WASHINGTON ― While the debate over Obamacare repeal focuses on insurance subsidies, coverage equity and tax cuts, a far more radical attempt is quietly underway to end the Medicaid program as we know it.
As currently structured, Medicaid guarantees a set of benefits to everybody who qualifies. Most people associate Medicaid with the poor and working class, but historically the program has spent as much or more money on elderly and disabled people who qualify. They use it to pay for things like nursing-home care that Medicare doesn’t cover.
The new version of the program would upend this arrangement. It would devolve Medicaid to the states and reimburse them using a predetermined formula that, as the Congressional Budget Office and other experts have concluded, would not actually keep up with the cost of care. As the federal contribution toward Medicaid eroded over time, states could make up the difference on their own or ― more likely ― they could make cuts in whom or what the program covers. The federal guarantee would be over, and with it, the Medicaid program as we know it.
That’s not an accident. If House Speaker Paul Ryan (R-Wis.) wanted Medicaid to keep up with the cost of providing coverage to those eligible, there would be an easy way to do it: leave the program as is. But Ryan has been salivating about targeting Medicaid most of his life, he said this week. When he’s speaking with conservative audiences, Ryan is upfront about the goal. “We’ve been dreaming of this since I’ve been around ― since you and I were drinking at a keg,” he recently told keg-party buddy Rich Lowry, editor of the National Review.
Speaking earlier with conservative radio host Hugh Hewitt, the two of them were practically giddy about the opportunity. “The Medicaid devolution, in capping, is the most significant entitlement reform of my 60 years on this planet,” Hewitt said, adding that he had just been talking with conservative economist Avik Roy. “Avik says it is 10 times more important than the welfare reform of 1996.”
“Oh, for sure,” Ryan replied. “Welfare reform is a $16 billion program. We’re talking about trillions in the end here in this program.”
The energy in his voice rising, Ryan got to the heart of the plan. “This is so much bigger by orders of magnitude than welfare reform, because ― let me just describe exactly what this bill does for conservatives. This is why I’m so excited about it, and this is why I think people need to see the forest through the trees. We are de-federalizing an entitlement, block-granting it back to the states, and capping its growth rate. That’s never been done before,” he said.
Brendan Buck, a spokesman for Ryan, said that the new approach would be a better one for beneficiaries. “Sending back to the states lets each one tailor a system to its needs ― some states have much higher elderly populations, while others have more young, poor for example ― and by eliminating federal red tape, more physicians and hospitals will actually accept patients on Medicaid,” said Buck.
But states already have significant flexibility in how to administer Medicaid. (The House bill may be amended to allow states to implement work requirements to Medicaid, but the result there would merely be to shrink rolls, not provide more coverage.)
“Speaker Ryan and others often argue to governors that a Medicaid per capita cap is about more flexibility (even though states already enjoy expansive flexibility in their Medicaid programs) rather than what it is really about: a way to achieve big federal spending cuts and cost-shifts to states,” Edwin Park, a health policy analyst for the Center on Budget and Policy Priorities, said in an email. “The House bill makes that starkly clear: $880 billion in federal Medicaid spending cuts over 10 years by ending the expansion and imposing a per capita cap without any new flexibility.”
Ryan’s plan would cut taxes by some $275 billion over the next decade, mostly for the rich, and is setting the stage, he told Fox News’ Tucker Carlson, for a much bigger tax cut to come. That’s what’s going on here.
When Ryan refers to seeing “the forest through the trees,” he is arguing to conservatives that they should swallow elements of the Obamacare repeal-and-replace bill that they don’t like in order to seize the once-in-a-half-century opportunity to destroy a major federal entitlement program. Everything else is just trees.
Ryan is right that it is an enormous forest. Some 11 million seniors and people with disabilities are covered by both Medicare and Medicaid, according to a new report from the Kaiser Family Foundation. That’s one in every five Medicare beneficiaries. Forty percent of those are under age 65 with permanent disabilities. Two out of three Medicare beneficiaries who are in nursing homes have their care covered not by Medicare, but by Medicaid. Many who get home health care are similarly covered by Medicaid.
Social insurance organized by the government is a relatively new phenomenon. Before the New Deal, society dealt with the elderly and infirm by shunting them away in “poorhouses” or by moving parents in with their children. “I can remember the terror that existed with regard to those county poor farms,” said former Rep. John Dingell Jr. (D-Mich.), who left office in 2015 after serving six decades.
Dingell’s father, also a prominent House Democrat, was an architect of the Social Security Act. It had a tangible benefit for the Dingell home.
“Social Security — this is one of the things of which my dad was very proud — closed 1,100 old folks’ homes in New York. Eleven hundred. And that was just one example, but it tells you what it did all over the country,” Dingell said in an interview for an article on poorhouses.
Before Social Security, he said, “everybody and his second cousin piled in with their families. I had relatives that came to stay with my dad and mom I didn’t even know were relatives. To tell you the truth, I’m not sure they are. And my granddad on Dad’s side, who threw Dad out of the house, came to live with Dad. Dad was the only one of his kids who’d take care of him. He was, quite frankly, the only one who could afford to do so, because Pop was making a fairly decent living during the war, but he was supporting a whole tribe of Dingells and Selmerses and a whole bunch of others who had other Polish names, but were related.”
Paul Ryan, in fact, got Social Security benefits himself; he was 16 when his father died. “It was a tough time for our family, and Social Security was there to help us when we needed the help,” Ryan has said.
Ryan saved much of it to pay for school at Miami University of Ohio, where ― who knows? ― a few dollars of it may have gone to pay for the kind of keg he would crowd around to fantasize with buddies about destroying Medicaid, which was created as part of the Great Society program in the 1960s.
The Affordable Care Act, known as Obamacare, expanded on the social insurance concept, with the goal of subsidizing coverage to make it universally affordable. The market-oriented approach has met with mixed success: Coverage is up, but premiums and deductibles both are high. The most successful element of Obamacare has been its expansion of the single-payer program Medicaid, even in the face of a Supreme Court ruling that allowed many Republican-led states to reject the federal expansion of the program.
Where the program has been allowed to expand, it has covered more people at a lower cost and led to healthier outcomes. Single payer ― or, at least, America’s stitched-together version of it ― is working, but Ryan opposes it on principle.
That principle is freedom. For Ryan, the poorhouses run by charities, and the family homes crammed with parents, grandparents, aunts and uncles ― the world before social insurance ― represent not a dark moment in human history that society advanced beyond, but freedom. It’s what Ryan calls “patient centered.” If a patient can afford health care, he or she can choose to purchase it or not. If a patient can’t afford it, well, that’s what children and charity are for.
“Either you believe in your principles, or you don’t. And our principles are, we should have a free market in health care,” Ryan said on Hewitt’s show. “We have the opportunity of going with patient-centered care, where you buy what you want to buy, and if you don’t want to buy something, you don’t buy it. That’s freedom. That’s the market. That’s what we’re proposing.”