeopardy and Democrats know it. And while they don’t necessarily want to own the inevitable collapse of the individual market that Obamacare put into motion, neither do they want to admit that it took electing a GOP-led Senate to fix it. So it’s not surprising that Democrats are pulling out the stops to paint Republicans as evil and their health care reform bill as destructive.

“The only play Democrats have right now is full-throated opposition for this proposal. They need to kill it once and for all,” Jim Manley, a former aide to former Senate leader Harry Reid told RealClearPolitics.

Democrats have heard that call loud and clear. Rather than kill the bill with solid policy arguments, they’ve opted for a short cut: Say that it kills Americans.

From Sen. Elizabeth Warren claiming that the taxpayer dollars saved by the bill would be “blood money,” to Hillary Clinton arguing that passing the bill would make Republicans “the death Party,” to Sen. Bernie Sanders tweeting that “thousands of people will die if the Republican healthcare bill becomes law,” the rhetoric has reached a disturbing level. In spite of the tragic shooting of Congressman Steve Scales just weeks ago, civility apparently still has no place in the debate. All that matters is stopping Republican attempts to roll back a disastrous law.

One of Democrats’ chief lines of attack has been on the Senate bill’s changes to Medicaid, arguing that it would enact dramatic cuts and kick millions off of the program. The effect, they argue, is a dramatic erosion of the safety net to the detriment of poor Americans.

It does no such thing.

What it does do is replace the Medicaid expansion under Obamacare with tax credits to buy insurance in the private marketplace. Not quite as rhetorically sexy when you describe it that way, huh?

Nevertheless, it’s a big deal that actually has the power to improve the lives of millions while also keeping more money in taxpayer’s pockets. That’s because Medicaid is a woefully inefficient system, made worse by Obamacare, that doesn’t actually improve the health of those it covers.

Medicaid began as a federal-state partnership to provide health care to pregnant women, children and families. That partnership takes the form of a “Federal Medical Assistance Percentage,” which reimburses states an average of 57 cents for every dollar they spend on care for certain indigent populations.

Obamacare dramatically altered the core program by attempting to mandate (before the Supreme Court ultimately stepped in it permissive) states to cover everyone, not just certain eligibility categories, up to 138 percent of the poverty line. In order to get states anxious to participate, the federal government reimbursed states at 100 percent of the costs for expansion enrollees. Over time this rate will gradually decline to 90 percent.

At the time it was assumed that this expansion population would be cheaper to cover. That assumption has proven false. As Charles Blahous, a former trustee for Social Security and Medicare, pointed out this week, the federal government is now predicting that costs for this population are more than 50 percent higher than projected four years ago. Moreover, expenditures are expected to grow even faster than they are for traditional Medicaid recipients.

“In other words, expansion has made Medicaid spending more poorly targeted,” Blahous writes. “We’re already spending a far greater share than expected on Medicaid’s relatively less needy participants, and this poor targeting is expected to grow worse.”

This is not just a wonky, inside-baseball debate over the inner workings of Medicaid. It has dramatic real world consequences for almost everyone. It means that the federal government has less money to spend on programs for those below the poverty line. It means states have fewer funds to invest in early childhood education, schools and services for vulnerable citizens. And it means higher prices for the privately insured since hospitals shift costs to make up for the fact that Medicaid pays less than the cost of care.

Perhaps all that would be worth it if Medicaid improved the health of those it served. Unfortunately, there’s not much proof of that. Several studies have shown that Medicaid “had no significant effect” on health outcomes and life expectancy has fallen, for the first time in decades, after the program expanded.

High costs, poorly targeted subsidies, and poor health outcomes aren’t signs of a successful program, they’re indicators of a system in need of dramatic reforms. That’s exactly what Republicans are offering. If Democrats have better ideas then by all means make them known. But please, stop with the fear mongering.

Photo Credit: