What Went Down On Health Care This Week

No one knows for sure right now what will be in the so-called skinny repeal. But if it largely leaves alone Medicaid, as most indications are so far, this is a huge shift, politically but also in terms of policy. The cuts to Medicaid — both to the Obamacare expansion and, in particular, to the traditional program — in both the House and Senate versions of this legislation have always seemed like an overreach in terms of the politics. By making cuts to traditional Medicaid, this legislation was not just a repeal of Obamacare but an effort to use the Obamacare repeal as a vehicle to accomplish a long-held but not very popular conservative goal: reducing Medicaid spending. Those cuts helped galvanize the left, which could point to the effects that the cuts would have on seniors, the elderly and disabled people. Traditional Medicaid has heavy benefits for these groups, while the Obamacare expansion of Medicaid targets uninsured adults who are generally working-age and not disabled. These Medicaid cuts would also take away money from states, which led to vocal opposition from Nevada’s Brian Sandoval and Ohio’s John Kasich, two Republican governors who have been blasting the Obamacare repeal effort for weeks. If the Medicaid cuts are out, Alaska’s Lisa Murkowski and Nevada’s Dean Heller become much more likely to vote for this bill. But it’s possible that conservative groups such as Heritage Action will oppose that move and make this into a conservatism test, potentially turning Rand Paul, Ted Cruz and Mike Lee against this more limited repeal. And can the conservative House Freedom Caucus support this direction? There’s talk that this provision is just a way to get the bill through the Senate and then Republicans will move back toward a more conservative version of this legislation in conference. I’m not so sure. It would seem to me that the most passable version of Obamacare repeal in both chambers would be whatever Heller can support. If this skinny repeal (or something else that doesn’t include Medicaid cuts) passes, the middle point between the House and Senate bills will be much less conservative than it appeared that it would be a week ago. That affects the conference process. If skinny repeal becomes the legislation the Senate passes, this is a big, important shift.

As Anna and Harry have mentioned, the “skinny” repeal path seems to be gaining favor among Senate Republicans. One big reason: Several GOP senators are opposed to cutting Medicaid, and the “skinny” repeal — as far as we know now — leaves Medicaid alone. The opposition to cutting Medicaid may well be grounded in their convictions about policy, but as a recent working paper I wrote with Kalind Parish indicates, there’s a political benefit as well. In states that expanded Medicaid, Obamacare became noticeably more popular among the low-income Americans most likely to be directly affected. Originally, the Affordable Care Act sought to expand Medicaid nationwide to people making less than 133 percent of the federal poverty line, and to include single adults for the first time. In its 2012 decision in National Federation of Independent Businesses v. Sebelius, however, the Supreme Court ruled that states couldn’t be forced to expand Medicaid. As a result, while many states expanded Medicaid on Jan. 1, 2014, several others expanded after that, and 19 states have not adopted the expansion to date. These cross-state differences allow us to analyze how attitudes toward the ACA differ in the expansion and non-expansion states, both before and after the expansion took place. Certainly, there’s reason to think that the expansion of Medicaid might well win public support for the ACA, since it provides a substantial benefit to people. But there’s also reason to think that it might not. In some states, Medicaid is provided through private organizations, which might obscure the fact that Medicaid is a government program; in other states, including Arkansas, the Medicaid expansion dollars have been used to purchase private health insurance. To analyze the impact of the Medicaid expansion, we use the extensive polling data collected by the Kaiser Family Foundation through its Health Tracking Poll. We make use of data on just under 48,000 respondents between January 2010 and October 2016. The effects of the Medicaid expansion are clearly visible in the survey data: in states which expanded Medicaid, the share of people on Medicaid jumped by 5.7 percentage points. But did the expansion have political effects? To answer that question, we separately analyze respondents making above and below $40,000, as those with incomes higher than that are unlikely to be directly affected by the expansion. On a scale from 1 (people who are very unfavorable toward the ACA) to 4 (people who are very favorable), the Medicaid expansion moves lower-income respondents by 0.11. (The standard error is 0.03, so the effect is highly statistically significant.) That’s about one tenth of the gap between Republicans and Democrats, and is apparent even though overall ACA attitudes across the country were becoming more favorable after January 2014. Still, the effect is concentrated on lower-income respondents. Among those making over $40K, there is no evidence of a post-expansion shift, reinforcing our sense that this uptick in support was driven by people who benefitted directly from the expansion rather than their neighbors or health care providers. The ACA used a variety of mechanisms to get Americans health insurance—and that complexity may well have contributed to its political vulnerability. But it’s possible that receiving insurance directly through Medicaid may do more to build political support for the ACA than does the indirect effects of the individual mandate. If the Senate opts for a health bill which targets the individual mandate while sparing Medicaid, these political dynamics may be one reason why. Thanks to Tiger Brown, Saleel Huprikar, and Louis Lin for research assistance.

One side note on the implications of this “skinny repeal” plan: McConnell’s current strategy appears to be to have the Senate pass a narrow replacement bill in order to take it to conference with the House and ultimately end up with something both chambers can agree on. That, of course, means it will be even longer before we know what the final bill will look like. The delay is significant because insurers are right now deciding whether to participate in the insurance markets next year, and states are negotiating what they can charge for plans. Kicking the can down the road legislatively only makes that process more difficult.