Everything's Negotiable Except Cutting Medicaid

The new Senate health bill does make some significant changes, but major cuts to the largest public health-insurance program are still the key policy.

Eric Gay / AP

The new draft of Senate Majority Leader Mitch McConnell’s Better Care Reconciliation Act released today has significant additions that have seemingly responded both to the demands of his own Republican conference and to public outcry.

As my colleague Russell Berman notes, perhaps the most significant change—or the most significant potential change—over the previous version of the BCRA is the addition of the Cruz amendment, which would allow insurers that provide at least one comprehensive plan on the exchanges to offer barebones plans alongside them that would also qualify for tax credits. That provision is as of yet still bracketed, which means that it is a tentative addition—or deletion—to the final bill. In the same vein, the new BCRA would also allow people to receive tax credits for catastrophic coverage and use health-savings accounts to cover premiums. States would also still retain the ability to waive certain essential benefits from otherwise qualifying plans.

In the aggregate, those tweaks to the exchanges are the largest shift in the new BCRA. Policy-wise, the move seems likely to create some roadblocks: The loss of the individual mandate and the addition of low-premium, high-deductible catastrophic and barebones plans seem likely to disrupt markets, increase their overall risk, and reduce affordable options for people with pre-existing conditions. It would split off the risk pool of low-cost healthy adults who can get by on barebones coverage from the pool of sicker, older adults—which would increase the odds of state exchanges entering death spirals. And it’s unclear if the Congressional Budget Office will even count super-minimal insurance coverage as proper “insurance coverage” per se, which means that this plan could increase the amount the federal government spends providing credits for insurance, without increasing the number of people who count as covered.

Bolstering the Stability Fund for providing reinsurance payments to increasingly risky pools of people might help offset some of the political downsides of this approach, as will a new $45 billion commitment to fighting opioids, but the big roadblock is the same: Medicaid. The new BCRA looks pretty much like the old BCRA with respect to Medicaid, and still phases out Obamacare’s Medicaid expansion to low-income adults. The new BCRA also includes the same per-capita cap structure and long-term growth-rate cut that transform the funding structure of Medicaid and then cut it over time, a change that will almost inevitably push millions of the Medicaid rolls and reduce benefits for those remaining.

There are some additions to the old BCRA’s Medicaid policies. For one, the new version creates a “Public Health Emergency” exemption for states that declare such an emergency. Their Medicaid spending for services related to such emergencies would be allowed to go over per-capita caps, or would result in extra payments for states that choose to receive their Medicaid funds via block grants. Also, the new BCRA would allow states to apply for waivers to go above the caps to provide home-and-community-based services (HCBS) for people with disabilities. That’s a key concession, and likely a response to the thousands of disabled activists rallied across the country to protest the last draft, which would have sent many disabled Medicaid enrollees to nursing homes.

Still, those changes don’t fundamentally alter the major cuts to Medicaid in the BCRA. The new McConnell plan provides $8 billion for the HCBS waivers combined from 2020 to 2023 and provides a $5 billion aggregate limit for public-health emergency expenditures from 2020 to 2024. That’s $13 billion over five years, or $2.6 billion extra dollars per year to help Medicaid cover home services and public health emergencies—a sum unlikely to fully offset cuts.

This iteration of the BCRA continues a trend of draft bills, whereby Republican legislators welcome substantive tweaks and the injection of new ideas for exchange plans—which cover a relatively small number of people—and tax reforms, but won’t budge on fundamentally reshaping and shrinking Medicaid.

Medicaid is the core of the matter here—and always has been in American health policy—even before House Speaker Paul Ryan spent college dreaming of Medicaid-reform at keggers. It’s the biggest budget item in the BCRA, the largest public-coverage pool, the piece of Obamacare about which public opinion is most polarized, and the public program that Republicans have most desired to roll back or eliminate over the decades. And conversely, although the Affordable Care Act incorporated a great number of reforms, its primary engine was the Medicaid expansion.

As the next CBO score will likely show, it’s just not possible to roll back that expansion and slice hundreds of billions of dollars from the Medicaid budget over decades and not see millions of people become uninsured. That’s the central problem for McConnell and his allies, whose latest proposal has already provoked  Maine’s Susan Collins to defect over the “deep cuts to Medicaid in Senate bill.” It’s still possible Republicans can push the bill through, persuading moderate holdouts to come aboard before the end of August. But, given that this draft retains the cuts to Medicaid, the odds are lengthening.