Drew Altman, Kaiser Family Foundation
Featured

Republicans see Medicaid as welfare. Most Americans don't

Republicans want to roll back the Medicaid expansion, cap federal Medicaid spending increases, and add work requirements, drug testing, time limits, copays and premiums to some state Medicaid programs. But almost no one else wants to do these things. One poll finding goes a long way toward explaining why: Republicans view Medicaid as a form of welfare, and pretty much everyone else views it as a government insurance program.


Data: Kaiser Family Foundation Health Tracking Poll, May 16-22, 2017; Chart: Andrew Witherspoon / Axios

Why it matters: Welfare remains unpopular in our country; it's always popular to limit or cut "welfare". Whether it should be, and what this says about us, is a different question.

What the poll found: As the chart shows, Democrats (73%) and independents (62%) view Medicaid as an insurance program similar to others that help people pay for health care. But a slight majority of Republicans (52%), see it as more similar to welfare programs like food stamps.

Between the lines: One reason Medicaid limits are no slam dunk for Republicans in the Senate may be that not all Republicans view it as welfare: 46% see it as insurance, just as most Democrats and Independents do. Republicans who are more moderate are worried about the practical effects on citizens and states of rolling back the expansion or cutting federal Medicaid spending. One assumes they wouldn't worry as much unless they viewed Medicaid as valuable health insurance coverage.

Perceptions of Medicaid as welfare don't seem bothered much by facts, such as, for example, that two thirds of Medicaid spending goes for the low income elderly and disabled who don't fit the Ronald Reagan era image of the welfare king or queen. But it's not the majority view in any case. A little less than a third of voters identify as Republicans today, and about half of them see Medicaid as welfare.

It's this group and their perceptions of the program, and elected officials who share their views, that seem to be driving debate about Medicaid today.

Featured

What's really at stake in the Medicaid spending debate

The $834 billion cut in federal Medicaid spending in the American Health Care Act would kick off budget battles in the states that go way beyond Medicaid. We could see cuts to higher education, school funding, corrections, environmental protection or other state priorities — or new taxes, depending on the state.

Data: HMA, based on CMS 2017 projections, CBO Medicaid Baseline and CBO letter to House Speaker Ryan; Chart: Andrew Witherspoon / Axios

The bottom line: What began as a Medicaid spending reduction in Congress will end up as a battle of budget priorities.

A new analysis from long time state Medicaid expert Vern Smith at HMA suggests why. To offset the $834 billion in reductions in federal Medicaid spending in the AHCA, states would need to increase their own general fund spending by an average of one third beginning in 2022, and 37% in 2026. States will have to decide whether to eat the reductions and cut their Medicaid programs, raise taxes, or cut spending for other state priorities, or to do some combination of these things.

In the short term, most of the reductions come from curtailing the ACA's Medicaid expansion, and the 31 states plus the District of Columbia that have expanded will be the most affected.

The problem: It's possible that with more flexibility, states could absorb some of the reductions by operating their Medicaid programs more efficiently, but only at the margins.

Medicaid spending is already growing more slowly than Medicare and private insurance on a per capita basis. Virtually all states have already picked the low hanging fruit to rein in their Medicaid costs, and most have already deployed the full spectrum of delivery and payment reforms currently in the arsenal to control spending growth.

Cutting payments to providers is always the Medicaid cut of first resort, but payments to providers are already too low in many states to cut them further.

What to watch: The need to absorb large reductions in Medicaid will pit cabinet agencies, legislative committees and interest groups against one another in some states. Nothing receives more attention from governors, legislators and interest groups than the size of the annual increase in the state general fund and how the increase is divided each year.

The amount of the annual increase that goes to Medicaid is already a sore point in state budgets. Now the annual budget dance will start with a big hole to fill in Medicaid.

It does not seem to have dawned on folks with an interest in state funding for higher education, or corrections, or schools, or environmental protection that the debate about Medicaid could soon become a debate about their issues. But Medicaid is the largest source of federal revenues states receive, and once the proposed reductions trickle down to state budgets, it won't only be a Medicaid debate any longer.

Featured

The other implication of the CBO report: Election-year pain

Rick Bowmer / AP

The new Congressional Budget Office score for the American Health Care Act showed who the winners and losers will be, and how quickly its negative consequences will take effect if the House bill is enacted into law without major changes. What it doesn't do is assess the politics. But the implications are clear: The negative effects of the AHCA, and the juicy news stories about them, will play out over each of the next two election cycles. It's the political equivalent of tearing off a bandage slowly.

Probably the biggest effect before the 2018 mid-terms will be the rise in premiums across the non-group market which the CBO predicts after the repeal of the individual mandate. Older workers who buy their own coverage will also begin to pay more, as five-to-one age rating replaces the three-to-one age rating under Obamacare.

Then, before the presidential election in 2020, the new AHCA tax credit will kick in. There will be winners who get can get a better deal, mostly younger, higher-income people in low cost areas who may be happy with "skinnier" limited benefit plans that states may allow. But there will be losers too: mainly older and lower-income people who live in high cost, often rural areas.

Budget fights: As the Medicaid expansion begins to unravel, states that expanded Medicaid will have fights over whether to fill the federal funding gap with state funds. Medicaid will have to compete with school spending, higher education, corrections, environmental protection and other state priorities.

Sick people could face "extremely high" premiums in states that choose to waive Obamacare insurance protections, according to CBO, creating more media stories and political problems.

Each negatively affected voter has a family and friends who know about their experiences, creating a multiplier effect. Media coverage focusing on their stories will add to the narrative. The negative anecdotes are always louder than the positive ones.

What to watch: The next election is the mid-term in 2018, and mid-terms are all about turnout of slivers of the electorate; the most motivated voters. If the CBO's analysis of winners and losers under the AHCA is even close to right, it will morph quickly from the storyline Republicans want — they kept their promise to repeal "Obamacare" — to a reality with winners and losers.

It's hard to see how it will stoke turnout on the right once the reality painted by CBO sets in, and it could diminish it. And it may add energy to voters on the left and in swing districts that could decide control of the House.

Here's a look at how it could play out.

2018 ELECTIONS

Summer 2017:

  • Individual mandate eliminated. Insurers may raise premiums.

Nov. 1, 2017:

  • Open enrollment under the AHCA begins. Consumers in the individual market may find much higher premiums.

Nov. 1, 2018:

  • People with preexisting conditions, gap in insurance may start to face higher premiums in states waiving community rating.
  • Healthy people may see lower premiums.

2020 ELECTIONS

Spring/Summer 2019:

  • States may begin to close their Medicaid expansions to new enrollees.
  • Or they may raise taxes/make cuts elsewhere in budgets.
  • With new federal Medicaid spending limits, states may tighten eligibility and reduce benefits and provider payments.

Nov. 1, 2019:

  • ACA tax credits are replaced with less generous ones. Cost-sharing subsidies are repealed.
  • Winners: The young and higher income in low-cost areas..
  • Losers: Older and poorer in high-cost areas.

Jan. 1, 2020:

  • More states close Medicaid expansion to new enrollees.
  • States can waive essential benefits. Many insurers sell "skinny plans," and many healthy people buy them.

BEYOND 2020

  • Number of uninsured Americans continues to rise. CBO says reaching 51 million in 2026.
Featured

No, Medicaid isn't broken

One reason the architects of the American Health Care Act want to cut Medicaid spending and give more responsibility to the states is that they believe that the current program is "broken," with inadequate access to physicians and out-of-control costs. This is one of those canards that is repeated so often that many people just accept it as true. Mostly, it is not true.

Data: Kaiser Commission on Medicaid and the Uninsured analysis of 2015 NHIS data; Chart: Andrew Witherspoon / Axios

Like any big messy public program, Medicaid is very far from perfect, as I learned when I oversaw a Medicaid program for a Republican governor in New Jersey. But on basic measures of access and satisfaction with care, Medicaid beneficiaries look very much like people with private employer coverage despite the fact that they are sicker and poorer. And they're doing better than the uninsured.

The bottom line: Medicaid isn't broken — at least, not any more than private insurance is.

Finding doctors: The biggest problem that's usually cited with Medicaid is that people have trouble finding doctors who will take them. And there are troubles with low Medicaid provider reimbursement rates and physician access, but they vary around the country. It's not hard to find a state, or more typically a region within a state, where physician access is a real problem.

But overall:

  • 74% of Medicaid beneficiaries see a doctor each year
  • 69% for people with employer based private coverage see a doctor each year.
  • People on Medicaid are also nearly just as satisfied with their health care as people with employer coverage.

Costs aren't out of control: Medicaid spending did jump to 10.5% in 2015 with the Affordable Care Act coverage expansion, but it dropped to 5.9% in 2016 and is projected to grow by 4.5% this year.

And per capita Medicaid costs are not rising faster than costs for private insurance. In fact, they're projected to grow more slowly.

Some would say that's because Medicaid underpays providers, and it does pay substantially less than Medicare in many states. Others would say, good for Medicaid; it drives a tougher bargain with providers while getting results comparable to other payers.

The AHCA would take more than 800 billion dollars out of Medicaid over the next decade by reducing funding for the Medicaid expansion and capping federal Medicaid spending. The architects of the AHCA may believe Medicaid dollars are better spent elsewhere or not spent at all, or that somehow states can make Medicaid work better with far less money.

There are many principled conservative arguments for smaller government. But the argument that Medicaid is "broken" is not one of them; it is more urban legend than fact.

Column / Kaiser Family Foundation Featured

Prescription drug costs break through the partisan logjam

Americans are divided along party lines in terms of the presidents they like, the news networks they watch, and even where they live. They disagree sharply on the Affordable Care Act and almost everything else in health care. But there is one issue Republicans and Democrats agree on: They want to lower the costs of prescription drugs.

We just surveyed Americans on the issue as part of our latest Kaiser Family Foundation poll. As this chart shows, Republicans are almost as likely as Democrats, and more likely than independents, to pick lowering the costs of prescription drugs as a priority for President Trump and the Congress. It's the number two priority in health for all Americans, just behind reducing out of pocket costs in general.

Data: Kaiser Family Foundation Health Tracking Poll, April 17-23, 2017; Chart: Andrew Witherspoon / Axios

In fact, Republicans are substantially more likely to pick lowering prescription drug costs as a priority than traditional conservative goals such as decreasing the role of the federal government in health or decreasing federal health spending. (It could be a sign that drug prices have a more direct impact on their lives.)

President Trump has also talked up the need to take on drug costs, at times favoring both Medicare price negotiation and importing cheaper drugs from other countries. Drug prices, it seems, stands on a pedestal by itself as a bipartisan priority.

Reflecting this bipartisan support, the public favors pretty much any action to lower drug prices you can throw at them in a poll. Topping the list in public support:

  • Allow the federal government to lower drug prices: 92%
  • Make it easier to bring generic drugs to market: 87%
  • Require drug companies to disclose how they set their prices: 86%
  • Limit prices for high cost drugs: 78%

One policy that is receiving attention — allowing Americans to buy prescription drugs from Canada — is supported by 72% of the public. And although some former FDA commissioners think that could undermine safety, the public isn't worried: 76% think that will make drugs cheaper without sacrificing quality, while just 35% agree that it could expose Americans to unsafe drugs.

Often support for ideas in the abstract dissipates when there is a debate about the pros and cons of legislation and winners and losers emerge. That is what happened in the first go-around in the House on the GOP health care bill, which has not been popular with the public. The strength and breadth of the support for dealing with out-of-pocket drug costs suggests that public support is much less likely to wane for those proposals.

Of course, the fact that policies are popular does not necessarily mean they are wise, nor does it mean that the drug companies will not be able to defeat them, working their magic in the halls of Congress as health care's powerful interest groups always have done.

Still, if partisan division has become the single most powerful force in health policy, this may be one issue that breaks the pattern.

Column / Kaiser Family Foundation Featured

Trump's dealmaking model doesn't fit health care policy

Kiichiro Sato / AP

President Trump's threat to withhold Affordable Care Act payments to insurers shows how he thinks of health care: Everything is negotiable, like it is in a real estate deal. In this case, it's his bargaining chip to get Democrats to negotiate on an ACA replacement plan. But in reality, it could panic insurers and crash the marketplaces.

The president doesn't have strong convictions himself about future directions for health care. But health policy is not like real estate. The partisan divide in health policy is grounded in deeply felt differences on both sides over policy and principle. It's hard to see Trump's approach to deal making working very often in health.

This was why Trump couldn't force a deal with the Freedom Caucus to pass the American Health Care Act in the House; the bill was not conservative enough for the caucus, and in their eyes, it violated their principles and political promises they had made. It is also why using Obamacare's marketplace cost sharing subsidies as a bargaining chip to try to force the Democrats to the table is unlikely to work.

Play that one out for a moment:

  • The subsidies are withheld, or a decision is delayed to the point where insurance companies withdraw.
  • The marketplaces collapse or falter in many states.
  • Some moderate Democrats want to come to the table to rescue the millions who would lose coverage, most likely in the Senate.
  • The right adds their demands as a condition of coming to the table. So does the left.
  • Negotiations quickly snowball, and the entire ACA is opened up for debate once again.
  • Stalemate follows.

There are other reasons why Democrats may not accede to Trump's threat on marketplace subsidies. They may calculate, for example, that the administration will own the fallout for a collapse in the marketplaces, as polls are starting to suggest they will.

Lawmakers are also hard to threaten because most come from safe political districts, as a recent Cook report featured in Axios showed, and they have been getting safer and more polarized.

So, Art of the Deal, meet health care. Whether it's bringing moderate Republicans together with conservatives ones, or Democrats together with Republicans, dealmaking in health care requires the hard, roll-up-your-sleeves work of developing policies that will bridge the partisan and ideological divide.

Column / Kaiser Family Foundation Featured

A warning from the polls about letting Obamacare "explode"

President Trump has said the Democrats will take the fall politically if and when Obamacare "explodes." But new polling shows that the public will hold Trump and the GOP accountable for failing to address problems in the marketplaces, not the Democrats. That means they'll have to think twice about some of the moves they might make that could make the Affordable Care Act's problems worse.

Note: Neither of these/someone else is responsible, Both are equally responsible, and Don't know/Refused responses not shown; Data: Kaiser Family Foundation Health Tracking Poll (March 28 - April 3, 2017); Chart: Andrew Witherspoon / Axios

What's on the line: The polling has direct implications for some of the specific actions Republicans could take, or not take, in the months ahead:

  • Eliminating the $7 billion in federal cost sharing subsidies to insurers to compensate them for providing smaller deductibles to lower income enrollees.
  • No longer enforcing the individual mandate that helps get younger, healthier people into the insurance pools to lower premium costs.
  • No longer marketing the healthcare.gov plans to boost enrollment.

These steps would cause insurers to exit the non-group market, cause premiums to spike, and could leave millions without affordable coverage.

As the chart from our latest tracking poll shows, 62% of the public say Trump and the Republicans in Congress are in charge of the government and are responsible for problems with the ACA from now on; just 31% say President Obama and the Democrats are responsible. As is always the case with the ACA, there are party differences; 81% of Democrats and 65% of Independents said Trump and the Republicans "own it", but just 35% of Republicans feel that way.

Trump has also said that the collapse of the ACA would bring Democrats to the table to forge a new "deal" with him on health care. That's not impossible, but it seems unlikely: it's hard to think of a single major element of health reform where the Democrats agree with the president and the Republicans.

As we saw when the Freedom Caucus refused to support the American Health Care Act because it wasn't conservative enough for them, the substance and the details matter to policymakers far more than they appear to the President. He has suggested that he mostly wants a deal on health care.

Basic rules of politics seem to be holding up pretty well in the fights over the ACA. One rule, that benefits once conferred on the American people cannot be taken away, was a primary reason for the collapse of the GOP health care plan. The other: If severe problems develop in the marketplaces, or are caused by actions the administration takes to undermine the law, the party in charge gets the blame.

Column / Kaiser Family Foundation Featured

Don't expect Medicaid work requirements to make a big difference

Liberals and conservatives have irreconcilable differences of policy and principle over the issue of Medicaid "work requirements." But their impact depends on how they are implemented and is likely to be very small — because most people on Medicaid who can work already are.

Data: Kaiser Family Foundation analysis of March 2016 Current Population Survey; Chart: Andrew Witherspoon / Axios

With Trumpcare dead for now, expect Republican governors to begin submitting waiver proposals to the Department of Health and Human Services to move their Medicaid programs in a more conservative direction. Medicaid "work requirements" are likely to be an element of many of those waiver requests, possibly from Republican-led states now looking to expand Medicaid under the Affordable Care Act.

During the Obama administration, HHS rejected mandatory work requirements as inconsistent with the purposes of the Medicaid statute, spurning requests from Arizona, Indiana, and Pennsylvania under a previous governor. Under the Trump presidency, HHS is expected to approve them.

Medicaid "work requirements" are not requirements to work in a literal sense. Generally, this is how states would define them:

  • Able-bodied beneficiaries — people who can work — would have to look for a job, participate in a job training program or go to school, or work full time or part time.
  • People who would be exempt: anyone who can document that they are too sick or disabled to work, have to take care of a sick child or family member, or do not have adequate child care.

Liberals find Medicaid work requirements repugnant because they believe that Medicaid beneficiaries want to work if they can, and that providing health coverage to people who cannot afford it is an obligation of any moral nation. Conservatives who favor work requirements see Medicaid coverage as another form of government welfare benefit, like cash assistance, requiring reciprocal obligations from beneficiaries, and a disincentive to work.

The reality, though, is that most Medicaid beneficiaries are working already, and the vast majority of those who are not working are likely to be exempted from all but the most draconian Medicaid work requirements when front-line caseworkers apply state rules.

As the chart shows:

  • 59% of all Medicaid beneficiaries who were not on Supplemental Security Income — the program for low-income people with disabilities — were working full time (41%) or part time (18%) in 2015.
  • That leaves 41% who were not working. Of those, the vast majority (89%) had reasons for not working, including that they were sick or had a disability (35%), were taking care of a family member (28%), or were in school (18%).
  • Another 8% said they could not find a job which, when documented, usually satisfies work requirements.
  • All told, just a tiny subset of Medicaid beneficiaries are-able bodied adults who do not have a reason for not working that would fail to pass muster with a state case worker.

Medicaid work requirements send signals conservatives like and liberals reject. As I learned a long time ago designing and implementing a leading welfare reform program as Commissioner of Human Services in New Jersey, the fight about policy and principle can get hot when it comes to work requirements, but their impact depends on how they are implemented.

With most beneficiaries working or with good reasons not to be, that impact will be small.

Drew Altman is president and CEO of the Kaiser Family Foundation in Menlo Park, Calif. and an Axios contributor.

Column / Kaiser Family Foundation Featured

Why deductibles would rise under the GOP health care plan

Health care is complicated, as the president has discovered. But here is one thing that is not so complicated: if people have modest means and limited tax credits, and coverage is expensive, they will mostly buy health plans with lower premiums — and high deductibles.

This is what is likely to happen under the GOP health care bill, the American Health Care Act. Only people who need more health care will stretch for more generous coverage. If that happens, those health plans will draw too many sick people, causing insurance companies to stop offering them for fear of losing money. That would leave mostly the low-premium, high-deductible plans.

Data: Kaiser Family Foundation analysis; Chart: Andrew Witherspoon / Axios

As the chart shows, the average deductible for a typical plan in the non-group market under the GOP plan would be about $1,550 higher in 2017 than it would have been under the Affordable Care Act, based on our analysis for this column. Most of the debate has been about what would happen to premiums — but for consumers, it's total out-of-pocket costs that matter.

Under the Affordable Care Act, the low-premium, high-deductible health plans are called "bronze" plans — so think of this as the "bronzification" of the non-group market. The result: premiums may be lower in some cases, but deductibles will go up.

That is based on the Congressional Budget Office's conclusion that the AHCA will result in health plans covering a lower share of patients' medical expenses. They'd have an average actuarial value across plans of 65% — meaning insurers would cover 65% of medical expenses on average for its enrollees — compared with the current market under the ACA, which has an average actuarial value of 72%.

The drop would be due to consumers gravitating to lower premium plans, insurers increasingly offering only those plans, and the elimination of the cost sharing subsidies the ACA provided to insurers. That could change now that the House is adding a reserve fund of as much as $85 billion to beef up the tax credits for older customers, but it depends on what the Senate does with the money.

President Trump said his plan to replace Obamacare would have "lower numbers, [and] much lower deductibles." When advocates of the AHCA talk about expanding choice of lower cost plans, keep in mind that they are focusing on the premiums, not the overall costs to consumers.

But insurance market dynamics, the CBO, and now this new analysis suggest that those out-of-pocket costs will go up for many consumers buying their own insurance, particularly people who need more health care services.

Drew Altman is president and CEO of the Kaiser Family Foundation in Menlo Park, Calif. and an Axios contributor.