Medicaid expansion helps foil plans to quickly repeal Obamacare

Feb. 12--WASHINGTON -- The Republican promise to repeal and replace Obamacare leaves New York State with two choices, neither of them easy: Either stand by and watch as 1.9 people lose their their health insurance or ask state taxpayers to pay another $3.7 billion a year.

Thirty other states face a similar dilemma, and that's one of the key reasons why congressional Republicans are having trouble keeping their promise to repeal and replace the federal health care they have hated since before its 2010 passage.

Those states face that dilemma because they took up Washington's offer to expand Medicaid, long the state-federal health care plan for the poor, so that it covers millions more people with somewhat higher incomes.

Now the Trump administration and congressional Republicans are floating the idea of turning Medicaid into a block grant, which would essentially cap how much federal money every state gets for the program.

That would end the federal Medicaid expansion. And even some Republicans are nervous about that.

"I'm very concerned about the Medicaid expansion repeal," said Rep. Tom Reed, a Corning Republican who will be involved in the repeal-and-replace effort from his seat on the House Ways and Means Committee. "There needs to be some recognition that it's going to have a significant impact in a state like New York."

Reed and other New York Republicans, including Rep. Chris Collins of Clarence, have been discussing what can be done for states that expanded Medicaid. And they are not alone. Reed noted that 119 House Republicans hail from states that, like New York, expanded Medicaid -- meaning their concerns will have to be addressed if Congress is to come up with a replacement for the bill that's formally called the Affordable Care Act.

That byzantine, 2,700-page law included several provisions aimed at getting more people insured, but none has worked quite like the expansion of Medicaid. That move added more than 10 million people to the ranks of the insured. That's more than half the overall total who gained insurance under Obamacare.

Some 1.9 million of those people are New Yorkers, and that fact has Sen. Charles E. Schumer of New York, the Senate minority leader, deeply worried.

He noted that even with the expansion of Medicaid to slightly better-off New Yorkers, many of the state's Medicaid recipients are elderly people in nursing homes. So any massive cut in Medicaid funding from the feds -- which, he fears, a block grant system would entail -- would hurt the elderly along with younger people who could lose their insurance.

"It would be a disaster for New York," Schumer said.

If so, it would be a disaster, in part, of New York's own making. The state long has offered more benefits under Medicaid than most states, and soon after Obamacare became law in 2010, the state opted to open the program to more recipients in order to make sure more people get health insurance.

"The uncomfortable truth is New York has one of the most expansive Medicaid programs in the country," said Collins, who, as a member of the Energy and Commerce Committee, will also be involved in health reform. "New York State has only 6.5 percent of the nation's population, but it accounts for more than 11 percent of national Medicaid spending, spending 44 percent more per enrollee than the national average... Changes need to be made to the program and Albany needs to recognize that reality."

Aides to President Donald J. Trump have said he favors "block granting" the program. Under that change, New York would no longer get more federal funds for every individual who signs up for Medicaid and for every medical service that person gets. Instead, New York and all the other states would get a set amount of Medicaid money from Washington and would have to make up the difference.

Under such an approach, "you really cut out the fraud, waste and abuse, and you get the help directly" to the people who need it, Trump aide Kellyanne Conway said on NBC recently.

Others stress the cost savings that likely would occur under a block grant system, because it would limit how much money each state gets from Washington for Medicaid.

"The idea is that states would be spending the amount they were spending before," said Sally Pipes, president and CEO of the Pacific Research Institute, a conservative think tank.

But other Republicans, such as Collins and Reed, favor a more nuanced approach, whereby the federal government would set per capita funding caps for Medicaid patients, with different caps for different kinds of patients. States would receive more money for each disabled person on Medicaid than they do for people who are poor but healthy.

"Per capita caps allow states flexibility while keeping in mind that one size doesn't fit all," Collins said.

Earlier House GOP health reform plans have given the states the option to either take a block grant or a per-capita payment for its Medicaid recipients, but Democrats point out problems with either approach.

"Repealing the Affordable Care Act , including its Medicaid expansion, would be a financial and health disaster for states," Gov. Andrew M. Cuomo and Washington State Gov. Jay Inslee wrote in a recent letter to congressional leaders. "Repeal would throw millions of our residents off their health coverage, shift enormous costs to state governments -- blowing a hole in state budgets -- and cause economic uncertainty for our states' businesses, hospitals, and patients."

Beyond that, that the number of Medicaid recipients goes up and down with swings in the economy, noted Rep. Brian Higgins, a Buffalo Democrat who sits on the Ways and Means Committee. That means a block grant approach would leave the states with an even bigger fiscal burden when the inevitable next recession results in many more people signing up for Medicaid.

Democrats say the Medicaid per-capita cap idea is marginally better, but it's still a cap -- one that would not take into account increasing medical costs, leaving states to subsidize them.

Reed said New York Republicans are looking hard at the per capita approach, which could allow for the Medicaid expansion to continue, depending on how Congress structures the program.

That's precisely what could happen under legislation that is being drawn up by Sen. Susan Collins, R-Maine, and Sen. Bill Cassidy, R-La. It essentially would allow provisions of Obamacare to continue in states that choose to continue them.

Reed said he has already discussed that legislation with Cassidy -- but he acknowledged he also has heard from Republicans from states that didn't expand Medicaid. Regarding New York's dilemma, they have told him: "Why should we care?"

Reed pointed out, though, that lawmakers from around the country have to care about the Medicaid expansion dilemma because it has to be solved if Republicans are going to repeal and replace Obamacare.

"The biggest positive I see is: this is going to bring people to solve this problem -- because the downside of just digging in and not working together is so significant not only from budget and tax perspective, but also because these are real people who would be affected," Reed said.

But Pipes, a longtime Obamacare critic and an advocate of a more market-based approach to health care reform, sounds frustrated at what she is hearing now about health care reform.

Some Republicans, like Collins, Cassidy and Sen. Lamar Alexander of Tennessee -- a key Senate Republican committee chairman -- now talk more about fixing Obamacare rather than replacing it. And with the Medicaid expansion issue and others looking difficult to solve, Trump has said he might not even offer up a health care proposal forward until next year.

That means the status quo -- including New York's generous Medicaid program -- is increasingly likely to remain in place for a while.

As for repealing and replacing Obamacare, "it has become a big political football," Pipes said.

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