President-elect Donald Trump’s selection of Rep. Tom Price to head the Department of Health and Human Services signals that the new administration is all-in on both efforts to repeal the Affordable Care Act and restructure Medicare and Medicaid.
Price, a Georgia Republican who currently chairs the House Budget Committee, was among the first to suggest that not just the ACA but also Medicare are on the near-term agenda for newly empowered Republicans.
Privatizing the Medicare program for seniors and disabled people and turning the Medicaid program for the poor back to the states are longtime goals for Republicans in Congress and the White House. They say the moves could help put the brakes on health spending. Opponents argue, however, that both changes are aimed instead at shifting the financial burden of health care from the federal budget to states and individuals.
That question — should the federal government continue to provide open-ended health benefits? — could prove to be a key battle line.
Democrats and consumer advocates say the changes would break a promise to guarantee health services made when Medicare and Medicaid were enacted in 1965.
Republicans, however, say in the face of rising federal deficits, it would be irresponsible not to rein in the programs’ spending.
“We have a moral obligation to the country to do this,” House Speaker Paul Ryan told The New York Times in 2011, when he first proposed the plans as chairman of the House Budget Committee.
Medicare, which covers roughly 57 million elderly and disabled Americans, and Medicaid, which covers more than 77 million people with low incomes, are among the biggest items in the federal budget, together costing an estimated $1 trillion in 2016, according to the Congressional Budget Office.
And, more importantly, both programs are expected to keep growing, consuming ever more of the budget. According to the CBO, over the next 30 years, the percentage of federal spending claimed by the major federal health programs (primarily Medicare and Medicaid) is expected to rise from just over 6 percent to more than 10 percent.
The latest version of the proposal offered by House Republicans would give states the option of modifying the plan so that the federal payments to states would be based on a per capita funding formula.
A number of Republican governors have supported the idea, because the program would generally relieve states from rules governing who and what to cover in Medicaid in exchange for accepting limited funding.
But advocates for the poor say it would lead to fewer people getting fewer services. Because the federal contribution proposed by Ryan is specifically set to increase more slowly than predicted inflation in health care, “states could either contribute much more to their Medicaid programs, or, more likely, use that flexibility to make deep cuts to the program,” said Park.
A 2012 estimate from the Urban Institute said that year’s proposal could result in 17 million people losing coverage, and payments to health care providers could be cut by nearly a third.
But later iterations of the Medicare proposal would increase contributions intended to pay for insurance more slowly than the expected rate of health inflation. That means that instead of covering the government’s share of a set package of benefits, the program would instead pay a specific amount, often referred to as a defined contribution, that might not be able to pay for those benefits.
Miller of AEI said any effort to push these GOP plans for Medicare and Medicaid will run into stiff headwinds — even in a Republican-controlled Congress — because it’s difficult to take something away from people.
Congress can’t simply cut the programs, he said. “You have to tell people why you’re doing this. You have to say this is actually going to improve the health care system.”