Republicans confront difficult Medicaid choices in search of savings to help pay for tax cuts

Congressional Republicans are targeting Medicaid, the government health insurance program for low-income Americans, for hundreds of billions of dollars in savings to help pay for sweeping tax cuts, but the extent of reform is creating intraparty divisions.

House Speaker Mike Johnson, Louisiana Republican, insists his conference does not plan to cut Medicaid benefits as it investigates “fraud, waste and abuse” and other “non-benefit reform to the program.”

Many Republican lawmakers fear that some of the proposed changes will reduce benefits and are warning of political consequences if the party overplays its hand.

“Hopefully, we learned our lesson from a number of years ago with Obamacare. If you are going to take people’s health care away, you damn well better have something to replace it with,” said Rep. Jefferson Van Drew, New Jersey Republican. “It’s life and death for people.”

Medicaid, a joint federal and state program, is the largest source of health care coverage in the United States, with 72 million people enrolled as of October.

Federal law requires coverage for certain groups of people, but eligibility is generally based on income and varies by state. Children are covered up to at least 133% of the federal poverty level in every state, and adults are too in most states.

The House Republicans’ budget blueprint, which outlines tax and spending targets for advancing President Trump’s legislative agenda, calls for at least $1.5 trillion in spending cuts over 10 years to help fund comprehensive tax reductions. The House Energy and Commerce Committee is tasked with identifying at least $880 billion of those savings.

“There’s no way to get there, to that number, without Medicaid,” Rep. Russ Fulcher, an Idaho Republican who serves on the committee. “It’s just too much.”

Energy and Commerce Committee Chairman Brett Guthrie, Kentucky Republican, said the panel is considering other options to meet its target, such as repealing electric vehicle mandates and other green energy policies from the Biden administration’s Inflation Reduction Act. Still, Medicaid is undoubtedly part of the equation.

“It’s not there to just get money out of Medicaid. It’s to reform it, to make it sustainable,” he said.

What is viewed as a reform versus a cut is in the eye of the beholder, and Democrats have sounded the alarm that Republicans are putting Medicaid on the chopping block.

The Washington Times interviewed more than a dozen Republicans in the House and Senate about finding savings from Medicaid and found a few common ideas but also some division.

One idea with broad support is implementing work requirements for able-bodied adults without dependents to qualify for Medicaid coverage. The proposal is estimated to save about $100 billion over a decade.

“With the people that just are able-bodied, don’t want to work and collect it, that’s not good. It’s wrong, and we need to do something there,” Mr. Van Drew said.

Rep. Josh Brecheen, Oklahoma Republican, said adding work requirements could help steer Medicaid back to its original intent of supporting “pregnant, nursing mothers, children, elderly” and people with disabilities over able-bodied adults.

As Republicans seek higher levels of savings, the ideas become more complicated in policy details and politics.

Several proposals address how the federal government shares Medicaid costs with the states.

The amount of federal Medicaid funds a state may receive is not limited, and the cost is determined primarily by a formula known as the federal medical assistance percentage.

The formula was designed to allow the federal government to pay a higher share of Medicaid costs in states with lower per capita incomes relative to the national average. The minimum federal contribution by law is 50%, but the formula produces different rates for different states that can reach 83%.

That’s before factoring in the 90% federal medical assistance percentage rate offered to states that opted to expand Medicaid under the Affordable Care Act, commonly called Obamacare, to cover most adults with incomes up to 138% of the poverty level.

So far, 41 states and the District of Columbia have taken advantage of the Medicaid expansion option.

Mr. Fulcher wants to return to the federal medical assistance percentage reimbursement rates that existed before the expansion, which could yield savings of around $560 billion. Without adjusting the formula, he did not see “the fiscal pathway” for his committee to achieve $880 billion in cuts.

“It’s also important that if that’s considered, then some incremental flexibility to states needs to be allowed to give them more autonomy with how to use what they have,” he said.

Mr. Fulcher’s home state of Idaho has expanded Medicaid, but Republican lawmakers in the state Legislature have considered repealing it amid budget concerns.

Rep. Dan Crenshaw, a Republican whose home state of Texas is one of the few that did not opt into the Medicaid expansion, agrees that rolling back costs added from the Obamacare changes is the right approach.

“That’s the most politically sensible thing to do considering the expansion population is not the poorest people that we’re supposed to be taking care of with Medicaid, by definition,” he said. Still, he acknowledged that Republicans from expansion states “are going to have a hard time with that.”

Mr. Guthrie said he favors per capita caps, which would limit the federal government’s spending per Medicaid beneficiary and could save roughly $900 billion over 10 years.

“States get money based on how many people they have on Medicaid,” he said of the alternative formula.

Mr. Guthrie said his committee’s decisions will ultimately be based on what Republicans can get enough votes to pass through their razor-thin House majority, and the per capita caps proposal has drawn some pushback.

“I think we’re cutting the wrong things when we do that,” said Mr. Van Drew, noting that he is worried about the trickle-down effect on “average working people, the base of the Republican Party.”

Republicans in the Senate also had concerns.

“Per capita caps really are detrimental to us in Alaska,” Sen. Lisa Murkowski said.

Other Republican senators said they preferred alternative fixed funding structures, such as Medicaid block grants, to force states to better manage their budgets.

“We get paid half as much per capita as New York,” Sen. Rick Scott said of his state of Florida. “That doesn’t make any sense. So I think having block grants with states and allowing the states to figure out how to save money would be the smartest way of doing it.”

When asked about Republican plans for spending cuts last month, Mr. Trump said he would “love and cherish” Social Security, Medicare and Medicaid, promising not to cut benefits in any of the most extensive government benefit programs.

“We’re not going to do anything with that unless we can find some abuse or waste,” he said. “The people won’t be affected. It will only be more effective and better.”

Republicans cannot adjust Social Security through the budget reconciliation process they plan to use to push Mr. Trump’s agenda through Congress on a party-line vote, avoiding the threat of a filibuster from Senate Democrats. Like the president, they have said Medicare, the health care program for seniors, is off the table.

The president’s vow to protect Medicaid could prove problematic as Republicans seek large spending cuts.

“We’re trying to get clarification on exactly what he wants us to do, what he doesn’t want us to do,” said Rep. Earl L. “Buddy” Carter, Georgia Republican. “We need to stabilize, we need to secure, we need to solidify Medicaid. We can do that without kicking people off the rolls.”

The Senate has not yet agreed to the sweeping spending cuts the House is targeting as it pursues a separate strategy of breaking the president’s agenda into two reconciliation bills.

Senate Finance Committee Chairman Mike Crapo, an Idaho Republican whose panel has jurisdiction over Medicaid, said the program would not be targeted for offsets in the first bill and declined to say whether Medicaid reforms would be considered in a second.

“I’m not commenting on any of the options,” he said, citing the plethora of ideas and not wanting to feed into misinformation from Democrats about what Republicans want to do.