Medicaid shows its political clout – Politico

Medicaid may be the next “third rail” in American politics. Resistance to cutting the health care program for the poor has emerged as a big stumbling block to Obamacare repeal, and Republicans touch it at their political peril.

“If they’d gone ahead … clearly I would think we’d be seeing a transfer of power in a year and a half,” said John Weaver, a GOP strategist for Ohio Gov. John Kasich, who has called the Medicaid overhaul proposals of his fellow Republicans “unacceptable.”

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The repeal efforts in Congress actually aimed to do more than repeal Obamacare. The House-passed bill, H.R. 1628 (115), and the Senate counterpart that collapsed Monday called for the biggest changes and deepest cuts to Medicaid since its creation as part of the Great Society programs in 1965.

But an overhaul that would cut nearly $800 billion over a decade and have 15 million fewer people covered in Medicaid went too far for moderates like Susan Collins (R-Maine) and Shelley Moore Capito (R-W.Va.) and created a backlash from several influential Republican governors.

“You can’t just over a very short period of time diminish the federal support level,” said Arkansas Gov. Asa Hutchinson, one of several Republicans who saw the Medicaid cuts as excessive. “That’s just an unrealistic goal in the short term.”

That’s made the politics around Medicaid much more volatile. Republican strategists and pollsters say Medicaid’s rising stock will likely diminish the GOP’s chances to cap federal funds without huge blowback from voters. Even Senate Majority Leader Mitch McConnell’s fallback, a partial repeal bill which scraps Obamacare Medicaid expansion but leaves traditional Medicaid intact, encountered fatal opposition Tuesday, and it’s not clear what comes next.

“I don’t think there’s going to be much appetite to do anything [on Medicaid],” Weaver said. “What was the last entitlement program that we changed our mind on in this country? There’s not one.”

Jointly financed by Washington and the states, Medicaid has long been in Medicare’s shadow. It began as a program for poor kids and their parents, but it’s grown — and grown. It now covers more than 70 million people, or more than 1 in 5 Americans. Roughly 30 million of those covered by Medicaid are children and 7 million are elderly, many in nursing homes. Medicaid covers millions of disabled people and is a big source of treatment for opioid addiction.

The opioid funding added to the concern of the GOP governors who objected to the Medicaid cuts, and it “clearly had impact,” noted Republican pollster Bill McInturff, a partner at Public Opinion Strategies. “The level of funding that Medicaid now provides to combat the opioid issue provided another pro-Medicaid argument that was quite distinct from past battles about the level of funding and structure of Medicaid,” he said.

Several surveys have shown growing public awareness of, and support for, Medicaid’s role in health care.

“The message that we got from our polling was that voters said, ‘If you vote for the new health care plan, you do so at your own peril,’” said Tim Malloy, assistant director of the Quinnipiac University poll. “That includes cuts to Medicaid.”

A Quinnipiac poll released in late June found that 71 percent of voters oppose decreasing federal funds for Medicaid, including 53 percent of Republicans. Other surveys have found strong support for Medicaid — even among Trump voters.

“We’re finding that Medicaid has a constituency that may have been underestimated,” said Diane Rowland, a leading Medicaid expert and the executive vice president at the Kaiser Family Foundation, recently as opposition began mounting in the Senate.

Medicaid may not be quite as untouchable as Medicare and Social Security — the traditional “third rails” of politics that drive voter behavior. But “it’s become even more of a national safety net,” Rowland said. “And more people’s lives have been touched by it.”

The GOP senators who opposed the latest repeal plan — McConnell wants a vote on the same partial repeal bill that Republicans passed but then-President Barack Obama vetoed two years ago — again cited Medicaid.

“I have serious concerns about how we continue to provide affordable care to those who have benefited from West Virginia’s decision to expand Medicaid, especially in light of the growing opioid crisis,” Capito said Tuesday in explaining her opposition. “All of the Senate health care discussion drafts have failed to address these concerns adequately.”

Medicaid has been a key concern of Kansas Sen. Jerry Moran, too — whose pivotal opposition to McConnell’s earlier version of repeal came as a surprise given that Moran’s state didn’t expand the program under the Affordable Care Act, and Moran himself is not usually a maverick.

“Medicaid has significant value,” he said at a town meeting early this month.

“Kansas is a place that has treated Medicaid payments very conservatively, and if there’s problems with people receiving Medicaid that shouldn’t receive it, address that issue,” he continued. But don’t harm a program, he said, that both low-income people and the health care system count on.

The doubts expressed by Moran and others have led to a great irony: Obamacare didn’t create Medicaid, but it might shield it from an overhaul.

Republicans have angled for Medicaid spending caps since the Reagan years, and the idea even had some bipartisan support in the 1990s — although the two sides never agreed on the specifics. The conventional wisdom was that Medicaid would be the easiest way to tackle entitlement reform precisely because it didn’t have a politically well-organized constituency to protect it, unlike Medicare and Social Security.

The moment may have come and gone. Pollsters and health policy experts say the political environment for altering Medicaid was more favorable to Republicans two decades ago, when it covered roughly half the number of people it does now and voters had more of an appetite for deficit reduction and welfare reform.

“The battle is framed differently than it would [have been] in the 1990s. Not a welfare battle here,” said Robert Blendon, an expert on health policy and politics at the Harvard Chan School of Public Health.

The federal government and the states in 2016 spent more than $550 billion on the program, costs that Republicans in Washington have long chafed to pare back. But state leaders and several senators were alarmed by the magnitude of the federal funding reductions included in the Senate’s Better Care Reconciliation Act. It would have capped federal Medicaid funding beginning in 2020 and limited its rate of growth.

As they gathered in Rhode Island last the weekend, governors received independent estimates showing that states would see a 27 percent to 39 percent reduction in their federal Medicaid funds by 2036 under the initial Senate bill. The analysis, completed by consulting firm Avalere Health, concluded that states may be confronted with a series of unpalatable choices to make up for the funding declines — including limiting eligibility or raising taxes.

Trump administration officials, during a closed-door meeting, later tried to assuage governors anxiety about Medicaid coverage losses and discredit various estimates, but state leaders largely weren’t swayed.

“The proposed reductions in Medicaid would leave our state with a budget deficit we could not absorb without cutting health care services for the people who deserve them most, or significantly raise taxes on already overtaxed Vermonters,” Republican Gov. Phil Scott said Monday at a press conference with Vermont’s all-Democratic congressional delegation.

Medicaid’s favorability rating among the general public has remained steady since the mid-1990s, according to Bianca DiJulio with the Kaiser Family Foundation. The program, however, was much smaller the last time spending caps were debated. Medicaid covered around 35 million in 1996 — roughly half the current number.

“It was an easier target by the Republicans,” said Chris Jennings, a top health official in the Clinton White House who later worked for Obama.

Federal funding has also increased considerably since then, with the federal government providing states at least 90 cents of every dollar to cover the expansion starting in 2014. Those changes have rankled conservatives who argue that the government just can’t afford that. But because Obamacare expanded Medicaid, the public is likely to perceive changes as an attack on the 2010 health law, said Doug Badger, a former White House aide for President George W. Bush.

That will make entitlement reforms all the more difficult despite bipartisan support for some type of Medicaid spending cap in the 1990s.

“I would chalk it up to Obamacare derangement syndrome,” Badger said before the Senate repeal bill collapsed. “The emotional linkage is there.”

Seung Min Kim contributed to this report.

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