Intra-GOP Fight Ramps Up Over Medicaid Cuts In Obamacare Repeal

Chairman Rob Portman of Ohio, listens during a hearing of the Senate Permanent Subcommittee on Investigations to review billing and customer service practices in the cable and satellite television industry, on Capitol Hill, Thursday, June 23, 2016 in Washington. (AP Photo/Alex Brandon)
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In a sign that Senate Republicans are close to—but not quite at—a deal to bring an Obamacare repeal bill to a vote, the fault lines within the GOP over efforts to impose major cuts to Medicaid are becoming publicly exposed, in what have been otherwise closely guarded negotiations.

One front of the battle is whether to soften a phase-out of the Medicaid expansion program, which is wound down starting in 2020 in the already-passed House repeal legislation. Another front of the battle is how Republicans craft their longer-term overhaul of the traditional Medicaid program. The GOP intends to transform Medicaid into a “per capita cap” system, in which states receive a set amount of federal funding per beneficiary, rather than an unlimited match rate from the feds. There is disagreement, however, over how they design the caps.

“On the discussion we had [Tuesday], that was marked ‘TBD,'” Sen. John Cornyn (R-TX), the No. 2 GOPer in the Senate, told TPM this week, referring to a slideshow presentation on health care Republicans held.

“We haven’t made decisions on that yet,” he said.

Is A Medicaid Expansion Compromise On The Horizon?

The House bill, the American Health Care Act, eliminated the Medicaid expansion by freezing enrollment in 2020 of beneficiaries who would receive the higher federal match rate under Obamacare. Any new enrollees after that would receive only the traditional match rate (which differs state to state, for an average of 57 percent).

Republicans have argued that “Nobody on Medicaid is going to be taken away.” But in fact, due to the high churn of the program, such a freeze would wipe out the expansion rather quickly, according to the CBO:

CBO projects that fewer than one-third of those enrolled as of December 31, 2019, would have maintained continuous eligibility two years later. Under the legislation, the higher federal matching rate would apply for fewer than 5 percent of newly eligible enrollees by the end of 2024, CBO estimates.

Thus some GOP senators who hail from expansion states are seeking a so-called “glide path” that they argue would soften the effects of the cuts in federal funding. A few—including Sen. Rob Portman (R-OH), who has been a point person for Medicaid expansion—are backing a seven-year “glide path.” The details are still very vague, but under such a transition, states would see the match rate for expansion enrollees they receive from the feds slowly decrease from the 90 percent enhanced rate under Obamacare to the traditional rate over the course of seven years.

Such a “transition” still wouldn’t help states that have included in their expansion trigger provisions that undo the program as soon as federal funding decreases. And some health care experts think most states would stick to a 2020 enrollment freeze, even with the option for a longer phase-out.

Regardless, Majority Leader Mitch McConnell (R-KY) has been willing to offer a three-year phase out, according to various reports, perhaps fearing that going any farther would lose the votes they’ll need from the conservative bloc to get to 50.

Outside conservative groups, meanwhile, are raising hell about letting the Medicaid expansion drag on any later than what was prescribed in the House bill. In a tweet storm, Dan Holler, a spokesman for Heritage Action for America, the political advocacy arm of the conservative think tank The Heritage Foundation, railed against the proposal:

Few Answers On How To Raise Limits On Medicaid Funding

The other major Medicaid debate has been less at the forefront, but arguably more important to the long-term reach of the program. Republicans have more or less agreed to overhaul Medicaid’s structure so that it will no longer be an unlimited match rate. Instead, states would receive a set amount of federal funding, based on number of enrollees per state, and what types of enrollees. (Costly seniors would likely get a larger per-beneficiary payment, for instance, than children, who tend to be cheaper to cover.)

A key question that will determine how large a spending cut these limits stand to impose on states is how the caps raise over time. The House bill sets this inflation metric at the Consumer Price Index for Medical Care—with the cap for seniors and the disabled getting an extra boost at CPI-M plus-one-percent, since those beneficiaries are particularly expensive. States would receive a cut right off the top, because the 2020 caps would be set according 2016 spending levels. But as time went on, the burden states would have to bear would grow even larger, because CPI-M is about 2 percentage points lower than the growth in Medicaid costs before the expansion (the influx of young, childless adults since expansion has made the more recent growth rate artificially lower, because those enrollees are cheaper to cover).

The CBO said that the expansion and the caps together cut $834 billion total in federal Medicaid funding, resulting in 14 million people fewer on the program, but it didn’t break down how many of those losses stem from the expansion rollback versus the caps. However, Brookings did an analysis on what the House proposal would have looked like if it had been enacted in 2004. By 2011, the average cut for states would 11 percent, but with wide variation. One state would see a 77 percent cut in that time period, and eight others would face at least 25 percent decrease in the federal funding for their programs, according to the report.

Conservatives senators, or at least, their allies on the outside, are seeking an even slower growth rate in the caps than what the House bill proposed. Michael Needham, the chief executive officer of Heritage Action, and David M. McIntosh, president of the Club for Growth, penned an op-ed in the Hill suggesting preference for a growth rate tied to broader inflation metric, Consumer Price Index for All Urban Consumers (CPI-U).

“The only way to put Medicaid on a truly sustainable budget is to ensure it cannot grow faster than the economy as a whole,” they wrote.

So far, it appears GOP leadership is seeking to hold on to the House’s metric. Time will tell whether this, coupled by the push by moderates for a longer Medicaid phase-out, will ultimately cost Republicans enough votes from its conservative bloc to sink the bill.

ABOUT THE AUTHOR

Tierney Sneed is a reporter for Talking Points Memo. She previously worked for U.S. News and World Report. She grew up in Florida and attended Georgetown University.
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