House Republicans Take a Wrecking Ball to the Medicaid Program

After months of confusion and false starts, Republicans in the House of Representatives have formally unveiled their plan to roll back federal health care reform. In a nutshell, the House Republicans’ proposal would reduce access to affordable health care coverage while providing massive tax breaks for the wealthy. This is horrible news for the millions of low- and moderate-income Californians who have gained coverage over the past few years thanks to our state’s decision to fully implement the federal Affordable Care Act (ACA). It’s also bad news for almost everyone else: The Republican plan would destabilize insurance markets and reduce the number of young and healthy people who sign up for coverage, with the result that health insurance premiums likely would skyrocket.

However, rather than blowing up Obamacare immediately, House Republicans are proposing to delay implementing key elements of their plan until 2020. This includes their plan to take a wrecking ball to the Medicaid program (Medi-Cal in California), which provides cost-efficient health care coverage to people with low incomes, including roughly 14 million in California. Specifically:

House Republicans’ Proposal Would Radically Restructure Federal Financing for Medicaid

Currently, the federal government provides matching payments for states’ Medicaid programs with no pre-set limits. Under the Republicans’ plan, federal Medicaid funding would be shifted into capped allotments that would be provided to states on a per-enrollee basis starting in 2020. This “per capita cap” would be designed to significantly reduce federal support for Medicaid over time, with the growing cuts resulting in a massive cost-shift to states. In California, which receives almost $70 billion per year in federal funds for Medi-Cal, a cap would reduce annual federal support by billions — and potentially tens of billions — of dollars relative to current law. Facing a cut of this magnitude, state policymakers would be hard-pressed to maintain current levels of coverage and benefits for millions of children, older adults, people with disabilities, and other Californians with low or moderate incomes, for whom Medi-Cal is truly a lifeline.

House Republicans’ Proposal Would Gradually End the Medicaid Expansion

As allowed by the ACA, California expanded Medi-Cal coverage in 2014 to childless adults and certain parents who previously were ineligible for the program. Currently, about 4 million adults are enrolled in Medi-Cal due to this expansion. The federal government pays most of the cost of covering these adults, using what’s known as an enhanced federal matching rate. For example, the feds are paying 95 percent of the cost of the Medi-Cal expansion in 2017, with California paying the remaining 5 percent. Under current law, this enhanced matching rate is scheduled to decline to 90 percent by 2020 (a 90/10 federal-state sharing ratio), and remain at that level indefinitely.

House Republicans’ plan would renege on this federal commitment to pay at least 90 percent of the costs of the Medicaid expansion. (The current Republican plan differs from an earlier version that we described last week.) Starting in 2020, the feds would provide the enhanced federal matching rate of 90 percent only for adults who were enrolled in the expansion by the end of 2019 and who remain enrolled without a break in coverage. Other adults who sign up through the expansion — including people with fluctuating incomes who temporarily lose their coverage and then later re-enroll — would qualify only for the standard federal matching rate of 50 percent, with California paying the remaining 50 percent for those adults. (Complicating things even more, the Republicans’ proposed per capita cap would also apply to this portion of federal Medicaid funding.) Over time, fewer and fewer enrollees would qualify for the enhanced federal matching rate of 90 percent. As a result, the state’s cost to maintain the Medi-Cal expansion would rise substantially, potentially to more than $10 billion per year. This is several times the roughly $2 billion to $3 billion in annual state costs that would be expected over the next several years under current law. Given the steep cost of maintaining this coverage, California would likely need to drop or scale back the Medi-Cal expansion, eliminating the only viable health care coverage option that’s available to millions of low-income Californians.

Republican leaders are aiming to move their “repeal and replace” plan through the House during March, after which it would go to the Senate for consideration. Yet, this isn’t expected to be a cakewalk. Republicans are clearly divided on both means and ends. Their disunity offers a ray of hope to Californians who aim to preserve — and to build on — the health care coverage gains that our state has made thanks to federal health care reform.

— Scott Graves