What Went Down On Health Care This Week

Few people know more about Medicaid than Andrea Louise Campbell. An expert in American social policy, in 2014, she published “Trapped in America’s Safety Net: One Family’s Struggle,” which tells the story of her sister-in-law, Marcella Wagner. In 2012, a reckless driver forced Wagner into a car accident near her northern California home. She was more than seven months pregnant at the time, and though her son was born without major trauma, the accident left Wagner paralyzed from the chest down. Medicaid — or Medi-Cal, as it is known in California — became the central payer of health care for Wagner and her family. At the same time, its rules came to place powerful limits on Wagner and her family, in effect committing them to a lifetime of poverty. And even though Campbell was already an expert on American social policy, her up-close experiences with Medi-Cal as a result of the accident changed Campbell’s views on the American safety net. Her book uses Wagner’s story to provide key details about how Medicaid does and does not work for the patients who rely on it. I asked her about Medicaid reform generally and the proposals currently being considered. The transcript below has been lightly edited. Dan: Imagine that you were advising Congress about reforming Medicaid. What are the kinds of reforms you’d be encouraging them to consider? Campbell: My preferred reforms would increase eligibility and decrease out-of-pocket costs for Medicaid beneficiaries to include more citizens under the program’s protections and to make it easier for beneficiaries to afford the care they need. First, 19 states have not expanded Medicaid eligibility under the ACA, leaving millions without insurance; I’d love to see those states brought into the fold. Second, although Medicaid recipients in the expansion states who are newly eligible do not face asset limits, about half the states still impose an asset limit on the original eligibility groups, such as the disabled and poor families with children. Such individuals and families are required to have assets below $1,000 or $2,000 or $3,000 to be able to enroll (while the newly eligible under the ACA – such as low-income single adults — do not face such asset caps). That perverse siloing should disappear. Third, a number of states have imposed cost-sharing on Medicaid recipients, such as monthly premiums or copays. Typically such cost-sharing has been sought by conservative states desiring recipients to have “skin in the game.” But studies show that even modest cost-sharing has a negative effect on utilization among the kinds of low-income populations that Medicaid serves. Dan: How do those reforms compare with the Medicaid reforms that have actually been on the table? Campbell: The reforms I just outlined are utterly pie-in-the-sky compared to what’s been on the table in recent months. I seek expansion; the bills on the table severely contract Medicaid. First, the various Republican bills roll back the ACA’s Medicaid expansion. While the federal government pays 50 to 75 percent of Medicaid costs for the original eligibility groups, with poorer states getting the larger match, the ACA enticed states to expand Medicaid to cover all poor people by paying 100 percent for the newly eligible in the short-term, and 90 percent thereafter. The Republican bills eliminate the enhanced federal funding, and most states lack the resources to make up the difference. Millions of people would be eliminated from the Medicaid rolls. Second, and even more fundamentally, the reform bills end Medicaid’s entitlement status. They roll back the federal government’s commitment to Medicaid and increase fiscal risk to the states. Since the program’s inception in 1965, everyone deemed eligible by the states has been entitled to Medicaid services. The federal government has provided as many matching dollars as needed to cover each state’s eligible population. The Republican bills instead impose a per capita payment – a set amount per beneficiary – which uncouples the federal contribution from actual health care spending. Although the reform bills have different per capita payments for different types of beneficiaries (smaller payments for poor children, who are relatively cheap to cover, larger payments for nursing home residents who are much more expensive), the fixed payments nonetheless shift fiscal risk onto states, who can ill afford it. Putting the caps in place makes it easy to reduce federal spending in the future; Congress can simply set the annual adjustment to a rate below medical inflation. Some proposals start the caps at states’ current per capita spending for each Medicaid subgroup; the initial cap would be lower for the non-expansion states, putting them at a disadvantage. And it’s easy to imagine an outbreak of Zika or the huge costs of opioid addiction treatment blowing through those per capita caps, leaving states on the fiscal hook. And that’s why we’re seeing so much opposition to the Congressional reform bills from governors. They realize that they’ll have to cut other state spending – already tight – or raise taxes to make up for the federal shortfall. I’m sure the nation’s 33 Republican governors really appreciate being thrown under the bus by their co-partisans in Congress. And then well beyond the implications of the reform bills for state budgets are the implications for Medicaid recipients and their families. In recent decades, states have received federal waivers to allow them to provide home and community based services – home health care – to the disabled rather than limiting them to nursing home care. If there are large Medicaid cuts, states are going to be forced to decide who to cover. They may need to cut the number of home health care hours available to the disabled and elderly, which are already too limited in many states. This will raise the informal caregiving burden for millions of adult children, who will have to reduce their work hours or quit work altogether. What will happen to the disabled and the elderly without such family members, I simply can’t imagine.

My colleagues have already shared their thoughts on whether “skinny repeal” would be popular. So let me pass my impressions along also, with the goal of stepping back and casting a slightly wider lens. At various times since Republicans first proposed a health care bill in March, I’ve wondered about the political wisdom of taking such a sweeping approach. The House’s American Health Care Act and the Senate’s Better Care Reconciliation Act would both have made massive cuts to Medicaid and used those cuts, it part, to finance tax cuts that would mostly have helped well-off Americans. And tens of millions of people would have lost insurance coverage. It’s hard to write a popular health care bill; Americans are inherently nervous about changes to the health care system. But AHCA and BCRA almost seemed designed to be as unpopular as possible. As compared to AHCA or BCRA, “skinny repeal” would be narrower and much more targeted — and its primary goal would be repealing the individual mandate, which is pretty unpopular. Republicans probably would have a lot of problems next year when premiums increased as a result of the individual mandate being repealed. But in comparison to AHCA or BCRA — which would also have disrupted the insurance marketplaces — they’d be somewhat more palatable, politically. Here’s the thing, though. Republicans wouldn’t be passing “skinny repeal” in a vacuum. Instead, they’d be passing it after a months-long debate in which many of their members had already voted for the super-unpopular AHCA or BCRA at some point along the way. Meanwhile, the Republican base’s expectations have been raised by the AHCA and BCRA and by years of promises to repeal Obamacare. While some conservatives will give them credit for “repealing Obamacare” by removing the individual mandate, others will feel disappointed — or even betrayed that they left so much of Obamacare intact. So Republicans would wind up with:

1. A lot of Republicans on record as having voted for AHCA or BCRA.
2. A substantial likelihood of premium increases that will kick in before the 2018 midterms, and a resulting increase in the uninsured population.
3. A bill that the GOP base isn’t all that thrilled about.
4. A public which is broadly confused by the months-long process — with the result of the confusion being that the public tends to read all of the above in an unfavorable light for Republicans.

In exchange, they get:

1. Trump and congressional leaders claiming some kind of “win” for having “repealed Obamacare.”
2. Removal of a provision, the individual mandate, that was rather unpopular.

That isn’t a good trade for Republicans. It’s a pretty bad one, in fact, and one which will contribute to the likelihood of Republicans losing seats in Congress next year. It’s still probably better than enacting AHCA or BCRA into law, however, just because those bills are so unpopular and would be even more disruptive to insurance coverage.