WASHINGTON – House Republicans have forged a plan for the future of Medicaid that would temporarily keep federal money flowing to cover almost the entire cost of people already insured through the program's expansion under the Affordable Care Act but would block the law's generous funding for any new participants.
At the same time, the GOP approach would open a fresh spigot of aid for the 19 Republican-led states that eschewed the ACA's Medicaid money because of their leaders' antipathy to the law. This extra aid would probably go to hospitals with a large share of poor and uninsured patients.
The Solomon-like strategy is an attempt to quell fears of Republican governors in expansion states that abolishing the 2010 law would cost them hugely, while also satisfying new demands for equity from other GOP governors who opposed the expansion. Details of how the plan's dual elements would be implemented, including their specific time frames and funding totals, are still coalescing in the House Energy and Commerce Committee.
Within the context of the GOP's broader repeal effort – and this week's tumultuous town hall meetings around the country, at which lawmakers have been confronted by constituents scared of losingtheir health coverage – Republicans' ideas for Medicaid's future have drawn less public attention. Yet their proposals would significantly remake one of the nation's largest entitlement programs, serving more than 74 million lower-income Americans and accounting for half the insurance gains that the ACA has brought about.
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The House committee also is moving forward with a plan to convert the rest of Medicaid to a system in which states would get a fixed sum of federal money for every resident who is enrolled. Such per-capita funding, outlined by the chamber's Republican leaders earlier this month, would be more restrictive than the way Medicaid has functioned since its birth as part of the Great Society legislation of the 1960s.
However, the allotments would be less rigid financially than full-fledged block grants, which have been advocated for years by many conservatives and decried by liberals for their potential to reduce spending over time, prompting states to cut benefits or eligibility or both. Block grants might still emerge from Congress as an alternative that states could choose.
This picture of the House's behind-the-scenes work is based on interviews with several people familiar with the thinking of the Republican leadership. All spoke on condition of anonymity since no plans have been announced.
The deliberations on Medicaid expansion are further along than other components of the lawmakers' thinking about how to shift government health policies in a more conservative direction, according to these individuals. The basic outline emerging from Energy and Commerce would "grandfather in" the roughly 11 million Americans currently on Medicaid-expansion rolls in 31 states and the District of Columbia. Still to be decided is whether the extra dollars for their coverage would last a specific length of time or continue as long as a beneficiary remained eligible.
As for non-expansion states, the extra money they would receive might come through an increase in "disproportionate share" payments the federal government has long given hospitals that treat a lot of poor patients. Or the government could increase its payments for Medicaid's very poorest patients – a boost to Republican-led states across the South with large low-income populations.
Less clear is whether the plan would accomplish its goal of satisfying a range of the 35 GOP governors now in office, no matter the stance each has taken on expansion.
The Ways and Means Committee is doing parallel work on overall ACA replacement. But according to the several people familiar with House leadership's approach, a central idea under consideration there – new health-care tax credits – hit a snag this week when congressional budget analysts reported privately to the committee that they would cost the government a lot of money and would enable relatively few additional Americans to get insurance.
Those tax credits would replace subsidies the ACA provides people with incomes of up to 400 percent of the poverty level to help them afford health plans through marketplaces created under the law. The credits would be available to everyone who buys coverage on their own, wealthy or poor. But the Congressional Budget Office has concluded that the credits, as conceived at the moment, would be too small to help low-income people afford health plans. They also wouldn't make much difference to affluent people, according to the CBO, since most of them already are insured.
Rep. Tom Cole, R-Okla., an influential member of the Budget and Appropriations committees, said that while Congressional Budget Office models are not precise indicators of a bill's actual fiscal impact, the new estimate should remind Republicans that they "should err on the side of being cautious, rather than make grandiose claims."
Democrats fell into that trap when passing the ACA, he said. "We should not be overselling."
Topher Spiro, vice president for health policy at the liberal think tank Center for American Progress, said that providing assistance to all consumers regardless of income "dilutes the impact." As a result, he said, poorer Americans will have a harder time paying for the plans they have now.
When the ACA passed a polarized Congress in 2010, the idea was that about half the Americans who would gain health coverage would do so through the law's insurance marketplaces. The other half would come through Medicaid, which was to grow nationwide to include adults earning up to 138 percent of poverty. The federal government would pay the full cost of expansion coverage for the first three years, then a decreasing amount before settling at 90 percent by 2020.
In 2012, though, in a case brought by ACA critics who unsuccessfully challenged the law's constitutionality, the Supreme Court ruled that each state had the latitude to choose whether to expand Medicaid. Nearly all Democratic-led states said yes; most with Republican governors opted out.
The latest polling by the Kaiser Family Foundation, released Friday morning, shows that Medicaid expansion enjoys strong public support these days. Nationally, 84 percent of respondents – and 87 percent in the 16 expansion states with GOP governors – said it is important to preservethe greater federal funding provided by the ACA.
The question of whether to join in the expansion, even at this late date, is unexpectedly alive in the conservative state of Kansas. While its legislature and governor have always opposed the idea, its House of Representatives on Thursday passed a bill that had been considered moribund earlier in the week. The measure now goes to the Kansas Senate, where its fate is uncertain.