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"Capped funding will force states to make hard choices about who 'deserves' health care coverage."

Published On: April 26, 2017

​Haleigh Mager-Mardeusz is a co-author of the new policy brief on how GOP changes to Medicaid could affect health care for tens of millions of low-income Americans. In this brief interview, she discusses why Republicans favor "capped" financing, the political risk of undoing the ACA, and the likelihood of Medicaid caps being enacted.

Q: Do Republican efforts to put a "cap" on Medicaid spending reflect a fair concern about spiraling costs of coverage for health care in general and Medicaid in particular?

​Both Democrats and Republicans are right to be concerned about health care cost growth. Health care costs continue to consume our gross domestic product and federal budget. The United States spends about twice per capita on health care compared to other high-income countries, but continues to rank lower in health system outcome measures. Capping federal Medicaid expenditures will limit health care as a percentage of the federal budget, but it will also push this financing burden onto states, low-income individuals and safety net providers.

Medicaid is already an extremely efficient program because of its low provider reimbursement rates and administrative costs. Per enrollee costs are considerably lower for Medicaid than private insurance, when similar coverage groups are compared.

One estimate found that adults covered under the Medicaid program cost about 22 percent less than if they were covered by a private plan. Between 1987 and 2014, per enrollee cost growth for Medicaid was also much lower when compared with private insurers. Further, Medicaid expansion states have seen savings from fewer payments to hospitals for uncompensated care.

While health care cost containment methods should continue to be explored, capping federal Medicaid spending will likely not curb overall health care cost growth. And it will be at the expense of our country's most vulnerable residents.

Q: Might it be politically uncomfortable for some Republicans to backtrack on Medicaid after expanding it in their states given that it now serves many of their core constituents?

​With the passage of the Affordable Care Act (ACA), 14 million people have gained Medicaid health insurance, among which 4.5 million reside in Republican governed states. Among the 32 states that expanded their Medicaid programs, 11 were headed by Republican governors. Repeal and replace of the ACA has been continuously cited as a central priority for the GOP under the Trump Administration.

However with recent efforts focusing on capping funding for Medicaid, including the most recent effort -- the American Health Care Act (AHCA) -- the Republican Party has faced widespread opposition within its own party. Republican states that have expanded their Medicaid programs have seen positive changes for their constituents. For example, Ohio concluded that expanding their Medicaid program led to experiencing the lowest rate of uninsured working-age adults in the state's history.

A repeal of Medicaid expansion provisions would have profound impacts on states' abilities to continue to cover current beneficiaries and services, which would affect the health and well-being of their constituents. There is therefore a resistance from Republican states that have expanded their Medicaid programs and from within the party, which is one reason that the AHCA failed to pass.

There is disagreement within the party on what should be included in health reform. For example, other GOP proposals have included provisions allowing for states to maintain parts of the ACA up to their discretion. Furthermore, the Republican Party has become more reliant on an older, white, lower-income voter base, who are a large population cohort that have benefited greatly from Medicaid expansion.

Q: What are the chances that Republicans will be able to pass any kind of Medicaid reform during the Trump administration?

​Block granting the Medicaid program has long been a priority for the GOP. President Reagan proposed this reform in 1981, Speaker Newt Gingrich in 1995 and President George W. Bush in 2003. Speaker Paul Ryan has included this in his legislative agenda for years and has introduced numerous Medicaid block grant reform proposals.

While Republicans have long been promoting this financing reform, efforts have failed thus far. Instead, Medicaid has cut its ties as a welfare-linked program and transformed to become the nation's largest health public health insurance program. Today, Medicaid covers about 1 in 5 people (over 70 million).

While the recent AHCA efforts have been thwarted, there is still a very real chance that the GOP will come back to health reform, especially if their tax reform efforts fail. Medicaid reform would easily meet budget reconciliation criteria, and some conservative think tanks have recommended taking a more incremental approach to dismantling the ACA and safety net.

Recently, President Donald Trump restated his pledge and commitment to health reform. House Freedom Caucus members even predict that a new health bill will pass the House within the next few weeks. But recent polling in Louisiana shows how popular the Medicaid expansion has been: More than half of Louisiana residents have an unfavorable view of the ACA, while almost 75 percent approve of the state's Medicaid expansion.

As expansion states continue to report decreased uninsurance rates, improved access to care for residents, and better financial stability for state budgets, changing the Medicaid program and taking away coverage will become harder and harder to do.

Additional Information

The UCLA Center for Health Policy Research (CHPR) is one of the nation’s leading health policy research centers and the premier source of health policy information for California. UCLA CHPR improves the public’s health through high quality, objective, and evidence-based research and data that informs effective policymaking. UCLA CHPR is the home of the California Health Interview Survey (CHIS) and is part of the UCLA Fielding School of Public Health​ and affiliated with the UCLA Luskin School of Public Affairs.