GOP's "screw the poor" budget: Republicans plan some serious pain for low-income Americans

The new GOP budget seeks to slash Medicaid spending and coverage, and in return will provide nothing

Published March 18, 2015 10:13AM (EDT)

  (Reuters/Kevin Lamarque/Joshua Roberts)
(Reuters/Kevin Lamarque/Joshua Roberts)

The House Republicans came out with their big FY2016 budget proposal yesterday, and, as my colleague Jim Newell points out, while Paul Ryan is no longer the official numbers wonk for House Republicans, his influence is readily apparent in their new budget plan. The Republican proposal privatizes everything it can privatize, cuts every non-defense program it gets its grubby mitts on, nukes Obamacare from orbit, and dynamically scores itself into something resembling balance.

It really can’t be overstated just how terrible this budget proposal is for America’s poor. There’s a lot to pick over, but I want to focus specifically on Medicaid. The program would be in for some especially deep cuts under the Republicans’ vision, and the inevitable impact of those cuts would be millions of low-income Americans losing access to health coverage.

The GOP plan envisions two big changes to the existing Medicaid system: it would do away with the Medicaid expansion made possible by the Affordable Care Act, and it would transform Medicaid into a block-granted program, wherein states would receive a chunk of money and be left to their own devices when deciding how to spend it.

Let’s start with the Medicaid expansion. The GOP proposal arrived the day after the White House released data showing that the uninsured rate nationwide had plummeted 35 percent since the Affordable Care Act was implemented. A huge chunk of this reduction is due to expanded Medicaid, which, as of this writing, 29 states have signed on to. The expansion is a great deal for the states – the federal government picks up full cost of the expansion initially, and 90 percent of the cost going forward – and data show that states that expanded Medicaid saw much sharper reductions in their uninsurance rates compared to non-expansion states. Obamacare works largely because of the Medicaid expansion. The Republicans in the House want to eliminate this and replace it with nothing.

The counterargument to this is that expanding coverage through Medicaid doesn’t necessarily mean access to healthcare, and the Republican budget document makes that case in proposing their changes to the Medicaid program:

For many, though, Medicaid’s promises are empty, its goals are unmet, and its dollars are wasted. Sick individuals cannot get appointments, new beneficiaries cannot find doctors, and Medicaid cards are little more than pieces of plastic.

This is undoubtedly true for a number of people. But it’s also true for people on private insurance. In fact, recent studies have found that “Medicaid provides access to health care services comparable to that of ESI but at significantly lower costs. Specifically, if adult Medicaid beneficiaries were instead covered by [employer-sponsored insurance], their access to care would not be significantly different.” Where Medicaid makes a real difference is in shielding low-income people from out-of-pocket medical costs.

But the GOP is determined to “fix” this problem, and that’s where the block grants come in. The party is clearly on a mission to distance itself from the term “block grant” – Paul Ryan’s recent poverty proposal rebranded block grants as “Opportunity Grants,” and the new Republican budget plan rechristens them “State Flexibility Funds.” I mean, who doesn’t like opportunity and flexibility, right? Anyway, the “State Flexibility Funds,” according to the GOP budget, will “give states greater freedom to build the most effective programs for their communities. We empower state policymakers to tailor their Medicaid programs based on the unique challenges they face because governors and state legislatures know their populations better than Washington.”

The reality of the block grant is very different. As the Center for Budget and Policy Priorities points out, block-granting Medicaid is tantamount to slashing its budget by 35 percent over the next ten years as funding increases lag well behind Medicaid’s projected growth rate. And while “flexibility” sounds nice, states may use that flexibility to erect new eligibility barriers to enrollment, or slash benefits, or both.

Also, there’s no guarantee that state “flexibility” will produce better outcomes. Bloomberg’s Christopher Flavelle recently picked over the Medicaid “reform” program that Jeb Bush implemented in Florida, which was supposed to provide flexibility and “let consumers shape and improve the market, rather than have the government tell those plans what to offer.” How’d it work out?

In 2013, the latest year for which numbers are available, the plans taking part in Bush's reform program ranked below the national Medicaid average on 21 of the 32 quality indicators reported by the state. In some cases, those results were dramatically worse than in other states.

The overall message put forth by the Republicans in the budget document when it comes to Medicaid is that they want to take what works and get rid of it. If you’re a poor person who depends on the federal program for access to healthcare, then you’re in for a world of hurt.

By Simon Maloy

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