Shutdown Theater will feature a new sideshow this year. Democrats are firing up the video camera and beating the bushes for ordinary people who will lose insurance coverage when the Republicans cut Medicaid dollars from those who receive Medicaid benefits as a result of the massive expansion of the program under Obamacare.
Prior to the approval of Obamacare in 2010, Medicaid was usually only available to non-disabled adults under 65 who had minor children. It was for the poorest of the poor. With Obamacare's expansion of the state-run program, adults under 65 with incomes up to 138% of the federal poverty level (about $21,000) became eligible for Medicaid. As an added enticement, Washington would pay up to 80% of the costs to states of the expansion, depending on when the state opted into expanded Medicaid.
In 2023, Medicaid cost the American taxpayer $880 billion. Medicaid expansion alone cost taxpayers $139 billion in 2023 — a cost overrun of nearly 180% when compared to states’ projected cost of less than $50 billion. Then again, there has never been a federal entitlement program that didn't radically exceed projections.
"All told, expansion states cost taxpayers more than $1 trillion between 2014 and 2023— $574 billion more than expected," reports the Foundation for Government Accountability.
Medicaid expansion, as many Republicans predicted at the time, was a catastrophic error that has destroyed many state budgets and may end up burdening all taxpayers because expansion has destroyed the original intent of Medicaid and made it just another bloated federal entitlement.
Now, Republicans will have to cut into the bloat caused by Medicaid expansion, and Democrats are literally salivating at the chance to pounce.
“House Republicans just voted to rip health care away from up to 1.8 million New Yorkers — all to bankroll giveaways for billionaires," wailed New York Gov. Kathy Hochul last week.
Yes, but what about the little, tiny babies, Sen. Patty Murray of Washington? “Moms and babies will lose health care coverage.”
Illinois Democrat Rep. Delia Ramirez was more succinct. "People will die," she claimed.
Babies weren't in much trouble before 2010, and they will not be in trouble now. Amazingly, states will find other ways to cover the moms and babies and, as always, people will adapt and make do.
Betsy McCaughey performs the necessary surgery on this nonsense.
These are lies. Helpless children, the elderly, pregnant women and the disabled are not going to lose their health care. And the Medicaid changes are designed to help all Americans, not just billionaires.
The economic impact of Congress not containing Medicaid spending is what’s truly scary.
If the demagoguery succeeds and the Republican majority gives up on achieving a budget bill that curbs spending, everyone will suffer. Inflation will rise. Interest rates on car loans, credit cards and mortgages will likely go up.
President Trump’s tax cuts probably would not be renewed, and some companies, suddenly facing unfavorable tax rates, would leave America for lower-tax locations, possibly taking your job with them.
If the Republicans can cut much of Medicaid's expansion and bring the program spending under control, it could be a game changer for the budget. Never before has Congress confronted entitlement spending. It may not do it here. The politics of cutting Medicaid is daunting. The opposition campaign ads cut themselves, and people are easily misled, worrying about their own healthcare programs.
There are a couple of ways to go about cutting Medicaid. Congress could lower the federal share of costs, or FMAP, for those on Medicaid as a result of the 2010 expansion. There could also be a per capita cap that applies only to those people.
"It's just unfair that the system's set up that if you're a disabled child in Kentucky and you go to the doctor, the federal government pays 72 cents on the dollar, if you're a healthy, able-bodied adult, it pays 90 cents," said House Energy and Commerce Chair Rep. Brett Guthrie of Kentucky. He referenced a proposal to lower the expansion's 80-90% FMAP.
Speaker Mike Johnson is opposed to funding caps and lowering the FMAP, but that's a mistake. To get the $800 billion in savings from the Energy and Commerce Committee that the Budget Committee agreed to last week, every dollar possible is going to have to be squeezed out of Medicaid funding.
There's no other way to get there from here.
