House Republican plan to disembowel Medicaid & the ACA makes the rounds. It ain't a pretty picture.

Many voices including mine have been warning of this for months, so it shouldn't come as a surprise to anyone, but here it is regardless: Last week Politico got ahold of a "menu" of draconian cuts to a wide variety of federal programs, mostly regarding healthcare policy, which House Republicans plan on implementing with their new trifecta:

The early list of potential spending offsets obtained by POLITICO includes changes to Medicare and ending Biden administration climate programs, along with slashing welfare and “reimagining” the Affordable Care Act.

The biggest program on the hit list, however, is Medicaid, which would make up nearly half of the $5 TRILLION in budget cuts Republicans have in mind in order to pay for...massive tax cuts for corporations & the wealthy, of course.

The people, granted anonymity to discuss closed-door negotiations, said that the list originated from the House Budget Committee, chaired by Rep. Jodey Arrington (R-Texas). Republicans involved in the reconciliation plans have been generally targeting the listed programs for several months, but internal GOP fights over trillions of dollars in potential cuts are just beginning.

The overall savings add up to as much as $5.7 trillion over 10 years, though the list is highly ambitious and unlikely to all become law given narrow margins for Republicans in the House and Senate.

It's important to understand that much of the supposed "savings" on the GOP wish list are phantom numbers, which I'll delve into in a separate post.

Cuts to Medicaid, the Affordable Care Act and the country’s largest anti-hunger program would spark massive opposition from Democrats and would also face some GOP resistance. House Speaker Mike Johnson can’t afford any Republican defections if he wants to pass a package on party lines.

So, what's on the House GOP's chopping block? Here's the Medicaid & ACA proposals, along with a general explanation of what they refer to. I should give credit to Edwin Park, a Research Professor at Georgetown University for most of the Medicaid-related bullets (I highly recommend reading his more detailed explanation). I hope to tackle the Medicare-related provisions in a future post.

• "REPEAL MAJOR BIDEN HEALTH RULES" ($420B)

Via Park:

...it is likely that one such rule would be the two-part rule finalized in September 2023 and March 2024 by the Centers for Medicare and Medicaid Services (CMS) that would significantly improve Medicaid and CHIP eligibility and enrollment systems and procedures by making it easier to apply for, enroll in and renew Medicaid and CHIP coverage.

In its regulatory impact analysis, CMS estimated that together the regulation would increase Medicaid and CHIP enrollment among eligible individuals by nearly 2.2 million, especially among seniors and people with disabilities.

In other words, the Biden Administration put rules into place to reduce paperwork and streamline the process for eligible seniors & disabled folks to enroll in Medicaid/CHIP; House Republicans are proposing to make it more difficult for people to do so.

• MEDICAID: "Per Capita Caps" - up to $918B

Per Park:

Under the current federal-state financial partnership, the federal government pays a fixed percentage of states’ Medicaid costs, whatever those costs are. [Under a per capita cap] ...states would receive only a fixed amount of federal Medicaid funding on a per-beneficiary basis, irrespective of states’ actual costs.

These funding caps are typically designed to fail to keep pace with expected growth in health care costs in order to severely cut federal Medicaid spending, with those cuts growing larger and larger over time. Moreover, the caps would also fail to account for any unexpected cost growth such as from another public health emergency or a new, costly drug therapy, which would make the federal funding cuts even larger than originally anticipated.

• MEDICAID: "Equalize Medicaid Payments for Able Bodied Adults" - up to $690B

For non-ACA Medicaid, the federal government pays between 50 - 83% of the cost depending on the state/territory (this is known as the Federal Medical Assistance Percentage, or FMAP). For the ~21 million people enrolled in Medicaid via the ACA, the federal gov't picks up 90% of the cost.

House Republicans are proposing to drop that 90% to the same 50 - 83% rates as for non-ACA Medicaid, which averages just 57% nationally. This would shift billions of dollars iin Medicaid costs to state governments, most of which would almost certainly drop their Medicaid expansion programs entirely as a result...and in fact, there are 9 states which have "trigger laws" which require them to do so if the ACA expansion FMAP ever drops below 90%, plus 3 more which would require the program to be reauthorized by the state legislature in order to keep it going.

This would also guarantee that the 10 holdout states would never expand Medicaid, of course.

Put another way, dropping the ACA expansion matching rate below 90% would mean kicking a minimum of 3.7 million and likely all 21 million low-income Americans off their healthcare coverage.

• MEDICAID: Limit Provider Taxes - $175B

Per Park:

Under current law, [to finance their share of Medicaid]...states are permitted to institute taxes and assessments on hospitals, nursing homes and other health care providers as well as on Medicaid managed care plans so long as the provider taxes and assessments are uniform and broad-based and do not hold taxpayers harmless.

... Restrictions on provider taxes produce federal savings because states would be unable to replace revenues raised by such taxes with other sources such as income taxes and sales taxes. As a result, states would end up cutting their Medicaid programs in response, which would therefore reduce federal Medicaid spending as well.

Put another way: By making it more difficult for states to fund their share of Medicaid, it would force them to cut those programs entirely, which in turn would mean less federal spending on the programs. It's like telling your kid you'll pay for half their college tuition but then forbidding them to get a part-time job to cover their half.

• MEDICAID: Lower FMAP Floor - $387B

Again, right now the federal government pays anywhere between 50 - 90% of Medicaid expenses depending on the state and program. House Republicans are proposing to reduce the lower threshold from 50% to...something less than 50%. This would be devastating to the ten states which currently have a 50% FMAP rate...nine of which are blue, I should note (CA, CO, CT, MD, MA, NH, NJ, NY & WA).

Again, those states would have to slash their Medicaid programs drastically in response.

• MEDICAID: Special FMAP Treatment for DC – $8B

Under the standard FMAP formula, the District of Columbia would be set at a 50% federal matching rate, down from its current 70% (I'm a little unclear as to why it's 20 points higher than it "should" be under the standard formula, and Park's explanation doesn't lend much insight).

• MEDICAID: Repeal American Rescue Plan FMAP Incentive – $18B

As I wrote about at the time, the ARPA law included one provision specifically intended to encourage the holdout states into finally expanding Medicaid by simply bribing them to do so with a generous 2-year FMAP boost for doing so. This was a critical factor in North Carolina's decision to expand Medicaid to over 600,000 low-income residents.

To be honest, while I'm not a fan about this being repealed, I actually don't see it as making much difference since it's been nearly 4 years since ARPA was signed into law and only one state has taken up the money anyway. In fact, I'm not even sure how this could be considered "saving" $18 billion since that money hasn't been spent to date anyway.

• MEDICAID: Work (Reporting) Requirements - $120B

(Sigh) Work reporting requirements have been an obsession of Republicans for decades. I've written about how absurdly (and deliberately) inefficient and pointless they are countless times, most recently in regards to the only Medicaid program with work reporting requirements in place in the country: Georgia's "Pathways" program, which has been an abject failure from any sane point of view:

...But a year since its launch, Pathways to Coverage has roughly 4,300 members, much lower than what state officials projected and a tiny fraction of the roughly half-million state residents who could be covered if Georgia, like 40 other states, agreed to a full Medicaid expansion.

...Health and public policy experts believe the enrollment numbers, dismal even compared to what Kemp’s office had said Pathways could achieve, reflect a fundamental flaw: The work requirement is just too burdensome.

...Cuello noted the program makes no exceptions for people who are caring for children or other family, lack transportation, suffer from drug addiction or face a myriad other barriers to employment. Then there are people with informal jobs that make documenting their hours impossible.

In rural Clay County in southwest Georgia, Dr. Karen Kinsell said many of her patients are too sick to work.

Granted, that as as of July 2024...how's it doing today?

Current Enrollment: 6,503

Active enrollment in Pathways to Coverage as of January 2, 2025

Oh.

Again, the entire "savings" from expanding such a work reporting requirement nationally would come from...millions fewer low-income people being enrolled in Medicaid.

• ACA: Recapture Excess Premium Tax Credit – $46B

I could be wrong, but I think this is referring to the limit on how much of the premium subsidies ACA enrollees receive that they have to pay back to the federal government if it turns out that they underestimated their income. Currently, if you earn less than 200% FPL, a single-person household only has to repay up to $375 (plus up to $750 apiece for other household members). Enrollees earning 200 - 300% FPL have to pay back up to $950/$1,900; if they earn between 300 - 400% FPL it's a limit of $1,575/$3,150.

If they earn more than 400% FPL, they have to repay up to the full amount of subsidies if they earn more than expected...but then again, House Republicans have no intention of extending the IRA's upgraded premium subsidies beyond this year, which would mean that no one earning over 400% FPL would receive them starting next year anyway.

• ACA: Limit Health Program Eligibility Based on Citizenship Status - $35B

I'm assuming this mostly refers to the ongoing DACA recipient eligibility saga, but given the GOP's disdain for immigrants (undocumented or not), it's possible that they're also talking about stripping some or all of these additional statuses from the eligible list:

• People with lawful permanent resident status (LPR/ green card holder)
• People with refugee or asylee status
• Cuban/Haitian entrants
• People granted parole into the U.S. for at least one year
• People granted withholding of deportation or withholding of removal
• Certain domestic violence survivors and their children and/or parents
• Certain people who are survivors of trafficking and their spouse, child, sibling or parent
• Citizens of Compact of Free Association (COFA) nations residing in the U.S.
• Iraqi/Afghan special immigrant visa holders
• People who are Amerasian immigrants
• Members of a federally recognized Indian tribe or American Indians born in Canada
• Certain people from Afghanistan or the Ukraine with parole status in the U.S.
• People granted relief under the Convention Against Torture (CAT)
• People with temporary protected status (TPS)
• People with deferred enforced departure (DED)
• People with deferred action (including DACA)
• People granted parole into the U.S. for less than one year
• People with nonimmigrant status (includes student visa; U visa; and many others)
• People with an administrative order staying removal issued by the Department of Homeland Security
• People with lawful temporary resident status
• People with family unity benefits
• People with special immigrant juvenile status
• Others granted employment authorization
• Applicant For Any of These Statuses
• Lawful permanent resident status
• Special immigrant juvenile status
• Victim of trafficking visas (T visa)

• ACA: Repeal the Prevention Public Health Fund – $15B

From the HHS Dept:

The Affordable Care Act established the Prevention and Public Health Fund (PPHF) to provide expanded and sustained national investments in prevention and public health, to improve health outcomes, and to enhance health care quality. The Fund has invested in a broad range of evidence-based activities including community and clinical prevention initiatives; research, surveillance and tracking; public health infrastructure; immunizations and screenings; tobacco prevention; and public health workforce and training.

Previous examples include $14.7M for Alzheimer's Disease Prevention Education & Outreach; $8M for Chronic Disease Self-Management; $72M for Diabetes Prevention and so on.

Yeah, MAGA Republicans don't want any of that, so out it goes.

• ACA: Appropriate Cost Sharing Reductions - $55B

The irony in this one is thick enough you'd need a chainsaw to cut through it. As a reminder:

• The ACA includes two types of financial subsidies: APTC, which reduce monthly premiums; and Cost Sharing Reductions (CSR), which cut down on deductibles, co-pays & other out-of-pocket (OOP) expenses for low-income enrollees.

• In 2014, then-Speaker of the House John Boehner filed a lawsuit on behalf of Congressional Republicans against the Obama Administration, in part because they claimed that CSR payments were unconstitutional because they weren't explicitly appropriated by Congress in the text of the Affordable Care Act.

• A long legal process ensued, the end of which resulted in a federal judge ruling in the GOP's favor and ordering that CSR payments stop being made...but also staying that same order pending appeal of her decision by the Justice Department (then still run by the Obama Administration).

• After Donald Trump took office, he started publicly threatening to "cutting off" CSR payments...and eventually did just that by having the Justice Dept. drop the appeal of the court decision on the CSR lawsuit.

• The way the CSR program worked until this point was unusual: Since the exact amount of OOP expenses varies widely month to month, insurance carriers would cover these costs up front and then submit their receipts to the federal government ot be reimbursed. It wasn't the CSR assistance which Trump cut off; it was the reimbursement payments to the insurance carriers.

• Ever since then, in order to prevent having to eat the costs of billions of dollars in CSR assistance, insurance carriers have instead simply jacked up their premiums to cover their CSR losses...and in most cases have placed the full load of CSR costs on Silver plans only, a practice known as...Silver Loading.

• The thing is, Silver Loading actually results in increased federal subsidies for millions of ACA enrollees, because raising Silver plans premiums also means raising subsidies accordingly...which can then be used to purchase Bronze or Gold plans instead (neither of which include the extra CSR premium spike).

• This means that eliminating CSR reimbursement payments actually caused federal spending to increase in the form of higher APTC subsidies...which increased more than stiffing insurers out of CSR payments saved.

• Therefore, 8 years after Donald Trump cut off CSR payments in an attempt to cripple the ACA, which is exactly what House Republicans wanted to happen...House Republicans are now pushing to reinstate CSR reimbursement payments...the exact opposite of what John Boehner & the GOP caucus were trying to do in the first place in 2014.

One thing which isn't mentioned in the House GOP's Wish List is "eliminating the enhanced IRA subsidies"...but that's because they don't need to actually do anything for that to happen; the IRA subsidies are already set to expire at the end of this year anyway.