Medicaid and the Budget Reconciliation Debate

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    Congress has sent President Obama reconciliation legislation that would roll back the Medicaid expansion

Under the Congressional Budget Act, “reconciliation” is the term used to describe the legislative process by which Congress makes changes in federal tax policy and government programs such as Medicare and Medicaid, in which federal spending is automatic and not dependent on annual appropriations. Over the decades, the reconciliation process has been the vehicle for major changes in Medicaid, including the eligibility expansions for pregnant women and children enacted during the 1980s. The reconciliation process is particularly important in the Senate, because filibusters are barred and all that is needed to pass a bill is a simple, 51-vote majority.

Five years after the Affordable Care Act’s (ACA) landmark Medicaid expansions, Congress has sent the President reconciliation legislation that would roll back the ACA’s Medicaid advances. Funding for coverage of low-income adults ages 18–64 would end after December 31, 2017. The law’s mandatory expansion of coverage for low-income children ages 6–18 also would end as of this date, as would its provision barring reductions in optional children’s coverage prior to the end of 2019.

The President has announced that he will veto the bill,1 which also repeals federal premium subsidies for marketplace coverage and eliminates the individual and employer tax penalties. The Medicaid expansions have been portrayed as exclusively the purview of one political party.2 In fact, the expansion states show great political diversity; among the 31 expansion states, only 13 lack a Republican senator or governor, while several have both.

Thus, the story behind the Medicaid expansion and the current repeal effort is one of philosophy and policy: Should Medicaid provide the platform on which coverage for the poorest Americans rests?

As Chief Justice John Roberts observed in National Federation of Independent Businesses v Sebelius, the ACA reconceived Medicaid, originally created to serve limited groups of poor people, as an “element of a comprehensive national plan to provide universal health insurance coverage.” Although Sebelius effectively made the expansion optional, 30 states and the District of Columbia have embraced this vision of a repurposed Medicaid as the means by which the poor achieve coverage. This vision of a restructured Medicaid program is not new; over many decades, elected officials across the political spectrum sought to extend Medicaid to all poor people, not merely subcategories. For years, adult expansion demonstrations were a mainstay of §1115 of the Social Security Act, which permits the U.S. Health and Human Services Secretary to undertake Medicaid demonstrations of national significance. Through these demonstrations, Medicaid’s achievements for the poor have been repeatedly documented. The Medicaid and CHIP Payment and Access Commission (MACPAC) most recently has offered extensive evidence of Medicaid’s success, in contrast to frequent claims that Medicaid has proven worthless. Indeed, as MACPAC’s statistics show, whether the measure is physician access, access to hospital care when needed, or appropriate management of chronic health conditions, Medicaid beneficiaries’ use of health care closely resembles that of the privately insured, not the uninsured.

Medicaid’s value goes beyond effective coverage of those most in need. One of its chief attributes is the extent to which it has enabled states to introduce coverage innovations that replicate those found in private health insurance, while offering additional protections to the poor. Today 75 percent of all beneficiaries are enrolled in Medicaid managed care plans that mirror private insurance models that, for a fixed per-member fee, offer coverage linked to participating provider networks. Particularly notable is Arkansas, which has taken matters a step further, using Medicaid to purchase marketplace health plans. The assertion that Medicaid somehow locks states into inefficient and dated approaches to coverage and stifles innovation in service delivery simply ignores what is happening in the real world and the extent to which states have used Medicaid to introduce coverage strategies that reflect systemwide trends, while adapting such strategies to the special needs of the poor.

Medicaid has emerged as a centerpiece of the ACA’s coverage achievements. As of October 2015, the Centers for Medicare and Medicaid Services reported nearly 71.8 million enrollees, a 13.5 million increase since the July–September 2013 time period, immediately prior to full implementation of the ACA. Among the expansion states, Medicaid enrollment increased by 30.6 percent over this time period. Even among the 20 remaining nonexpansion states, enrollment rose by 10 percent, a testament to the ACA’s simplified enrollment process, which helped identify millions of eligible people previously left out. These remarkable enrollment numbers should be embraced as evidence of the success of insurance reform and as a reaffirmation of the extent to which the Affordable Care Act has succeeded in providing effective health insurance coverage to the most disadvantaged populations.

Notes

1R. Pradhan, “White House Issues Veto Threat of Obamacare Reconciliation Bill,” Politico, Dec. 2, 2015.

2B. Everett, “Dems Take Aim at GOP’s Medicaid Repeal,” Politico, Dec. 1, 2015.

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Publication Details

Publication Date:
January 7, 2016
Authors:
Sara Rosenbaum, Sara Rothenberg, Rachel Gunsalus
Contact:
Sara Rosenbaum, Harold and Jane Hirsh Professor of Health Law and Policy, Milken Institute School of Public Health at the George Washington University
E-mail: sarar@gwu.edu

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