Op-Ed in The Hill: ObamaCare repeal must include Medicaid reform


Today, Club for Growth President David McIntosh and Heritage Action CEO Michael Needham, coauthored an op-ed in The Hill.  In the piece, the two explain the need to include Medicaid reform in efforts to repeal Obamacare.

Read the op-ed in its entirety here and an excerpt below.


ObamaCare Repeal Must Include Medicaid Reform

The Hill

By: David McIntosh and Michael Needham
June 5, 2017

At this point it is clear that Republicans have no intention to repeal ObamaCare “root and branch” as so many promised on the campaign trail. Many congressional Republicans have begrudgingly accepted that a significant number of their colleagues were only pretending. Since coming to that conclusion, those conservatives are plotting a path forward in the repeal and replace debate that respects taxpayers and drives down the skyrocketing cost of health insurance. That dynamic was on full display in the House as the conservative Freedom Caucus and a handful of moderates worked in good faith to address the crippling costs of ObamaCare’s regulatory architecture.

A similar opportunity exists in the Senate to improve both the regulatory reforms and various other provisions, but there are serious policy risks in the upper chamber as well. One of the most notable is that some moderate Republican Senators are trying to delay the phase out of ObamaCare’s generous Medicaid expansion subsidy and increase the program’s growth rate. Having already conceded on full repeal of ObamaCare, conservatives should resist attempts to essentially lock the failed law’s over-subsidization of the Medicaid expansion in place.

The notion that the House-passed American Health Care Act (AHCA) does not provide a soft enough landing for Medicaid expansion states to transition into a new financing system is inaccurate. If the AHCA were to become law, ObamaCare’s expansion of Medicaid to cover able-bodied, childless adults will remain. . .

. . .

Many will point to President Trump’s budget or the House-passed health care bill as a sign Republicans are getting serious about changing this dynamic. Unfortunately, the Congressional Budget Office projects Medicaid will grow faster than the economy as whole even if the AHCA were to become law. That is not to say the new “per capita” cap meant to restrain per-beneficiary growth does not have the potential to rein in costs, but the AHCA’s cap will be rendered meaningless.

The primary concern is that the House caps are artificially inflated. They would grow at CPI-medical or CPI-medical plus one percent. This is significantly higher than the average per beneficiary growth in Medicaid of two percent over the last 15 years. In other words, the cap will save zero dollars.

The only way to put Medicaid on a truly sustainable budget is to ensure it cannot grow faster than the economy as a whole. Sen. Pat Toomey (R-Pa.), for example, has suggested switching the Medicaid “per capita” cap growth rate to CPI-U, the broader measure of inflation. At the very least, the Senate should revise the indexing rates to more closely align with the historical and projected trends for medical care consumption of the different beneficiary groups.

. . .

Growing one percent more than Medicaid inflation – i.e., over five percent on average for the past decade – is not only at odds with longstanding Republican policy, but it is also well beyond what most on the left have proposed. . .

There is no doubt that “per capita” caps are a good step and would change the incentive structure for states to make their programs more efficient while minimizing waste and fraud; however, if AHCA were enacted as-is, Medicaid spending could grow at a rate far greater than what the taxpayers or the economy can sustain. That is why we need conservative senators to push for simple changes to the “per capita” growth rate that will actually control costs, as opposed to bankrupt taxpayers.

If Senate Republicans can reform Medicaid and go further in unraveling ObamaCare’s draconian regulations, the legislation would be a good step toward undoing the damage caused by ObamaCare. It would be a proposal conservatives could be proud of and President Trump could eagerly embrace. That would be a welcomed change.

Former Rep. David M. McIntosh is president of the Club for Growth and Michael A. Needham is chief executive officer of Heritage Action for America.