House Republicans: We're not cutting Medicaid spending, we're just reducing it
Republicans are hiding the ball -- and fooling reporters -- by suggesting that states are free to pick up the offloaded cost.
Regarding Republican plans to cut (or theoretically, not cut) federal funding for the ACA Medicaid expansion: What’s funky about this narrative from Ben Leonard in Politico?
Some moderate Republicans and vulnerable GOP incumbents have signaled opposition to cuts to the program itself but have left the door open to supporting a reduction in the federal share of payments to the expansion states.
That’ a self-cancelling statement. A “reduction in the federal share of payments to the expansion states” is the only type of cut to the program under consideration. You can’t “oppose cuts to the program itself” and cutting federal funding for it. While the letter from twelve House moderates to leadership purported to exactly that, their obfuscation shouldn’t be reported as possible.
The ACA stipulated that the federal government would pay 90%* of the costs of enrollees rendered eligible by the expansion — adults under age 65 and not on disability with income below 138% of the federal poverty level — because expanding eligibility in that way would be unaffordable for states under their normal federal match rates (deemed the Federal Medical Assistance Percentage, or FMAP).
That remains true today. If the 90% FMAP for the expansion population is repealed, so that each state is only reimbursed at the FMAP it receives for other Medicaid populations (ranging from 50% for high-income states to 77% for the lowest-income states), no state will able to afford the full expansion. The 50-state 10-year tab would total $626 billion, according to KFF. Some states with progressive governments might extend eligibility to all or most adults with income up to 100% FPL, as a handful did before the ACA expansion was enacted. But that’s about it. Repealing the ACA’s 90% FMAP for the expansion population will, over the course of a handful of years at most, strip Medicaid coverage from most-to-all of the 21 million adults currently covered (or those who would replace them — Medicaid has a lot of turnover).
Leonard’s formulation above has some technical accuracy in that Republicans theoretically could cut all federal funding for those rendered eligible for Medicaid only by expansion criteria — effectively barring coverage for most adults not on disability in many states. But that was never on the table. By CBO’s estimate, reducing the FMAP for the expansion population to the FMAP for all other eligible populations in that state, would reduce spending by $561 billion over 10 years. That’s the lion’s share of the $880 billion/10 year cut target established by the budget resolutions under which Republicans are writing their spending bills.
Recently, a lesser but still damaging cut the expansion FMAP has been floated: Republicans could impose a per capita cap on funding for the expansion population alone, which would mean that funding each year increases at a rate below that of likely medical inflation (and would fall radically short in a crisis like the COVID-19 pandemic, during which Medicaid held the line against mass increases in the uninsured population). KFF estimates that this cut would cost states $246 billion over ten years. Worse, the FMAP would keep dropping so the effects compound over decades. And again, there are no contemplated “cuts to the program itself” other than cuts to the FMAP.
Well, check that: imposing work requirements, which impose onerous reporting requirements on enrollees and therefore drive eligible people off the rolls (by design), are an indirect cut, aimed primarily at the expansion group, and supported by virtually all Republicans. But they wouldn’t call this barrier to enrollment a “cut to the program.
Promising not to cut benefits while defunding the expansion is an economic iteration of the party line, articulated by House Energy and Commerce Chair Brett Guthrie and effectively seconded by House Speaker Mike Johnson, that the expansion of eligibility to the “able-bodied” diverts resources from "the disabled, the destitute, the people that Medicaid was originally designed for" — and defunding it is therefore strengthening Medicaid.
As I noted two weeks ago (time flies when you’re gutting vital programs), the April 14 letter from twelve Republican House “moderates” to leadership (alluded to in the Politico passage above) purportedly balked at steep Medicaid cuts, asserting in the first paragraph, “Balancing the federal budget must not come at the expense of those who depend on these benefits for their health and economic security.” But actually the letter endorses cutting the expansion, excluding the low-income adults insured through the expansion from the groups the signers vowed to protect (my italics):
We support targeted reforms to improve program integrity, reduce improper payments, and modernize delivery systems to fix flaws in the program that divert resources away from children, seniors, individuals with disabilities, and pregnant women – those who the program was intended to help. However, we cannot and will not support a final reconciliation bill that includes any reduction in Medicaid coverage for vulnerable populations.
This gaslighting is still widely misunderstood; every day I read assertions (as above) that the letter’s signers of the letter are balking at major cuts.
UPDATE, 5/1/25: More no cuts/just reductions nonsense, via Punchbowl:
A. "Moderates" are "concerned"...
GOP moderates concerned about Medicaid cuts will meet with House Energy and Commerce Chair Brett Guthrie (R-Ky.) this week as the panel struggles to come up with potentially hundreds of billions of dollars in cuts to the popular program.
Rep. Jeff Van Drew (R-N.J.) told us this will be his fourth conversation with Guthrie, who has been talking to concerned members individually for weeks. Van Drew was among a dozen Republicans who warned House GOP leaders that they wouldn’t vote for a final reconciliation package with deep Medicaid cuts.
B. "Moderates" will gut the ACA expansion..
Guthrie said the panel is still considering whether to lower the federal match rate or implement per capita caps for the ACA Medicaid expansion population.
GOP moderates are more supportive of changes to the expansion population, with Bacon, Van Drew and Malliotakis saying they would consider those proposals. However, this may cause issues in the Senate.
C. Susan Collins deploys Congress-speak to make it clear that she does not want to defund coverage for the expansion population (though she will cut it via work requirements):
“The one thing that I would support are carefully crafted work requirements for able-bodied adults without pre-school children,” Collins said. “But I want to make sure we’re not depriving seniors, children, low-income families, people with disabilities and our rural hospitals.”
No one likes to say "low-income adults" -- who could care about them? So "low-income families" is the universal designation of the ACA expansion population. It's not exactly inaccurate, as a family is hurt by stripping healthcare access from its adults. [end update]
The ACA was built on “kludges” — patches laid on an existing patchwork of programs and practices. There is no inherent reason for the FMAP for the expansion population to exceed that of the FMAP for the disabled, children, and the low-income elderly. In a political world where rational policy were possible, each state’s FMAP might be blended and unified in a revenue-neutral way. (Or better yet, the federal government would assume complete responsibility for the program, as for Medicare.) But that is not going to happen. Meanwhile, the expansion has served as the chief engine for the ACA cutting the uninsured rate in half since inception. (The ACA marketplace, enhanced by the increased subsidies enacted by the American Rescue Plan Act in 2021, may recently have reached rough parity with the expansion in reducing the ranks of the uninsured — but those enhanced subsidies expire at the end of this year unless Republicans extend them.)
Extending Medicaid coverage to 21 million low-income adults has been a major policy accomplishment, vastly increasing national well-being. To borrow a short list of benefits from Jason Sattler (aka LOLGOP):
It cuts crime, especially drug arrests.
It increases families’ entire financial well-being.
It creates jobs.
It helps hospitals.
So of course Republicans want to kill the expansion. They just don’t want you to notice.
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*Originally 100%, phased down over three years.
UPDATE, 4/29/25, 9:30: Recognizing that I’d buried the lede here (a besetting sin), I’ve rearranged the post, leading with the Politico snip.
This is despicable.
This is a long-standing gaslighting trope from Republicans: "protecting vulnerable people" is always used to describe cutting programs so only the very, very poorest still get them (and often they only get them if they've managed to navigate a set of administrative burdens purportedly put up to stop fraud that does no such thing). Thank you for this clear piece of writing.