Medicaid is getting sliced even more in the Senate

What is going on here?

Medicaid which was scheduled to take a 27% federal cut in spending under the House version of the AHCA, is getting cut even more in the Senate.

Why is this?

It is a function of reconciliation rules. The Senate bill has to reduce the deficit by at least as much as the House passed bill. Any dollar that is spent on beefing up opioid addiction spending or creating a multi-billion fund for NICU babies so that Senators can claim it passes the Kimmel test or slowing down the Medicaid expansion phase out from three years to seven years or anything else has to be paid for elsewhere in the bill.

There are three major sets of pay-fors in the AHCA. The first is reducing or slowing down tax cuts that accrue overwhelmingly to upper income individuals. The second is to cut funding for the individual market/Exchanges. The third is Medicaid.

The Republican Party has a strong revealed preference for tax cuts for upper income individuals above almost all else. That is the one policy plank that holds that party together. So pushing back the Medicare tax increment on investment income is unpossible within the political realities of the Republican caucus.

The Senate bill has been focused on taking off some of the most pointy edges of the individual market problems in the House bill, or at least sanding them down to avoid some attack ads in October 2018. So taking money out of there does not make sense within the internal logic of the Senate bill.

That leaves Medicaid as the sole pay for that does not have either strong and broad consensus support or immediate political logic. And here the power of compound interest comes into play. Switching to CPI-U instead of CPI-M or CPI-M+1 is a massive cut. Below is the difference in the CPI-U and CPI-M since 1/1/2000 with spending index at 100 for 1984.

What does this mean? May 2017 CPI-M had 2.7% growth from May 2016. CPI-U only had 1.9% Applying that to the $344 billion the Federal Government spent on Mediciad in 2015 (from the NHE fact sheets Table 03 Line 11), that is a difference of $2.75 billion dollars in the first year. And then it compounds. Over a ten year budget window, it is a $150 billion dollar or more in cuts adding to the current $800 billion dollars already scheduled to be cut. The Senate rumor has the change in formula not start until the end of the budget window so the total in-window cut may only be $20 or $30 billion dollars incrementally but the long run growth curve is incredibly compressed. It further shrinks the federal role for Medicaid finance over time. It is a slower shrinkage than the FY-18 budget proposal where by the end of the budget window, federal funding for Medicaid would be cut in half compared to present baseline but it will get to that point fairly quickly outside of the budget window.

Grabbing money out of Medicaid by lowering the index growth rate is a massive cut of future growth. It is also fairly subtle as I know the number of people whose eyes have not glazed over by now in this brief explanation can fit into a large booth at the local Cracker Barrel. It kicks Medicaid harder while allowing for attack ad insulation and large tax cuts.

35 replies
  1. 1
    rikyrah says:

    thanks for the heads up. Will spread the word.

  2. 2
    🌎 🇺🇸 Goku (aka Junior G-Man) 🗳 🌷 says:

    The Republican Party has a strong revealed preference for tax cuts for upper income individuals above almost all else. That is the one policy plank that holds that party together. So pushing back the Medicare tax increment on investment income is unpossible within the political realities of the Republican caucus.

    The entire United States is held hostage to the political infighting and rigid ideology of a single political party.

    Do they think that by doing this shit, America will remain a great country? One of the best in the world? Decades of these regressive policies will only leave us like Russia is today: poor, system rife with corruption, and democracy non-existent.

    Something is going to have to give.

    Grabbing money out of Medicaid by lowering the index growth rate is a massive cut of future growth. It is also fairly subtle as I know the number of people whose eyes have not glazed over by now in this brief explanation can fit into a large booth at Cracker Barrel. It kicks Medicaid harder while allowing for attack ad insulation and large tax cuts.

    Slippery little bastards. All they care about is power and doing the biddings of their billionaire masters. Fuck them.

  3. 3
    catclub says:

    ten years seems like a LONG time in politics. If I were them, I would make huge tax cuts that only last ten years, so reconciliation is a go.
    Then revert to present law in ten years – yeah, right.

    Bush got most – but not all- of his tax cuts made permanent this way.

  4. 4
    rikyrah says:

    Sociopaths.
    THE.ENTIRE.LOT.OF.THEM.

  5. 5
    MobiusKlein says:

    I’ve said it before, will say it again.
    The most important part of the ACA / ACHA thing is spending.

    All the other details about provision X,Y, or Z are small potatoes except for the bottom line – how many folks will have their healthcare payed for or not.

  6. 6

    Sick fucking sociopaths. The lot of them. Fuck them all. Especially Susan Collins, at least the rest are up-front about wanting to kill you.

  7. 7
    🌎 🇺🇸 Goku (aka Junior G-Man) 🗳 🌷 says:

    @🌎 🇺🇸 Goku (aka Junior G-Man) 🗳 🌷: Also, all this will do is cause more instability and lead to more chaotic violence of the kind that struck the GOP baseball practice last week. And the response to it is to carry heat themselves! These are not sane people. 50-60 years ago, they would have been put into psychiatric care

  8. 8
    Victor Matheson says:

    From a practical standpoint, the question is how the CBO scores this. If Congress writes a law that mandates something that can’t happen, the CBO needs to figure out what to do. If the law mandates growth in Medicaid spending below the rate that recipients’ medical spending needs, CBO will have to figure out what to do with this sick people who no longer have Medicaid dollars to cure their illnesses. I would presume that CBO won’t simply assume that medical spending for Medicaid recipients will magically fall to the rate of CPI-U. If Medicaid (and Medicare) could actually do this, we would have solved our medical spending problems long ago.

    So, I would think that CBO would simply assume that the slowly increasing Medicaid funds will cover fewer and fewer people over time increasing their estimate of the number of uninsured.

  9. 9
    catclub says:

    Especially Susan Collins

    Murkowski is the mystery to me. Alaskans were absolutely killed by the House bill – which was one size fits all big government solution – in contrast to the state by state system presently in operation, yet there is very little sign that Murkowski will oppose a bill that hammers her constituents.

  10. 10
    D58826 says:

    I don’t know why the GOP keeps torturing people this way. Just take the undesirable lower 20 percent and put them on iceflows. Oh wait that none global warming thing is making ice flows harder and harder to find.

    There was a link to a cartoon on twitter the other day expressing the same view for Granny but I can’t find it.

  11. 11

    @catclub: Murkowski doesn’t preen.

  12. 12
    wvng says:

    I just called Capito’s office with this latest news, and said I really don’t believe she wants to support a bill that will harm so many West Virginians and so many Americans, and encouraged her to do the hard thing politically but the right think for America and break with her party on this and vote no.

  13. 13

    Tax-cuts is too benign a term to describe what the Rs are doing. They are stealing money from the 99% to give it to their 1% cronies and themselves. They will do almost anything to do that.

  14. 14
    sunny raines says:

    “Why is this [deeper Medicaid cuts coming from the senate]?”

    I assume not a serious question.

    Medicaid recipients do not vote republican.

  15. 15
    Skippy-san says:

    They could just raise taxes. And maybe make Medicaid available on a fee basis like Nevada is proposing?

    HA HA HA HA HA HA!

    Those $400 dollar bottles of wine are not going to buy themselves.

  16. 16
    dnfree says:

    My eyes glaze over but I read to the end anyway, figuring I understand at least the big picture. So can I come to the local Cracker Barrel?

  17. 17
    sherparick says:

    @sunny raines: Actually, a surprising number are, either directly or indirectly, or can expect to become Medicaid recipients over the next 20 years as we boomers age out. And of course white boomers are heart of the Republican base right now. http://www.facethefactsusa.org.....-home-care But most of them don’t understand the connection between what Ryan and McConnell and why. And Republicans constituents are not really the rubes who vote for them in the individual states, but the 5000 or so super wealthy families that donate to Republican candidates and Conservative Movement organizations.

  18. 18
    dnfree says:

    @sunny raines: What makes you think Medicaid recipients don’t vote Republican? Many of them are senior citizens, just if you’re following stereotypes.

  19. 19
    sherparick says:

    @D58826: There is always Soylent Green.

  20. 20

    @sunny raines: Old people (the biggest expense category of Medicaid) do vote Republican and they need nursing home help

  21. 21
    TenguPhule says:

    Whenever I’m told that McConnell is too interested in retaining power to risk this AHCA horror, I am torn between wanting to dopeslap them with these reports and just getting drunk.

  22. 22

    And Medicaid is already a tight-fisted system.

  23. 23
    stinger says:

    @Raven Onthill: I’ll say. A couple of weeks after my 94-yr-old mother died, I got a lovely letter of condolence from then-Gov. Terry Branstad: “Sorry for your loss. Now send us $158,000.” This was my mother’s “Medical Assistance Debt”, explained in the fine print as her Medicaid usage. They were trying to claw it back from her “assets”. As we had to prove annually for her eligibility review, she didn’t have any. Didn’t stop Terry from trying to scare it out of her kids (who may have assets, but certainly can’t pay a bill like that).

    I wonder now if other states treat Medicaid that way, as a debt incurred.

  24. 24
    PaulB says:

    I think you may be underestimating the ability to write an attack ad for this. “The Republican Party is taking away one trillion dollars on health care and giving all of that money to tax cuts for millionaires.”

    “The Republican Party Robin Hood update: Steal from the poor and give to the rich.”

    “The Republican Party just voted to throw a million senior citizens in nursing homes out on the streets.”

    “The Republican Party just voted to take everything that was wrong with the ACA and make it worse!”

  25. 25
    dm says:

    @stinger: Have you not heard of the Medicaid Recovery Act? Medicaid has the right to recover payment from assets/estate after death of recipient.

  26. 26

    @stinger: as dm points out, this is enabled by federal law. The states have discretion over how what they recover. It is possible that, in red states, coverage of younger people through the Medicaid expansion will be clawed back, bankrupting them.

    New Republican health care policy: don’t get old, don’t get sick.

  27. 27

    It’s the Republican Death Tax! Hey, that might make a good slogan. Clear, simple, and understandable.

  28. 28
    stinger says:

    @dm: No, I hadn’t heard of it before, thanks. But even so, she had to prove EVERY YEAR that she was eligible. Dying didn’t suddenly make assets spring out of thin air.

  29. 29
    stinger says:

    @Raven Onthill: They should be honest and refer to it as Medicaid Lending. Like higher ed loans, they’ll never be able to repay them.

    Overall Republican policy: don’t get old, don’t get sick, don’t get educated.

  30. 30
    jl says:

    Thanks for an informative post. I read that the Senate bill was even more ‘mean’ than the House bill, and this post explains how that could be true.
    Maybe I’ll run into this Anderson guy at a local cracker barrel soon!

  31. 31

    @stinger: For people over age 55, states have the options to attempt to claw back money from their estates for services used. The idea is that Medicaid should be the payer of last resort, especially for long term care. So if there is a major protected asset that was not counted, after death and during its liquidation, the state gets paid for paying for the nursing home

  32. 32
    Lizzy L says:

    Thanks for this, David. Very clear. I’ve passed the information on.

    They don’t even try to hide it, the bastards. Since, as you point out, the one non-negotiable item in the Senate bill is the size and timing of the tax cut for the rich, the money has to come from somewhere. The best place to take it is from the poor, the disabled, and the poor disabled elderly who are going to die soon anyway, so who the fuck cares if they die a little faster and in a little more discomfort?

    They will not say that, of course. BUT THAT’S WHAT THEY ARE GOING TO DO, unless we stop them.

  33. 33

    […] But in any form it’s a sneaky and underhanded path to a benefit cut. As health insurance expert David Anderson of Duke University observes, it’s subtle enough that the implications might escape large numbers of voters or even […]

  34. 34

    […] in any form it’s a sneaky and underhanded path to a benefit cut. As health insurance expert David Anderson of Duke University observes, it’s subtle enough that the implications might escape large numbers of voters or even […]

  35. 35

    […] But in any form it’s a sneaky and underhanded path to a benefit cut. As health insurance expert David Anderson of Duke University observes, it’s subtle enough that the implications might escape large numbers of voters or even […]

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  1. […] But in any form it’s a sneaky and underhanded path to a benefit cut. As health insurance expert David Anderson of Duke University observes, it’s subtle enough that the implications might escape large numbers of voters or even […]

  2. […] in any form it’s a sneaky and underhanded path to a benefit cut. As health insurance expert David Anderson of Duke University observes, it’s subtle enough that the implications might escape large numbers of voters or even […]

  3. […] But in any form it’s a sneaky and underhanded path to a benefit cut. As health insurance expert David Anderson of Duke University observes, it’s subtle enough that the implications might escape large numbers of voters or even […]

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