OP-ED: Trump’s conservative overhaul of Medicaid is a loser all around

Max Nisen
Bloomberg News (TNS)
Seema Verma, Administrator, Centers for Medicare & Medicaid Services, testifies before the United States Senate Committee on Homeland Security & Governmental Affairs on Capitol Hill in Washington, D.C., on August 21, 2018. (Ron Sachs/CNP/Zuma Press/TNS)

American voters consistently name health care as one of the issues they care about most heading into the presidential election. That’s bad news for President Donald Trump, who gets bad marks on health issues after his party’s attempt to gut the Affordable Care Act failed and backfired. Instead of changing strategies, though, he is doubling down on unpopular policies.

On Thursday, officials announced that the administration will allow states to pursue what it dubs “Healthy Adult Opportunity” initiatives. The new name is just a dystopic rebranding of “block grants,” which itself is more palatable code for “cap Medicaid funding and strip health benefits from poor Americans.”

The plan is another in a series of efforts to weaken Medicaid, a popular insurance program for low-income and disabled Americans that was expanded by the ACA. The president is playing with political fire for a bad idea that may never see the light of day.

Medicaid funding is currently open-ended; the federal government provides matching funds for state spending, adjusted for per-capita income. That entitlement enables states to expand services and makes the program exceptionally resilient.

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Block grants would replace that obligation with fixed payments. Proponents argue that this would boost flexibility, allowing states to manage the program and control costs better. Opponents point out that a fixed budget leaves states in a bind when the economy deteriorates, and more people need Medicaid. States also would run into issues during public health crises, and may be stymied as novel and expensive treatments hit the market. They would likely have to cut eligibility and services over time, and Trump’s proposal would give broad freedom and significant incentives to do so.

The GOP has been trying to block-grant Medicaid for decades. It was a key component of the proposed Republican replacement for Obamacare, and one of the reasons the party wasn’t able to get the Senate votes needed to pass it. Trying to mess with Medicaid led to bruising losses for the GOP in 2018’s midterm elections. Even deep-red Kansas is now expanding the program. It turns out the “opportunity” to prevent many Americans from getting health coverage isn’t that appealing.

Like the administration’s effort to impose Medicaid work requirements — which are quite effective at using bureaucracy to withhold benefits but don’t appear to boost employment — his plan relies on states for implementation and is exceedingly vulnerable to legal challenge. To the extent it is allowed to stand, it threatens health benefits for a vulnerable part of the population and represents a fundamental change to Medicaid. Instead of the benefits of the full program — which saves lives, boosts maternal and infant health, and cuts the poverty rate — people in states that apply for this program could get something less or nothing at all.

Democrats are likely to seize on the opportunity to draw a sharp health-care contrast with the president. As the administration works on inventive ways to strip health coverage from poor Americans, even moderate candidates for the Democratic presidential nomination have plans that would automatically cover expansion-eligible people in holdout states. This proposal makes a further hash of the president’s absurd claim that he’s working to protect people with pre-existing conditions as he supports a lawsuit that would kill the ACA. There’s nothing protective about tearing chunks out of Medicaid.

Democrats may be divided on health care, but that might not matter as much if the Trump administration keeps bungling both politics and policy.

— Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.