A contrarian view of the updated House reform bill

Late Monday night, the House Republicans unveiled a set of proposed amendments to their reform bill, the American Health Care Act.  You can read the summary of the “Manager’s Amendment” for the best overview of the proposed changes.

Many of the changes are technical (moving an inflation index from CPI-U Medical to CPI-U Medical +1) or are not terribly substantial (moving delay of the Cadillac Tax from 2025 to 2026).  Some are a more clear nod to trying to keep in moderates (states can pick either a block grant or per capita financing model, whichever fits) and trying to ameliorate conservatives (ending certain taxes this year).

On one of the central elements of the ACA, Medicaid expansion to childless adults via a simple income test, things are not quite so ‘cut and dried.’  In fact, I think under a different time, moderates from both parties may have found much to like in this latest Medicaid proposal.

Medicaid expansion

If you’re a Congressional Republican, you can make an argument that this amendment restricts future funding for Medicaid expansion. Moderates could argue these restrictions put the expansion at risk, while Congressional conservatives can complain that the legislation actually lets expansion continue.

Here are few reasons to think that.

  1. An expansion state can keep full federal funding (FMAP) for any beneficiary while they remain on the program, regardless of other changes.  States will continue to receive federal funds for that eligible person.
  2. An expansion state can keep the eligibility open for childless adults after the enhanced FMAP of 90% sunsets in 2020, so beneficiaries can remain eligible for Medicaid under a proposed new section, 1902(nn).
  3. Any new state can expand Medicaid to cover childless adults with a federal contribution at the regular, non-enhanced FMAP.

Here’s what this means:  states can choose to keep Medicaid expansion in place if they want to.  They will keep federal funds for at least half of the cost that program, and in some states the FMAP rate climbs much higher than half the contribution.

Now, sure, progressive advocates will say that a cut in funding amounts to a cut in the program.  In many states that will be true.

Many states will not make up the difference in funding between the enhanced FMAP of 90% and a reversion to a traditional FMAP of as low as 50% match.  In other words, states may have to pay 50% of the cost of the expansion instead of 10%.  Some states won’t be willing to do that and will let the program sunset.

Even the eligibility issue in bullet one above will generate concerns for progressives.  According to one study, 80% of Medicaid beneficiaries churn out of eligibility within one year.  Because states won’t continue to receive the enhanced FMAP funding if those beneficiaries return at a future date, this also effectively cuts funding to those which were previously covered but which may be eligible in the future.

Putting this in perspective

In the context of today’s political climate of deep polarization and – let’s face it – a less-than-sophisticated public conversation about America’s health policy, this bill will divide right and left.

However, in the context of the debate on the Affordable Care Act, the Manager’s Amendment might have been a reasonable compromise. In other words, if Republicans had participated in any meaningful way during the 14 months of Congressional debate on the ACA from 2009-2010, this kind of policy might have been the sort of thing borne from a compromise back then.

Within the context of 2009-2010, here are some things moderate Democratic members of Congress could have heralded about the Manager’s Amendment.

  1. Opens Medicaid eligibility to childless adults as a block, something generally not allowed prior to 2010.
  2. Simplifies the eligibility to focus on income only rather than also household demographics and an asset test.
  3. Significantly raises eligibility by income, moving a median of 61% of FPL for adults to 138% for everyone – a major expansion.
  4. Maintains the existing federal FMAP commitment for this expanded Medicaid program, expanded both by demographic and income – a federal funding level that was an open question during policy discussions pre-ACA.

Now, I understand that this is a step back for many progressives given where the ACA brought America.  And, I know many conservatives would argue this doesn’t go far enough.  Moreover, there are a lot of other parts of the bill I don’t discuss here that have reasons to be for or against this bill based on one’s world view.

But, it seems to me that if Republicans had come to the table with this proposal in 2009, many Democrats might have accepted this and justifiably claimed a victory on behalf of states and hard working, low wage Americans.