The new regime is here, and it’s coming for your health care.
The Trump administration plans to change the way the federal government pays for health insurance for low-income people to a block grant, a move that experts say would mean drastic cuts to programs serving the most vulnerable Americans.
If the administration implements the plan proposed by Rep. Tom Price (R-Georgia), a physician and nominee to head the Department of Health and Human Services, it would cut $1 trillion from Medicaid over a 10-year period. That amounts to almost a third of its federal financing by 2026, said Matt Broaddus, a research analyst with the Center for Budget and Policy Priorities.
Price’s plan also eliminates the Medicaid expansion embraced by states including Washington under the Affordable Care Act, which extended coverage to 592,910 Washingtonians who did not have access to the program before. As of March 2016, 1.8 million Washington residents were enrolled in Medicaid.
Less drastic proposals involve reducing the amount of money provided to the states to cover the expansion, Broaddus said.
“Six hundred thousand adults are enrolled in Washington’s Medicaid program as a result of the Medicaid expansion,” Broaddus said. “It’s very real that their coverage might be at jeopardy.”
Under existing policy, the federal government runs Medicaid as an entitlement program, meaning that every adult who qualifies could enroll. The Affordable Care Act expanded the program to anyone who made 140 percent or less of the federal poverty level and also dictated minimum requirements for that care. The government’s expenditures were open-ended, and those costs have been rising faster than the economy, largely because of increased enrollment.
If converted to a block grant, the federal government would give a fixed amount of money to each state and allow each state to decide who receives coverage and what that coverage looks like.
Proponents of the approach say it provides states more freedom and flexibility in how they provide health care and keeps costs down. Advocates for homeless and low-income people do not agree.
“Proposals to block-grant a program like Medicaid — which helps poor people, elderly people, children and neighbors in every community — are deeply, deeply cynical and wrong and must be opposed,” said Alison Eisinger, executive director for the Seattle/King County Coalition on Homelessness (SKCCH).
By reducing health care costs to poor people, Medicaid helps pull people out of poverty at the same time that it improves health outcomes, another source of savings, Eisinger said.
And states already have flexibility with Medicaid dollars. Washington Rep. Nicole Macri (D-Seattle) and the Washington Low Income Housing Alliance (WLIHA) fought for and received a waiver through the federal government that allows Medicaid dollars to be used to defray the costs of permanent supportive housing for homeless people.
That form of housing — compared to transitional housing or rapid rehousing, two programs that provide temporary housing subsidies and varying levels of services — is expensive, but it’s also the most effective way of combating homelessness, according to a report by the federal Department of Housing and Urban Development.
“There’s already a mechanism to allow states to experiment and all that, and it needs federal approval,” said Daniel Malone, executive director at the Downtown Emergency Services Center, the largest provider of emergency shelter in Seattle. “There’s nothing to stop Congress from making it easier for states to experiment. Block-granting itself doesn’t have to be part of that.”
A move to block grants would mean cuts to access. Washington, already struggling to fund basic services like education, does not have the money to cover the loss of federal funding for the Medicaid expansion, Malone said. At present, the federal government funds 90 percent of the cost of the expansion.
It could entail changes to services, but the Health Care Authority, which administers Apple Health, Washington’s Medicaid program, doesn’t yet know the specifics, said Amy Blondin, a spokesperson for the organization.
Block grants would make federal spending on health care lower, but those costs would be shifted onto the states and poor people, not eliminated.
Medicaid and Medicare, the federal insurance plan for elderly people, together cost 4.6 percent of U.S. gross domestic product (GDP) in 2013 compared to 2 percent in 1985, according to the Congressional Budget Office. In the same time period, the share of the population enrolled in Medicare rose from 13 to 18 percent, while Medicaid enrollment rose from 8 percent to 18 percent.
Costs rose, and continue to rise, but those increases were far outstripped by expanded coverage.
And Medicaid might not be cheap, but it’s much less expensive than private insurance. According to a 2005 study, health care spending would increase by nearly 26 percent if low-income Medicaid enrollees were moved to private health insurance for a full year. Out-of-pocket spending would increase by six or seven times, according to the report.
“Health care costs do rise faster than the cost of other goods, but that’s not exclusive to Medicaid,” Broaddus said. “Per-enrollee costs have been lower than other health care providers for the past 30 to 40 years, and that continues to be the case now. Trying to seek savings in the Medicaid program specifically seems to be losing the forest for the trees.”
The last time the government had a serious conversation about Medicaid block grants was under the Reagan administration in the 1980s. The policy did not go through, but the Clinton administration did convert food subsidies for needy families into a block grant in the 1990s.
The results hold a sign of what could happen to Medicaid, Broaddus said.
The Temporary Assistance for Needy Families (TANF) block grant replaced the Aid to Families with Dependent Children program in 1996 as a part of the Clinton administration’s welfare reform overhaul. It promised greater flexibility in how states used the funds and, for the first time, set time limits and work requirements.
That system imploded during the Great Recession in 2008. In an analysis provided by the Center for Budget and Policy Priorities, researchers found that that tanf had early successes but over time provided cash assistance to fewer families despite an increase in need. The reduction in cash assistance contributed to an increase in “deep or extreme” poverty, according to the report.
During the campaign, Donald Trump promised his supporters — many of whom use entitlements, including Medicaid — that he would not cut their access to these programs, and that he would deliver cheaper, better benefits, “believe me.”
If the president allows Medicaid block grants to become the law of the land, we’ll know he was lying.