Henry Waxman is chairman of Waxman Strategies, a public affairs and strategic communications firm. He served as a Democrat in the House of Representatives from 1975 to 2015.
Congressional Republicans and President Trump want desperately to repeal the Affordable Care Act (ACA), a move that would take health insurance away from as many as 32 million Americans over the first decade if there is no replacement plan. These efforts have garnered national attention, with crowds of outraged constituents dominating town hall meetings. But what Trump and the GOP are trying to do below the radar might even be more alarming — ending Medicaid as we know it by imposing a “per-capita” cap or block grant.
This radical plan has nothing to do with the ACA and everything to do with conservatives’ long-standing ideological goal to cap and cut federal Medicaid spending. Medicaid has been a pillar of our health-care system for 52 years and now insures nearly 1 in 5 Americans. A per-capita cap (sending a fixed amount to the states for each beneficiary) or a block grant (sending a fixed amount to the states for their entire program) would be an unprecedented abandonment of federal responsibility by giving states substantially less federal funding than they would get under Medicaid today, with the cuts growing larger each year. That would pass the buck to the states, our health-care safety net and all Americans — and deny care to the most vulnerable among us.
We need to shine a spotlight on this reckless move, because it threatens the well-being of about 65 million Medicaid beneficiaries, including approximately 35 million children, 7 million elderly people and 11 million people with disabilities, on top of the 11 million who would lose coverage from repeal of Medicaid expansion.
Medicaid saves lives, improves people’s health and reduces poverty in a comprehensive, cost-efficient manner. That’s why I worked to strengthen Medicaid throughout my 40 years in Congress, sponsoring laws expanding coverage to more low-income children and their parents, the elderly and low-income pregnant and postpartum women.
The beauty — and necessity — of Medicaid is that it automatically responds when needs grow, including during economic recessions and public health emergencies such as the opioid addiction epidemic, or when new but costly lifesaving treatments become available, as was the case for Hepatitis C cures. A per-capita cap or block grant ends the elasticity of the program as we know it and dramatically shifts the burden for unexpected and new costs to the states. As the office of Arizona Gov. Doug Ducey (R) wrote, it would “result in the single largest transfer of risk ever from the federal government to the states.”
The ideas Republicans are considering save the federal government money by steadily reducing the amount of funding provided to the states and thus would not keep up with health-care costs, especially given that costs are rising due to the aging of the population and new medical breakthroughs. For example, Medicaid helps pay for the cost of care for 64 percent of nursing home residents, as well as for services that allow seniors to stay in their homes, so states that skew older will be hit the hardest. And because Medicaid pays the premiums, deductibles, co-payments and other out-of-pocket costs associated with Medicare for lower-income elderly people, drastic changes to Medicaid would also hurt Medicare beneficiaries.
Republican leaders in Congress and the White House tout these “reforms” with claims of the benefits of “flexibility.” But in the face of shrinking federal dollars and rising costs, what will states do about Medicaid when given greater flexibility? Massachusetts Gov. Charlie Baker (R) was right when he wrote, “States would most likely make decisions based mainly on fiscal reasons rather than the health care needs of vulnerable populations and the stability of the insurance market.”
That means people would get kicked off Medicaid and benefits would be reduced. That would pass the buck to hospitals, nursing homes, clinics and other health-care providers, who would experience a jump in uncompensated care. In turn, the providers would have to raise rates for the rest of us, meaning the buck would end up with insured Americans in the form of higher premiums.
The notion that states will make up for federal cuts through greater efficiency is ludicrous. Today, Medicaid costs 27 percent less for children and 20 percent less for adults than private insurance largely because Medicaid pays health-care providers less than Medicare and private insurance. Medicaid costs per person already grow much more slowly than private insurance. There’s no blood to squeeze from this turnip. Plus, state-level innovations will be undermined. Currently, federal dollars support efforts to improve quality while reducing costs, such as accountable care organizations and care coordination for people with chronic conditions. A per-capita cap or block grant will leave states high and dry.
Moreover, federal savings will be counterbalanced by the higher costs of worsened health outcomes. A National Bureau of Economic Research study found that children covered by Medicaid and the Children’s Health Insurance Program earned higher wages by age 28 than their peers, meaning they’ll pay more in taxes and need fewer services in the future. Cutting Medicaid is penny-wise and pound-foolish.
Simply put, Medicaid is a lifeline — and lifesaver — that’s cost-efficient and pays huge long-term dividends to society. Imposing a per-capita cap or block grant would rip health-care coverage from the most vulnerable, including millions of children, the elderly and people with disabilities, while shifting costs and risk to the states, safety-net providers and all Americans. Congress and the Trump administration should think twice before taking such an irresponsible and harmful step.