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Resisting the Coming Austerity: Medicaid in the Crosshairs

Lingering Republican threats to the ACA and Medicaid do no favors for America’s working poor    

By Annette Gaudino

The 2016 election is in large part a story of the failure of existing health policy to adequately address a health crisis among the working class. The largest voter margins in favor of Trump comprise many people in poor health. This includes the opioid overdose epidemic currently occurring among predominantly white, suburban, and rural communities battered by deindustrialization and dimmed economic prospects. Affordable Care Act (ACA) repeal and replace legislation, presently defeated with the fall of the American Health Care Act (AHCA) but still an ambition of the White House administration and Republican Congress, threatened to make a bad situation worse.

The federal government has a large role to play in funding the public health response to the ongoing opioid crisis and its sequelae, including hepatitis C virus (HCV) and HIV. The expansion of Medicaid under the ACA to cover individuals living at 138% of the federal poverty level (approximately $16,000 for an individual and $33,000 for a family) is key. Roughly half of the 22 million Americans who receive health insurance coverage under the ACA are covered under Medicaid expansion.

Medicaid is currently a federal entitlement, meaning the U.S. government is committed to at least matching state funding to guarantee coverage for all Americans meeting eligibility requirements. Wealthy states with large tax bases, such as New York, split Medicaid costs 50/50 with the federal government. States with a lower GDP and smaller tax base are in effect subsidized by federal tax dollars. For example, approximately 70% of red-state Kentucky’s costs are paid with federal funds.

In recent years, many states have moved to managed care Medicaid programs, with patient care being increasingly budgeted on a per-capita basis and delivered with per-capita costs in mind. In the best cases, this provides strong incentives towards preventive care, but managed care can also be used to limit access to expensive treatment options, as we’ve seen with restrictions to HCV curative treatments based on disease progression or sobriety.

The introduction of AHCA in early 2017 initiated the next great battle in U.S. healthcare reform. The bill, pulled from the floor of the House of Representatives after it became clear the Republican Party did not have the votes to pass the measure, maintained the most popular provisions of the ACA, while providing generous tax refunds to those who need it least and sought to end the entitlement to health care under Medicaid. Where the bill succeeded was in providing a clear view of the GOP’s political goal: relieve the federal government of the burden to fund health care for the poor.

If AHCA had passed, the proposed per-capita caps would have cut $880 billion in federal funding for all state Medicaid programs and resulted in 14 million people losing Medicaid coverage by 2026. Per-capita caps or block grants would have also left Medicaid programs with even fewer financial resources to cover exorbitantly priced curative hepatitis C treatments and comprehensive HIV care.

For the low-income individuals and families who would have been thrown into the for-profit insurance marketplace, the AHCA proposed replacing income-based premiums and subsidies with fixed age-based refundable tax credits, regardless of the actual cost of insurance where they live, which varies significantly across states. Additionally, AHCA would have allowed insurers to charge older enrollees up to five times what they charge younger ones (up from 3:1 under the ACA), effectively wiping out the value of the slightly larger tax credit for those 60 years of age and older. Those that managed to remain on Medicaid were at risk of losing essential benefits coverage, including mental health and substance use treatment—a particularly short-sighted change given the opioid epidemic. 

As was evident with AHCA, however, the road to replacing the ACA is rocky for GOP leadership. The House bill effectively alienated all stakeholders: voters would have seen their subsidies to purchase insurance cut significantly, hospitals and other providers would have faced reduced funding and more unreimbursed care, private insurers would have been left with sicker enrollees, and Congressional members ideologically committed to free market solutions would have been left wanting. The split between Republicans in Congress and in State Houses remains particularly difficult to bridge—the former don’t have to balance budgets under the additional public health burden of hundreds of thousands of potentially uninsured residents.

The big question that remains, particularly now that ACA remains the law of the land, is whether there is a way to repair the features of the original legislation signed by President Obama in 2010 that provide no benefit to the working poor and middle class. For example, under current formulas, ACA subsidies max out for annual incomes above $48,000 for individuals and $97,000 for a family of four. The resentment among those who are too well off to qualify for expanded Medicaid, but too strapped to feel secure under high-deductible, unsubsidized plans, contributed to the election results. Will both major parties once again miss the opportunity to address the needs of working people?

Even in the darkest political times, persistent advocacy and activism has resulted in concrete, permanent wins for public health. The Ryan White CARE Act and PEPFAR were both enacted under Republican administrations that were otherwise hostile to evidence-based public health approaches to the HIV pandemic. Likewise, AHCA faltered under GOP control of the White House and Congress. There is no reason to think significant movement toward ending the HIV and HCV epidemics isn’t achievable under Trump.

We must engage at all levels of government, including state and local, to amplify the political cost of not further expanding Medicaid, link Medicaid and the opioid crisis, and build coalitions to fight back, particularly alongside the harm reduction movement and those fighting to dismantle mass incarceration and white supremacy.

A broad, intersectional social justice movement has been ignited as a result of the 2016 election. It is led by those who never paused their struggle during the Obama years—the movements for black lives, indigenous rights, and immigrant rights. The huge influx of new people into existing activist movements, and the formation of new direct action groups such as Rise and Resist in New York City, and countless others nationwide, creates a unique opportunity to share knowledge and skills across generations, follow and foster new leaders, and bring public health issues to new audiences and spaces. As we have just witnessed, when we fight, we win.