A new argument has emerged in recent weeks in the debate over the repeal of the Affordable Care Act on the new policy to shift in the Medicaid payment system to “per-capita caps” or “block grants.” The argument is an attempt to portray the reductions in Medicaid enrollment and federal dollars allocated to the program as “hysteria” or dramatizations the reductions. The argument is recycled from the last eight years of the cuts to Medicare managed care plan incentive payments in the Obamacare debate, only with political parties switched.
From a purely logical perspective this makes little sense. The Congressional Budget Office has shown that the Medicaid program would see more than $800 billion in reduced funding and 14 million fewer eligible people would be enrolled than currently are in the program over the next ten years. The reality is that states will have to reduce the number of services they provide or reduce the types of people that can enroll as inflation and increased costs in medical services rise. This sounds like a cut. What the defenders of this claim- ranging from Karl Rove to Sally Pipes have insisted is that this is a cut to the growth rate, not cuts to the existing program.
But in a broader perspective this doesn’t follow a logical line from the conservative argument. The GOP has campaigned for decades on the idea that the social welfare state is bloated and that the oversized growth of the welfare state needs to be trimmed. The GOP should embrace the idea of calling per-capita caps and block grants cuts. From a policy perspective, the goal of the per-capita caps and block grants is to reduce the size and scope of the program.
Why have they begun to shy away from the argument that has been popular among their base and the broader public for decades? The most salient reason is that we have moved out of the Reagan era as the populace has moved to the left. The evidence for that lies with the popularity of Medicaid and the unpopularity of the Republican health care plan. The other reason proponents of the cuts have moved away from embracing their cuts is that Medicaid is efficient and trimming the program does not hold weight.
First, Medicaid is popular and the GOP American Health Care Act (AHCA) is not. In a recent poll by the Kaiser Family Foundation, Democrats and Republicans alike opposed cuts to the Medicaid expansion and half of Republicans oppose changing the existing Medicaid financing structure. Many other polls show that the majority of voters have favorable views of Medicaid, coming close to the level of support for Medicare. Telling is that a Quinnipiac poll found that Republicans oppose cuts to Medicaid. This is one possible reason that the latest messaging appears to be focused on reframing the cuts as minimal. Meanwhile, the AHCA has polled from 17–21 percent by Quinnipiac and only 8 percent think that the Senate should pass these reforms without changes.
More importantly, the reality is that Medicaid is a pretty efficient program considering who it is providing services for and the types of care provided. Medicaid general spends less than other insurers to treat similar populations, largely because it often pays providers at a lower rate, although there is significant variation from provider to provider. The growth in Medicaid expenditure varies significantly from type of Medicaid coverage with the per-capita growth in long-term care much greater than the care for children, for example. In reality one of the largest causes of growth to Medicaid expenditures is the aging of the population with more people requiring long-term care services.