Reported Medicaid Expansion “Compromise” Would Have Almost the Same Effect as House Bill

We explained earlier this week that delaying the end of the Affordable Care Act (ACA)’s higher funding for Medicaid expansion wouldn’t change the long-run effects of the House health bill: states would still have to end their expanded Medicaid programs because of the large cost shift from losing federal funds, and the poor and near-poor adults losing Medicaid wouldn’t be able to afford private coverage.

Now, Senate Republicans are reportedly coalescing around what may be an even worse Medicaid “compromise.” Senators Dean Heller, Rob Portman, Shelley Moore Capito, and others are supporting a phasedown of Medicaid expansion funding, with funding cuts still beginning in 2020.

That approach would not preserve anyone’s coverage in the long run. It also would do next to nothing to preserve Medicaid expansion in the short run. First, at least eight Medicaid expansion states — Arkansas, Illinois, Indiana, Michigan, Montana, New Hampshire, New Mexico, and Washington — have expansion “trigger laws” under which their Medicaid expansions automatically end if the federal matching rate for expansion enrollees falls at all. Under the reported proposal, these state triggers would go off in 2020 — just like under the House health bill.

Second, even non-trigger states would see their costs for new expansion enrollees rise significantly starting in 2020. Few state legislatures will choose to come up with extra funding to keep their expansions going when they know that the federal funding cuts — and required state funding increase — will just keep rising each year. More likely, even non-trigger states would freeze enrollment starting in 2020. If so, their expansions would be more than two-thirds gone by the end of 2021 and virtually eliminated by the end of 2024.

Just last week, new polling found that the Medicaid expansion is extremely popular, with its popularity crossing party lines. Eight-four percent of the public, including 71 percent of Republicans, support continuing current federal funding for the expansion.

The expansion’s overwhelming popularity may be part of the reason that a number of Senate Republicans say they want to find a way to maintain the gains from expansion in their states. But the deal some Senators appear ready to accept would not only reverse those gains over the longer run, it wouldn’t even maintain them in the near term.