Republicans confront Medicaid. @Larry_Kudlow Doug Badger @Mercatus

Jun 28, 2017, 04:06 AM

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Republicans confront Medicaid. @Larry_Kudlow @CNBC Doug Badger @Mercatus

Congress is currently pursuing Medicaid reform as part of the American Health Care Act. Most people agree that Medicaid should help the poor, particularly those whose poverty is related to their age and disability. However, the Affordable Care Act (ACA) requires the federal government to pay a much greater share of the medical bills for nondisabled, nonpregnant adults than it does for elderly individuals, people with disabilities, children, and pregnant women.

The share of state Medicaid spending paid for by the federal government—known as the Federal Medical Assistance Percentage, or FMAP—remained relatively unchanged throughout the program’s history, until Congress and the executive branch instituted changes that have effectively expanded Medicaid and changed that share. The new FMAP formula and expansions created two significant problems:

The federal government rewards states much more generously for providing services to individuals who fit the new criteria than to individuals who arguably are more in need of assistance. The Medicaid expansion overlooks differences among states in their capacity to fund services for this new population, benefiting states with high per capita income at the expense of low-income states. In this paper, Galen Institute Senior Fellow Doug Badger argues that Congress should reexamine this arrangement as it considers legislation to repeal and replace the ACA

https://www.mercatus.org/publications/medicaid-FMAP-ACA


Despite Democrats’ continued hyperbole, the Republicans’ Medicaid reform is not unreasonable. The Brezhnev Doctrine said that the Soviet empire could only expand and never give back its gains. A domestic version of the doctrine has long applied to the welfare state — and never so brazenly as in the debate over the Republican health-care bill. Its reforms to Medicaid are portrayed as provisions to all but forcibly expel the elderly from nursing homes and send poor children to the workhouse. Bernie Sanders has called the bill “barbaric,” a word that once was reserved for, say, chattel slavery or suttee, but is now considered appropriate for a change in the Medicaid funding formula. The Republican health bills have two major elements on Medicaid: rolling back the enhanced funding for the Obama Medicaid expansion, and over time instituting a new per capita funding formula for the program. The horror. The Democrats now make it sound as if the Obama expansion is part of the warp and woof of Medicaid. In fact, it was a departure from the norm in the program, which since its inception has been, quite reasonably, limited to poor children, pregnant women, the disabled, and the ailing elderly. Obamacare changed it to make a priority of covering able-bodied adults. –– ADVERTISEMENT –– Obamacare originally required states to enroll able-bodied adults with incomes less than 138 percent of the federal poverty line starting in 2014. The Supreme Court rewrote the law to make the expansion voluntary, and 31 states and the District of Columbia took it up. Traditionally, the federal government had paid more to poor than rich states, with a match ranging from 75 percent for the poorest state, Mississippi, to 50 percent for the rich states. Obamacare created an entirely new formula for the Medicaid expansion population. It offered a 100 percent federal match for the new enrollees, gradually declining to a 90 percent match — supposedly, forever. So, perversely, Obamacare has a more generous federal match for the able-bodied enrollees in Medicaid than for its more vulnerable populations. “This higher federal matching rate,” writes health-care analyst Doug Badger, “allows states to leverage more federal money per state dollar spent on a nondisabled adult with $1...