Are Republicans Too Stingy With Medicaid? – Forbes

A demonstrator in a wheelchair protesting cuts to Medicaid is led from the office of Senate Majority Leader Mitch McConnell by a U.S. Capitol police officer at the Russell Senate Office building in Washington, D.C., U.S., on Thursday, June 22, 2017. Senate Republicans proposal to replace Obamacare would provide an additional $50 billion over four years to stabilize insurance exchanges, relying on a mechanism Republicans have criticized in the past as a way to keep insurers in the marketplace. The draft bill would phase out Obamacare’s expansion of Medicaid over three years, starting in 2021. Photographer: Andrew Harrer/Bloomberg

This article was co-authored by Thomas R. Saving, an economics professor and the director of the Private Enterprise Research Center at Texas A&M University.

Before the Senate voted on a “skinny” alternative to Obamacare, it was considering the House version of repeal and replace – called the Better Care Reconciliation Act (BCRA). President Trump called the legislation “mean” and Republicans were attacked for robbing the poor, the elderly and the disabled of needed health care dollars. But were these criticisms fair?

By the year 2036, Medicaid spending under the Republican proposal would be 35 percent lower than under current law. That’s according to an estimate by the Congressional Budget Office.

The reason? For the first time in its history, Medicaid would be subject to a budget instead of being an open-ended entitlement. Beginning in 2020, the federal allotment for the elderly, blind and disabled would rise by the rate of medical inflation plus 1 percent. For all other beneficiaries, it would rise by the rate of medical inflation alone. Beginning in 2025, all federal Medicaid spending would rise at the rate of general inflation – which is almost always lower than the rate of medical inflation.

The result: Medicaid would grow more slowly than the economy as a whole, even though health care generally is expected to grow faster than the economy as a whole.

This prospect was greeted with howls of protest on the Democratic side of the aisle. But it’s worth noting that Democrats did something very similar with Medicare when they enacted the Affordable Care Act (Obamacare). Thanks to Congressional Democrats, Medicare is no longer an open-ended entitlement. Spending is set to grow no faster than GDP plus .054 percentage points. That’s forever.

The accompanying chart shows what was expected at the time Obamacare was passed. Based on Medicare Trustees projections, the Democrats effectively voted to reduce Medicare Part A spending by 31 percent by the year 2035 and reduce Part B spending by 23 percent.

Source: 2009 and 2010 Medicare Trustees Report.

2009 and 2010 Medicare Trustees Report. Percents reflect the 2010 report’s shares of GDP as percents of the 2009 estimates.


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