The Trump Administration's Latest Plan to Gut Medicaid

With Dems running the House, the Trump administration is looking for ways to enact its agenda without legislative approval.

President Donald Trump with Seema Verma, administrator of the Centers for Medicare and Medicaid Services, at the South Court Auditorium of the Eisenhower Executive Office Building on January 18th, 2018, in Washington, D.C.

Just when it seemed safe to go back to the doctor, here comes the Trump administration’s latest plan to gut Medicaid. Observers thought that when Democrats won back control of the House of Representatives, the Affordable Care Act and the major health-care entitlements ought to be safe from repeal.

Instead, Politico reports that the Centers for Medicare & Medicaid Services Administrator Seema Verma has been quietly planning to unilaterally impose spending caps on Medicaid for the states.

Right now, Medicaid works by setting a fixed rate at which the federal government reimburses states based on their Medicaid costs. Depending on the wealth of the receiving state, it receives between one and three dollars from the feds per Medicaid dollar spent on individual needs. That means the reimbursement is linked to actual expenses, and while both state and the federal government regulate costs closely, there’s no cap on total expenditures. Block grants, which Republicans have been trying to impose since early in the Reagan administration, estimate total expenses (by a variety of different proposed formulas) and award total funding to the states in a lump sum. The consequences of the plan would vary depending on the funding formula used in allocating the initial grants. Paul Ryan’s 2017 proposal, for example, linked block grant growth to inflation. Medical costs routinely outstrip inflation, so that’s a formula designed to bankrupt the program.

Regardless of the specifics, block grants, according to the Kaiser Family Foundation, would limit state flexibility in responding to current needs and shift costs increasingly to states, health-care providers, and beneficiaries.

Any situation that reduces funding to Medicaid would widen inequalities in access to health care in myriad ways, including the quality of care in nursing homes and the access for disabled individuals and the elderly who rely on various types of long-term supports and services for independent living. It would hurt Medicare too, because low-income people on Medicare have a significant amount of their care financed through Medicaid. Cuts in the latter will lead to higher costs for the former. This is why disability rights activists, in particular, campaigned so fervently in the summer of 2017 to stop the GOP Senate from repealing the Affordable Care Act and imposing spending caps on Medicaid. That campaign worked. The Senate ultimately rejected the ACA repeal and block grants in 2017.

According to the Politico report, the new block grant plan is still being drawn up. If implemented, it might not survive legal challenge. The key takeaway, though, is that, without total control of Congress, the Trump administration is looking for ways to enact its agenda without legislative approval.
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