Juggling Chain Saws

We are in a series looking at the recently published Republican plan for the ‘repeal and replace’ of the Affordable Care Act. Click here to find other posts in the series.

Now we get to the hard part…Medicaid.

Here’s what any ‘replace and replace’ plan gets to balance:

On one hand, 72 million people (more than one in five people) are covered by Medicaid.  Because participation in this program is transitory, almost one in three people are covered by this program during any given year. That is up 15.7 million since 2013, when Medicaid expansion kicked in under the ACA, and 85% of that increase came from the states that expanded Medicaid.

On the other hand, the cost of this expansion is simply unsustainable.  Already, Medicaid consumes a quarter of the average state budget and combined federal and state spending on Medicaid is on track to reach $1 trillion by 2025.

So you wonder about the angry town hall meetings? A lot of folks that just got a new entitlement and now they aren’t too thrilled at the prospect of losing it, no matter what the spreadsheet says.

Add to that the politics of it all and you see this one is perilous.

So the Republican plan is to:

  • Stop subsidizing the ‘able-bodied’ part of the ACA expansion. This is a little wonky, but essentially the Feds will say to the states that after some future date, we’re only going to subsidize at the historic Medicaid rate, so if you want to keep your expanded eligibility, you figure out how to pay for your half.
  • Move to a ‘per capita’ allotment. Channeling Bill Clinton (a little political sugar), CMS will give states a fixed amount per person in the program.  This is just like the move from a pension to a 401k.  In short, Congress is saying, ‘We’re no longer going to be on the hook for your costs. We’ll give you what we can give you and wish you luck.’
  • Allow states to opt for a block grant. Again, think 401k.  Since this is now your responsibility, we’ll give you more freedom in how you get it done.  There will be some minimums on care for the elderly and disabled, but otherwise ‘go innovate.’
  • Restore cuts to the ‘disproportionate share hospitals.’ DSH hospitals have a high percentage of Medicaid and uninsured patients. ‘The evil President Obama cut DSH payments under the ACA because he did not care for the poor, but we do, so we are restoring those cuts and will pay this separately, in addition to the per capita allotment.’  I think that is what the paper says…brilliant politics on several levels. 

Medicaid reform, in short, can be summarized as, ‘Here’s your allowance…go get ‘em Tiger.’

Simple math says something’s gotta give.  This plan, with its ’50 state laboratories of innovation’ banner, pushes the decisions, and likely the backlash, down to the governors.

One more reason this is complicated.  Who knew?


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Tim Coan, ALN’s CEO, writes an insightful and witty blog three times a week about a variety of topics relevant to independent physician practices.

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