Michael Hiltzik Columnist
Column

In secret Obamacare repeal bill, Senate Republicans plan even harsher cuts to Medicaid than House GOP

In the all-out quest for ways to strip health coverage from millions of people in order to deliver a huge tax cut to the richest Americans, Senate Republicans have been regarded as more moderate than their House colleagues. But a proposal leaked from the Senate GOP’s closed-door drafting sessions on an Obamacare repeal bill may put that notion to rest: The Senate is contemplating a change in Medicaid that would cut it even more than the $830-billion proposed by the House.

That news comes from The Hill, which reported Monday that the Senate is contemplating imposing a lower inflation growth rate on Medicaid, which would be capped in both proposals. The Senate’s idea is to allow Medicaid to grow at the rate of the overall consumer price index (specifically, the CPI for all urban consumers, the most commonly used variant).

That’s a much lower growth rate than the index in the American Health Care Act, which House Republicans passed in May as a measure to repeal the the Affordable Care Act. The House caps growth in the Medicaid budget at the CPI for medical care, which grows much faster.

The difference would produce a massively larger cut in Medicaid than the House bill. That’s remarkable, because the House bill would drive 14 million people out of Medicaid by 2026, according to the Congressional Budget Office. The Senate version, which hasn’t been presented in its entirely to the CBO because it’s still being worked on in secret, is certain to cost many more Americans their coverage.

This would not be the first time that lawmakers attempted to manipulate inflation indexing to cut social insurance benefits. Changing the cost-of-living index is a perennial nostrum for reducing Social Security payouts; a popular idea is to substitute a “chained” CPI index for the conventional CPI, largely because the former grows at a slower rate than the latter.

This is not solely a conservative idea; President Obama considered it a few years ago too. But in any form it’s a sneaky and underhanded path to a benefit cut. As health insurance expert David Anderson of Duke University observes, it’s subtle enough that the implications might escape large numbers of voters or even legislators. That shouldn’t be allowed to happen.

The Hill reports that the proposal has been sent to the CBO for its analysis, but the answer is likely to be grim. That could cost the Senate effort support from moderates, some of whom have been focusing on the need to protect Medicaid because cuts in its federal funding will mean higher costs for state governments, unless they drastically reduce benefits.

It’s proper to note that there’s a major disconnect between the way the Republicans consider Medicaid, which is as a program that largely benefits the expendable poor, and the reality: It’s the nation’s largest single health insurer. Of its 73 million enrollees, 43% are children and 13% blind and disabled persons. The program covers “more than 60% of all nursing home residents and 40% of costs for long-term care services and supports,” reports the Center on Budget and Policy Priorities. The program pays for half of all births in the U.S.--in some states, two-thirds. Plainly, cutting or capping Medicaid benefits will cause pain and suffering across a broad spectrum of Americans.

Just last week, seven governors—including three Republicans—warned Senate Majority Leader Mitch McConnell (R-Ky.) and Minority Leader Charles Schumer (D-N.Y.) in a letter that the House bill, H.R. 1628, “calls into question coverage for the vulnerable and fails to provide the necessary resources to ensure that no one is left out.” They called its Medicaid provisions “particularly problematic,” to the extent they would be “shifting significant costs to the states.”

The signers were Republicans John Kasich of Ohio, Brian Sandoval of Nevada and Charles D. Baker of Massachusetts, and Democrats Steve Bullock of Montana, John Bel Edwards of Louisiana, John Hickenlooper of Colorado, and Tom Wolf of Pennsylvania.

Lowering the growth rate of Medicaid is “a massive cut of future growth,” says Anderson. Here’s how that would happen.

The analysis starts with the House bill’s plan to convert Medicaid to a block grant for states. In addition to eliminating the ACA’s Medicaid expansion, the bill would limit the growth in that block grant to enrollment growth while capping per-capita growth at the CPI for medical care, or CPI-M. For enrollees who are disabled or 65 or older, the per-capita growth rate would be CPI-M plus one percentage point. The Senate bill would reduce the per-capita growth rate to that of the CPI-U.

As Anderson notes, the CPI-M grew by 2.7% in May 2017 over the same month a year ago. CPI-U grew by only 1.9%. If we apply that to the federal share of Medicaid spending, which was $344 billion in 2015 (the latest year for which government figures are available), in one year alone the Senate would provide $2.75 billion less than the House.

Assuming that the two indices continued to diverge by the current rate, the gap would only grow. By 2026, it would reach a total of more than $200 billion—over and above the $830 billion the House proposes to cut. So that’s a trillion-dollar Medicaid cut over current federal spending on Medicaid, a boon for the high-income beneficiaries of the Republican tax cut, and pure disaster for the beneficiaries—children, adults and the disabled.

That outcome underscores the necessity of putting a stop to the Senate GOP’s intention to ram their version of Obamacare repeal through to a vote without a full public airing. The manipulation of the Medicaid growth rate is only one of untold ways they could be harming Americans’ welfare. No wonder they’re trying to do so behind closed doors.

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