Saturday, June 24, 2017

Ending Medicaid As We Know It: The Court's Role

Perhaps the Senate's health care bill will be a political fizzle but if it passes, we should at least mark the Supreme Court's role in permitting Republicans to advance a proposal that would make one of the biggest changes to the welfare state ever -- ending the role of Medicaid as an entitlement program.  As this WaPo story notes, with respect at least to Medicaid, the Senate bill is consistent with an aim Republicans at the national level have had for years.  They have wanted to cap federal Medicaid spending either through block grants or per capita limits.  As the story says, the Bush 43 administration made a run at a block grant proposal.  But it doesn't say why it didn't pass.

In the past, proposals to cap Medicaid usually ran afoul of the nation's governors, and on a bipartisan basis. Medicaid is jointly funded by the state and federal governments.  Governors know what would happen if federal spending is capped -- they will be left holding the bag for a lot of very ill poor people.  This is particularly the case during recessions when state revenues decline sharply yet budgets must still be balanced due to constitutional mandates.  In fact in many past recessions, including the Great Recession of 2008, states requested and got additional money from Congress to cover the gaps that opened up in state budgets for financing Medicaid.  Governors are sensitive to this issue because they know they will be blamed for all the poor people who can't get medical care when state revenues decline.  And if the Senate bill passes, that result is probably guaranteed in the next recession.

You might figure that governors would oppose the Senate bill and some (including some Republicans) do oppose it.  But my sense is GOP governors in particular are not speaking with one voice this time around.  They aren't because the Court created the option, unforeseen by Congress, of not expanding Medicaid in NFIB v. Sebelius.  If all states had expanded Medicaid, they all would be in the same position with respect to the Senate bill, which is a very bad one, as it rolls back the expansion.  Parenthetically, I haven't seen much commentary on how the different parts of the ACA are intended to work together.  Reverse the Medicaid expansion and more poor people will show up at emergency rooms, recreating the cost shifting problem that the ACA tried to solve.  In any case, GOP governors in non-expansion states appear to be supporting the House and Senate bills.  The unity that characterized governors in the past on Medicaid has been broken. For that, we have the Supreme Court to thank.