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It was a pretty big deal on Tuesday night, at the State of the Union, when President Joe Biden got Republicans to promise they wouldn’t cut Medicare or Social Security.
It’s not clear how binding that promise is or whether it even means what it sounds like. Republicans have a long history of proposing “reforms” to Medicare and Social Security that, as my fellow HuffPoster Arthur Delaney noted afterward, are actually benefit reductions of one sort or another.
And at least a few Republicans don’t seem to have gotten the memo. During a Thursday radio interview, Sen. Ron Johnson (R-Wis.) reiterated his belief that Social Security is a “Ponzi scheme” and his support for requiring the program to get new authorization every few years — a plan that Sen. Rick Scott (R-Fla.) laid out in plain language last year.
But assume, for the moment, that GOP leaders are true to their word and manage to keep their party away from Medicare and Social Security. Assume, also, that Republicans carry out their threat to block an increase in the federal government’s borrowing authority, jeopardizing America’s and maybe the world’s economy, until Democrats agree to major spending cuts.
Given the budget math, that would almost certainly force cuts in another big program: Medicaid.
Medicaid, of course, is the government health insurance program for low-income Americans. The federal government puts up most of the money and sets broad guidelines for how it works, leaving program details and management to the states, which contribute a share of the funds as well.
In fiscal year 2021, total Medicaid spending was more than $700 billion and enrollment was more than 80 million. That’s roughly one-quarter of the U.S. population, and more beneficiaries than you’ll find in any other health insurance program that the federal government runs or administers.
Yes, Medicaid now covers more people than Medicare, the beloved Great Society-era program that provides basic insurance to the nation’s elderly.
This growth in Medicaid is a problem, as most Republicans and their conservative allies see it. They think the program covers way too many people and costs way too much money — especially because, they insist, it doesn’t even serve its population well.
Are they right? What would big Medicaid cuts mean in practice?
And would the American people find that any more palatable than going after Medicare or Social Security?
Medicaid has gotten big because the need is big.
Medicaid traces its history back to the same 1965 law that created Medicare. And just like Medicare, the statutory language authorizing and governing Medicaid lives inside the Social Security Act as an amendment.
But unlike either Medicare or Social Security, Medicaid isn’t something everybody pays into during their working years, then draws upon when they reach retirement. It is a program for low-income Americans specifically, at whatever stage in life they meet its eligibility requirements.
Initially, those requirements were linked to the rules for the old “welfare” system so that Medicaid was open mainly to poor Americans who were either pregnant women, young children, seniors or people with disabilities. Over the years, the program became available to more and more people, thanks to a combination of federal and state actions.
One of the biggest increases was through the Affordable Care Act, which gave states extra funding if they’d open their Medicaid programs to all people in households with incomes below or just above the poverty line. Most states have now done that. The exceptions are 11 states where Republican officials in charge have refused, as part of their ongoing resistance to Obamacare.
(You can read about one of those states, Florida, and one of those Republican state officials, Gov. Ron DeSantis, here.)
“It was a lifeline during the pandemic.”
- Allison Orris, Center on Budget and Policy Priorities, speaking about Medicaid
Medicaid meets a very clear need. The vast majority of people on the program would not be able to pay for insurance or cover their medical expenses on their own because they don’t have nearly enough money. And Medicaid is making a very clear difference in these people’s lives.
There’s a lengthy and constantly growing pile of studies demonstrating that Medicaid has, for example, improved access to care and reduced medical debt. There’s also evidence of better health outcomes, especially for pregnant women and young children, although the direct link and relationship to life expectancy is more ambiguous.
Never was this more true than when COVID-19 hit, when the need for medical care was at its greatest and job losses threatened health care access for millions.
As Allison Orris, senior fellow at the Center on Budget and Policy Priorities, told me in an email, Medicaid “was a lifeline during the pandemic.”
GOP designs on Medicaid date to the Reagan era.
Over the years, conservative critics have pointed to some very real problems with Medicaid ― most obvious among them, poor specialist access. Medicaid beneficiaries routinely have trouble finding specialists who will see them and, even when they can, they frequently have to wait many months for appointments. But a big factor in that problem is Medicaid’s notoriously low payment rate, which makes physicians less eager to see Medicaid patients.
A bump in payments could remedy that problem, or at least make it less severe. That hasn’t happened, which isn’t exactly surprising. Historically, means-tested programs have not commanded the broad, popular support of universal programs because their constituencies are less powerful ― and, in a country that routinely distinguishes between the “deserving” and “undeserving” poor, less politically sympathetic, too.
“The assumption that there is lots of easy money to save is wrong, something I learned running a state Medicaid program.”
- Drew Altman, KFF
There’s a saying in politics that poor programs remain poor, and there’s a lot of truth to that. It also helps explain why Medicaid has been an object of Republican budget attacks so many times in the past, going back to the Reagan era.
Big Medicaid cuts were part of the agenda former House Speaker Newt Gingrich (R-Ga.) tried to force on President Bill Clinton, leading to the infamous shutdown of 1995 and 1996, and they were a staple of the budgets former Speaker Paul Ryan (R-Wis.) kept proposing a decade ago.
Most recently, Medicaid cuts were part of the legislation to repeal the Affordable Care Act that House Republicans passed and Senate Republicans came close to passing as well.
The details of these proposals were different, but they all had two main components. They envisioned ending the existing, open-ended guarantee of federal funding sufficient to cover however many people became eligible for the program. And they all envisioned substantial funding reductions relative to projections.
Medicaid beneficiaries would feel the pain of cuts.
If Republicans really do turn their attention to Medicaid, whether as a part of the new debt ceiling threat or in some future legislation, chances are good they’ll propose another version of these changes ― and that they will promote them as a way to increase state flexibility while wringing waste out of the program.
State officials would undoubtedly like more discretion over the program (they almost always do), and Medicaid, like any large program, undoubtedly has waste. But the idea that efficiency alone could generate huge savings without affecting beneficiaries sounds far-fetched to Drew Altman, who today is president of KFF but earlier in his career oversaw Medicaid for the state of New Jersey.
“The assumption that there is lots of easy money to save is wrong, something I learned running a state Medicaid program,” Altman said. “Faced with less money, states can throw people off the program, cut their benefits, or cut provider payment rates, which in most states are already too low. There is no magic, and in the end, low-income, disabled and elderly people get hurt.”
That last part is important, and a piece of the Medicaid picture that’s easy to miss. Seniors and people with disabilities represent a minority of enrollees, but they account for the majority of program spending because the services and supports they need are frequently so expensive. Think about the cost of major heart surgery, the kind that gets a lot more common with age, or the cost of round-the-clock aides for somebody with paralysis.
As a result, state Medicaid officials running out of money have “no easy options,” according to Robin Rudowitz, director of KFF’s program on Medicaid and the uninsured.
“States would need to cut a lot of less expensive low-income children or adults from Medicaid or cut elderly and people with disabilities with high health care needs who may need long term care in nursing homes or the community,” Rudowtiz said.
Medicaid has political strengths, too.
Just how vulnerable Medicaid is to cuts now is the big, open question.
During the mid-’90s shutdown, Clinton cited Medicaid (as well as Medicare) as a reason to resist Gingrich’s budget cuts. In 2017, protests from people with disabilities were a key factor in turning public opinion against the repeal of the Affordable Care Act.
And with so many people on the program now, inevitably, more Americans are aware of the role it plays. In a 2020 KFF survey, roughly 40% said they had either been on Medicaid once or had a child who had been, while another 26% said they had a friend or family who had once used Medicaid.
Add it up, and you have two-thirds of Americans with either direct knowledge of the program or some a direct connection to it. That’s a big swath of the population, more than enough to produce a serious political backlash.
In the past, Altman notes, that possibility has made plenty of state officials flinch at cuts, even when those officials desperately wanted the savings. If Medicaid does end up on the GOP agenda, the same thing could happen again.