Republican leaders in Congress have directed the committee that oversees Medicaid to cut $880 billion from the next budget. They say these cuts aren’t necessarily aimed at Medicaid, the insurance program for 72 million poor and disabled Americans. The cuts could come from Medicare, for instance. But Trump has vowed not to touch that very popular program. And a sum this large can’t come from anywhere else.
The Republican process is just getting started, and we don’t yet know how lawmakers will change the program. Most Medicaid money goes to states, so the best way to think about the proposal is as a cut to state budgets. State lawmakers could react by dropping coverage, raising taxes or slashing other parts of their budget. In today’s newsletter, I’ll explain a few possible scenarios.
Who’s covered
Medicaid was designed to divide a patient’s medical bills: the federal government and the state would each pay a set share. (A state’s contribution depends on how poor it is.)
The law is precise about what Medicaid must cover — cancer screenings and kidney transplants, for instance, but not prosthetic legs — and Republicans can’t change that with a budget bill. Every state has to cover certain populations, including poor children, pregnant women, people with disabilities and patients in nursing homes who run out of money.
Most states also choose to cover an optional group that was added as part of Obamacare in 2014: anyone who earns less than a certain income (around $21,000 for a single person). Republicans want to impose a work requirement on this group for people who aren’t disabled. That idea is popular with the public but would save the federal government only around $100 billion, not enough to meet the G.O.P. target.
Bigger targets
Anything more to lower the federal government’s share would put the burden on states. And lawmakers there could deal with the problem in their own ways. They could cut optional populations like the Obamacare group. Twelve states have laws that will automatically do this if federal funding drops. If they don’t want to drop people, states can drop optional benefits, such as prescription drug coverage.
After those cuts, states face tough choices.
They could pay doctors, hospitals and nursing homes less for care. But there is a limit. If Mississippi suddenly started paying $50 for an echocardiogram instead of around $160, cardiologists might stop seeing Medicaid patients. (Many Medicaid patients already struggle to find care because the program pays doctors so little.) Cuts like these could also put some nursing homes or rural hospitals out of business.
Even so, states would still need a lot more money for Medicaid, usually their second-largest expense after education.
Where could they get it? They’d have to sacrifice other priorities. One option is to cut education. Another is to raise taxes. None of these would be required by federal legislation; it’s up to the states how they cope. That allows Republicans in Congress to say they are not cutting Medicaid benefits or eligibility, even if that is the inevitable effect in most places.
Too big to fail
Republicans point out that the original pact between Washington and the states has frayed, and feds are covering more than their share. That’s true. Through various accounting gimmicks, states have lowered their Medicaid contributions and now pay about a third of the bill, on average. Plus, Washington assumed almost the whole cost of the 2014 Obamacare expansion.
But that expansion has made Medicaid popular. More than half of Americans say someone in their family has used the program, and only 17 percent support cutting its budget. Local lawmakers also probably won’t win over voters by chopping education or raising taxes to save Medicaid. That’s why Democrats have settled on Medicaid as their top talking point about the G.O.P. budget plan.
Republicans tried to cut Medicaid’s budget in 2017, too. Grassroots opposition helped defeat the effort, as did extensive lobbying by Republican governors, who urged senators not to leave them with a huge fiscal hole.
The unpopularity of that bill — and its failure — helped Democrats retake the House the next year.
Related: Cutting Medicaid, taxing scholarships and killing invasive plants: A guide to the Republican wish list.
THE LATEST NEWS
Trump’s Tariffs
In India, young people are driving a boom in book festivals big and small. These readers are increasingly consuming books in their native tongues and in English. They are learning in ways that India’s higher education system — with its focus on exams — often does not encourage.
