One of the biggest early surprises under the Trump administration is that the long-standing Republican campaign against Obamacare seems to be shifting from “demolish it” to “fix it.” House Republicans and conservative activists remain focused on substantially rolling back the Affordable Care Act (ACA). But the Senate’s 52-seat Republican majority is split. Republican Sen. Lamar Alexander is bringing together a group opposed to a quick repeal, and Democrats are unified enough to stop Senate Republicans from overriding a filibuster.

Much of the media coverage and public political battle has focused on regulations and subsidies that impact middle America and those with coverage. The program targeted at the poor — Medicaid —has received less attention but demands more.

For now, it looks as if the Republican Congress will end up leaving the structure of Obamacare’s expanded Medicaid program intact and that Tom Price — President Trump’s secretary of health and human services — will use his administrative powers to grant states greater discretion in running their Medicaid programs.

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Our research has analyzed state Medicaid expansion and enrollment since the ACA’s passage and suggests that increased state discretion over Medicaid is likely to invite a new wave of Medicaid expansion in red states. The partisan obstacles to red states during the Obama presidency will likely ease as congressional Republicans put their fingerprints on reform. Economic circumstances and administrative muscle will guide state decisions and enrollment. We explain below.

Here’s the background.

Unlike social insurance programs like Medicare, Medicaid is designed for people who are poor —even though more than 20 percent of its beneficiaries were middle class for most of their lives before being impoverished when they entered in nursing homes or other long-term care facilities. Federal funds pay the lion’s share of its costs.

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Before 2010, all states were free to set rules on eligibility and other limitations. In many Southern states, those rules barred all but the destitute. The ACA toppled state control by setting a national standard for eligibility: All individuals living below 138 percent of the federal poverty line ($24,300 for a family of 4 in 2016) were made eligible for health benefits. The federal government pays 90 percent of the costs for the new coverage; states pay the remainder.

While the original ACA legislation pressured states to adopt the new expansion under the threat of losing their existing Medicaid funding, the Supreme Court’s 2012 decision in NFIB v. Sebelius granted states the ability to decide whether to adopt the program without this threat. Governors in 19 states — all Republican — refused to expand the program. But the 31 states that adopted the new benefits lowered the percentage of residents who were uninsured; decreased the costs that health care providers previously paid for treating the uninsured by reducing the size of the uninsured population; and reduced the burden on state budgets with increased federal funding.

Congressional Republicans continue to introduce proposals to reduce Medicaid or deliver it as a block grant to states, which will lose value over time. However, that looks less and less likely to succeed. Sixteen Republican governors accepted the Medicaid expansion, and eight are facing reelection in 2018 —and they’re pressuring Congress to leave Medicaid as is. That’s because the added Medicaid funding has helped state budgets while enabling those states to insure an additional 12 million people, thereby reducing the amount of unpaid medical services those states have to underwrite.

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However, the Trump administration will probably loosen the rules under which states administer Medicaid —giving them greater discretion than they had under President Barack Obama. We can expect Republican-run states to introduce conservative proposals, such as requiring recipients to work or to pay a fee for coverage.

What will happen moving forward?

Our research projects two patterns.

1) Republican-led states will accept the Medicaid expansion —and reduce the number of uninsured.

Without the partisan resistance that drove many Republican governors to oppose Obama and his signature policy achievement, many Republican states will see the Trump administration’s revised program as an opportunity they can’t pass up. The figure below shows that Texas, Florida and Georgia have the most new enrollees to gain if they adopt a revised Medicaid program. If Congress doesn’t significantly reduce the benefit levels, those three states alone could extend Medicaid to cover nearly 1.46 million people who are currently uninsured.

2) Factors that make a difference in how many new Medicaid recipients a state can enroll

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All this will probably open up a race among states for enrollment. Our research pinpoints why some states are more successful at enrolling eligible individuals into expanded Medicaid programs than others.

As you can see in the figure below, a group of states increased Medicaid enrollment after the ACA by quite a bit relative to the size of their Medicaid populations before the ACA. Other states showed very little change.

Our research found several factors that led states to enroll more or fewer new Medicaid recipients. Unemployment was a positive and significant predictor of higher enrollment, indicative of the strong connection between state economic circumstances and the size of this health program for the poor.

More important, we find that states are prone to enroll more Medicaid recipients if they invest in the administrative muscle needed to implement the Medicaid expansion. Strong administrative capacity allows states to better identify and enroll those at or below the new eligibility threshold and to reduce the size of their uninsured population.

In sum, while we expect Congress and the Trump administration to largely leave Medicaid alone in their efforts at repeal and replace, minor changes that provide states greater administrative discretion over the program seem likely. As a result, we expect more Republican states to sign on. Ironically, that means a Republican-controlled government may preside over a significant expansion to the program they originally vowed to replace.

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Here’s another irony. Much of Obamacare works through private insurance markets. Its expansion of Medicaid is the exception; that is a genuine “big government” program. Republican reforms appear on track to leave Obamacare’s big government component while rolling back its market reforms.

Timothy Callaghan is an assistant professor in the Texas A&M School of Public Health. Follow him on Twitter @THCallaghan.

Lawrence R. Jacobs is the Mondale Chair for Political Studies and Director of the Center for the Study of Politics and Governance in the Hubert H. Humphrey School and the department of political science at the University of Minnesota. Follow him on Twitter @larryrjacobs.

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