Congressional Republicans have consistently, if not unanimously, opposed Obamacare’s expansion of Medicaid.
Their opposition is irrational.
It is also unpopular with voters. In dark red states like Nebraska, Idaho and Utah voters recently went over the heads of their Republican legislators and governors by approving referendums to expand the program. And, Kansas is about to become the 37th state to expand Medicaid under Obamacare after a bipartisan agreement between the Democratic governor and Republican leaders in the legislature.
While Obamacare’s individual health insurance reforms and subsidies have been a disaster for the middle class (See: Obamacare is “Stable” at an Incredibly Unstable Place), the Medicaid expansion in the states that have approved it has covered millions of people that would never have been covered otherwise––at a cost that could never have been less.
Republican opposition has centered around a number of arguments. Let’s take a look at each of them.
We can’t afford such a massive expansion of the welfare state and the impact that would have on deficit spending.
Our rapidly exploding deficits are a big issue we seem to have recently forgotten about.
But blowing up the deficit over health care didn’t bother Congressional Republicans in 2003 when they created the Medicare Part D drug benefit and didn’t pay for it adding $700 billion to the deficit over the following ten years (Part D added $140 billion to the deficit alone in 2018). But that unpaid-for entitlement expansion helped a big Republican constituency––seniors.
Blowing up the deficit by more than $1 trillion with the Republican tax cut bill didn’t bother Republicans in 2017 arguing it was all going to pay for itself with economic growth––something that so far hasn’t come close to panning out. Last November the CBO estimated that the annual deficit will remain between $1 trillion and $1.2 trillion each year through 2029.
And, just last month in the year-end spending bill, Congressional Republicans overwhelmingly voted to repeal the Obamacare medical device tax, the health insurance tax on insurance companies, and the employer health insurance “Cadillac” tax on high cost plans––taxes originally intended to pay for the Medicaid expansion and insurance subsidies in the first place. Doing so will cost $400 billion over ten years, again all just added to the deficit. None of that bothered Republicans one bit when they joined the Democrats to pass the larded up year-end spending bill at a time both the medical device and health insurance industries are reporting record profits.
But, money for the Medicaid expansion? Irresponsible.
Any Medicaid expansion should be paid for. Just like the Obamacare Medicaid expansion was fully paid for before Republicans joined with Democrats last month to repeal three of the law’s key taxes!
Consumers should have mainstream private coverage not welfare coverage via Medicaid.
A noble objective but simply unaffordable both for low-income consumers and government.
Medicaid is, by far, the cheapest way for government to expand coverage. And, unlike individual health insurance, Medicaid doesn’t have big deductibles and copays low-income people will find it hard if not impossible to pay.
The CBO has estimated that the Medicaid expansion cost $4,916 per enrollee in 2018––for a program with no consumer deductibles and co-pays. At the same time the CBO estimated that the average per-enrollee cost for the Obamacare insurance market subsidies was $6,300––and remember the Obamacare market plans have big deductibles and the government doesn’t subsidize the entire cost.
The cheapest way, by far, to subsidize the poor into plans with minimal copays is through Medicaid.
And, while there are fewer providers participating in Medicaid than commercial insurance because of the lower reimbursement rates, rates of access to care and satisfaction with care among Medicaid enrollees are comparable to rates for people with private insurance.
Whatever the quality of care challenges in Medicaid, it sure beats being uninsured.
Insurance should be provided by the private sector, not government.
Congressional Republicans love to take credit for the Medicare Advantage program that gives seniors a private insurance option. But, do they understand that most of the Medicaid program is today under private insurance company managed care organizations (MCOs) administration and risk-taking subject to competitive bidding?
In 2018, insurers had more than 49 million Medicaid beneficiaries in their programs––two-thirds of the enrollment.
Why don’t these people just get a job with health benefits?
Sounds good. But what these Republicans don’t seem to understand is that lots of employers don’t offer health insurance benefits.
About 48% of private sector jobs are in small businesses and small business creates two-thirds of net new jobs.
The latest annual Kaiser Family Foundation survey of employer-based health insurance found that only 47% of employers with three to nine workers offer health insurance, for those with ten to 99 workers, it’s 57%.
The welfare state is already too big.
The first Republican president, Abraham Lincoln, famously said, “The legitimate object of government is to do for a community of people whatever they need to have done, but cannot do at all, or cannot so well do for themselves in their separate or individual capacities.”
Medicaid eligibility extends up to 138% of the federal poverty level in the 36 states that have expanded the program under Obamacare. That is an annual income of $17,236 for a single person and $35,535 for a family of four.
Back in 2013, before Obamacare became effective, it wasn’t uncommon to find a health insurance plan that would cost a family of four about $5,000 in premiums with a $1,000 deductible––if they had no pre-existing conditions and could get insurance.
There is no way a family making $35,000 could afford to pay all of those 2013 premiums and deductibles today without assistance, any more than they could back in 2013. Even if Republicans take us back to the 2013 health insurance market, just how do they think the Medicaid eligible would be able to access health insurance without the Medicaid expansion?
Republican plans like the failed 2017 health care bill passed by the Republican controlled House make more sense than the existing Medicaid expansion.
In 2017, House Republicans would have repealed the Medicaid expansion and the individual market subsidies and would have repackaged them into a program that took some, but not all, of that money and sent it to the states. Each state legislature would have been expected to take that money and craft a health insurance reform plan of their own making––fifty different states doing what the Congress has been unable to find a way to do.
In July of 2017, the CBO calculated the Republican House plan, assuming the fifty states would have each found a way to pass a plan, would have spent $1.3 trillion less than Obamacare over ten years on Medicaid and insurance subsidies.
The CBO estimated that these funding cuts would have led to:
- Nine million people being pushed out of Medicaid by 2020 growing to 14 million in 2026––and then having to enter the individual market as their only option for coverage, unless they found their way to employer coverage.
- The individual market shrinking by ten million in 2020, and six million by 2026.
The CBO therefore concluded that the number of people eligible for the individual market would increase dramatically as the reduced Medicaid population was forced to seek private individual coverage–– but in a market where money for the individual coverage subsidies was also substantially cut.
The 2017 House Republican plan’s combination of dumping more people into the pool by shrinking Medicaid––and therefore increasing the number of people eligible for individual coverage––and cutting the subsidies in the private market, could only have had the result of making the percentage of eligible people buying a private health plan even worse. That in turn could only lead to even worse individual market affordability and resulting underwriting anti-selection than what we have had under Obamacare.
I have been in the health insurance industry for 47 years. I am not an advocate for a government takeover of the system.
But, I have also learned in these years that the private sector on its own is not the answer.
The answer lies in a carefully crafted system that includes both the private sector and government seamlessly doing “for a community of people whatever they need to have done, but cannot do at all, or cannot so well do for themselves in their separate or individual capacities.”
I wish the Congressional Republicans could come to the same conclusion that Lincoln did.