MEDICAID Squabble – Politics at its worst
Good Time To Tell Democrats and Republicans to Grow Up
The US House of Representatives, with a narrow Republican majority, advanced a Budget Resolution. Among the provisions the bill contains changes to Medicaid, the Federal-State tax-supported program for low-income Americans. The contours of these policy proposals are changing as the legislative process grinds forward. This column seeks to add some policy clarity to go along with the political shouting.
My job as CEO of a healthcare consulting company required detailed understanding of legislation affecting healthcare. Meeting that requirement included a full read of the Patient Protection and Affordable Care Act (aka Obamacare). In 2010, I was at the podium before an audience of healthcare executives when the program was interrupted for a live feed from the Supreme Court of the United States. SCOTUS had ruled on the constitutionality of the PPACA. There were two issues in question – the first challenging whether the individual mandate was indeed a tax* and whether the Medicaid expansion was constitutional. Both matters were resolved by the court and Obamacare became law.
The Medicaid expansion is essentially this: that states could provide Medicaid health insurance to their able-bodied citizens without dependents who earn up to 400% of the poverty level. This expansion meant that there was not a requirement for a disability or child or extreme low income to become eligible for taxpayer-supported health insurance through Medicaid. This year’s budget resolution seeks or sought to reverse Medicaid expansion. Reasonable people could agree or disagree on the policy itself.
Naturally, here is where it gets ridiculous.
And The Washington, D.C. Show Begins!
The opposition Democrats retreat to their world of fear porn, with the canard that Republicans are taking away healthcare from disabled and impoverished Americans to fund tax cuts for billionaires. The Democrats and legacy media must know that isn’t the story, but it is too good not to feed to their rabid followers. Apparently in Democrat world, the words “disabled” and “able bodied” have the same meaning; similarly “with dependents” and “without dependents” are synonymous; “impoverished” and “4 times the poverty level” are no different. The “tax cuts” are merely the extension of the 2017 Trump tax bill that has been law for 7 years and benefit a broad range of people. But this quick column is not about tax policy although there are plenty of disingenuous talking points in the fear porn factory on this topic as well.
The Republicans somehow imagine that lower-income Americans, if they are able-bodied and without dependents, will simply move off Medicaid once the gravy train comes to a halt. In this gross disconnect from reality, the GOP imagines that a person will go find a job that pays well and provides healthcare benefits. As if the gyrations employers go through to avoid providing healthcare to their workforce do not exist, or that the employee contribution for premiums and deductibles have not skyrocketed. One would think that the Republican Congress Person could simply show their newly employed constituent how easy and affordable an individual policy is, were that reality.
The actual issue screaming for a policy response is the idiotic method(s) in place for healthcare financing. At the center of the issue is the linkage of health insurance to employment which includes tax-favored treatment of the revenue stream that benefit companies like Anthem, United Healthcare, Aetna and others who have a business model that offers coverage right up to the point you might need it.
So, we have one major political party lying to generate political points and another too disconnected from reality to think through solutions that benefit Americans. This tragic dysfunction comes precisely at a time when the healthcare financing mess could be resolved. A complete policy response can be found at https://thecommonbridge.substack.com/p/a-solution-for-healthcare , originally published in June of 2019 and reposted on March 2, 2024.
A Few Random Facts About Medicaid
The proposed legislation has a target of slowing the rate of growth in Medicaid spending by $880 billion. It is not an absolute cut from the current spending level. However, the anticipated budget growth is a function of rising costs for healthcare supplies and labor, along with demographically driven demand for more services. Reining in spending will have impact on access to care and affordability.
Medicaid is not profitable for hospitals. Medicaid reimbursement rates vary from state to state. Medicaid reimburses hospitals for about 55% of the cost of delivering care. That may sound low and a certain money loser for providers, and it is. However, the alternative is getting no dollars while being required to treat those who have gone without care in higher cost ways, often in the emergency departments. Ultimately, unless a few trillion in philanthropy filled the gap (not likely), Federal and State budgets would be tapped to provide funds to treat a larger uninsured population.
Other Medicaid Reforms Being Discussed
There are other Medicaid reforms that are under discussion. One is eliminating the provider tax. The way it works is that states tax the revenue of hospitals, nursing homes and other care facilities. Thus, money flows to the coffers of state governments. That same tax expenditure on the books of the healthcare providers artificially inflates their cost of care, so the state can obtain higher matching Medicaid funds from the Federal Government. That money is then used to support the same groups providing care. If the provider tax is eliminated, there would be enormous holes in state budgets.
The provider tax, while clever on the part of state governments and healthcare providers, is one more datapoint supporting the view that the entire healthcare finance method is horribly broken. Our government is literally talking about removing a method that state legislatures put in place to get around methods that won’t work because the Federal government will not fix the system.
Another avenue to reform Medicaid is the compromise of including work requirements in order to be eligible for benefits. I suppose if you are in the Washington, D.C. bubble this makes sense, i.e., conservative Congressional Reps can return to their districts and say they got the lazy able-bodied off Medicaid and left leaning reps can say they saved wheelchair-bound constituents from losing their Medicaid. Except in past practice there were so many exceptions to work requirements the program was ineffective in reducing cost of Medicaid or incentivizing work.
Past Due for Healthcare Finance Reform
Again, it is past time to reform the healthcare finance methods and put in place a working system that will provide access, ensure quality, and be delivered at a price the public can afford. Make a financing system every bit as excellent as the prevention, diagnostics and treatments resident in the United States.
The program outlined in the embedded link, above, has been vetted and discussed with guests of The Common Bridge who are healthcare policy experts and represent points of view from across the political spectrum.
And if there is any doubt that the healthcare finance methods are broken and need an overhaul, consider that during the pandemic, absent special funding legislation, nearly every hospital in America would have gone bankrupt.
Give up the fear porn. Give up the nonsense that doesn’t comport with reality. Write to your representatives. Ask them to grow up and govern.
Onward
* The Obama administration argued that the individual mandate requiring every citizen to buy health insurance or pay a penalty was not a tax. SCOTUS rejected that argument and ruled the individual mandate was a tax and therefore within the authority of the Congress. Thus, PPACA aka Obamacare, became law.