In Health Bill's Defeat, Medicaid Comes of Age

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Date: Mar. 28, 2017
Publisher: The New York Times Company
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Length: 3,306 words
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When it was created more than a half century ago, Medicaid almost escaped notice.

Front-page stories hailed the bigger, more controversial part of the law that President Lyndon B. Johnson signed that July day in 1965 -- health insurance for elderly people, or Medicare, which the American Medical Association had bitterly denounced as socialized medicine. The New York Times did not even mention Medicaid, conceived as a small program to cover poor people's medical bills.

But over the past five decades, Medicaid has surpassed Medicare in the number of Americans it covers. It has grown gradually into a behemoth that provides for the medical needs of one in five Americans -- 74 million people -- starting for many in the womb, and for others, ending only when they go to their graves.

Medicaid, so central to the country's health care system, also played a major, though far less appreciated, role in last week's collapse of the Republican drive to repeal and replace the Affordable Care Act, also known as Obamacare. While President Trump and others largely blamed the conservative Freedom Caucus for that failure, the objections of moderate Republicans to the deep cuts in Medicaid also helped doom the Republican bill.

''I was not willing to gamble with the care of my constituents with this huge unknown,'' said Representative Frank A. LoBiondo of New Jersey, a member of the centrist Tuesday Group caucus, noting that in three of the counties in his district in the state's more conservative southern half, over 30 percent of all residents are covered by Medicaid.

In the Senate, many Republicans, echoing their states' governors, had worried about jeopardizing the treatment of people addicted to opioids, depriving the working poor, children and people with disabilities of health care and in the long run reducing funding for the care of elderly people in nursing homes.

The Republican bill would have largely undone the expansion of Medicaid under the A.C.A., which added 11 million low-income adults to the program and guaranteed the federal government would cover almost all of their costs. It would have also ended the federal government's open-ended commitment to pay a significant share of states' Medicaid costs, no matter how much enrollment or spending rose. Instead, the bill would have given the states a choice between a fixed annual sum per recipient or a block grant, both of which would have almost certainly led to major cuts in coverage over time.

The nonpartisan Congressional Budget Office predicted that the Republican bill would have cumulatively cut projected spending on Medicaid by $839 billion and reduced the number of Medicaid beneficiaries by 14 million over the coming decade.

Many Republicans could not stomach those consequences. Even some conservatives -- Christopher H. Smith of New Jersey, for example, and Daniel Webster of Florida -- expressed concerns about the number of Medicaid recipients who could suffer.

The Trump administration will likely still seek to rewrite Medicaid rules and give states more leeway to limit benefits or eligibility, for example, allowing them to require certain adults in the program to have jobs or pay monthly premiums. And many Republican governors and members of Congress remain determined to curb Medicaid spending, including by methods proposed in the bill. In 2015, the nation spent more than $532 billion on Medicaid, of which about 63 percent was federal money and the rest from the states.

Still, last week's defeat reflected how hard it is to take away an entitlement. It also showed the broad and deep reach of Medicaid, which covers about six times as many people as the private marketplaces created under the A.C.A. but, perhaps because the markets are more strongly associated with President Barack Obama and his law, got less attention in this month's contentious debate.

Medicaid now provides medical care to four out of 10 American children. It covers the costs of nearly half of all births in the United States. It pays for the care for two-thirds of people in nursing homes. And it provides for 10 million children and adults with physical or mental disabilities. For states, it accounts for 60 percent of federal funding -- meaning that cuts hurt not only poor and middle-class families caring for their children with autism or dying parents, but also bond ratings.

The program is so woven into the nation's fabric that in 2015, almost two thirds of Americans in a poll by the Kaiser Family Foundation said they were either covered by Medicaid or had a family member or friend who was. The program not only pays for 16 percent of all personal health care spending nationwide, but also accounts for 9 percent of federal domestic spending.

Because it has always covered a patchwork of groups -- and many of its beneficiaries are poor and relatively powerless -- Medicaid lacks the unified, formidable political constituency that Social Security and Medicare have. States often have different names for the program, and many who rely on it don't realize that MassHealth in Massachusetts or TennCare in Tennessee are just Medicaid by another name.

But in Kaiser's polling since 2005, the percentage of people who support cutting Medicaid spending has never exceeded 13 percent. ''The conventional wisdom that there's a great deal of stigma attached to this program does not bear out in the public opinion data,'' said Mollyann Brodie, who oversees polling for the foundation.

President Trump led the charge for the bill that would have slashed Medicaid, but he recognized the program's political potency during his campaign, proclaiming when he announced his candidacy that Medicaid should be saved ''without cuts'' and repeatedly taking to Twitter to declare his support for it. ''The Republicans who want to cut SS and Medicaid are wrong,'' he wrote in July 2015.

The C.B.O. report made it clear that within a few years, the cuts to Medicaid in the Republican bill would have been felt by millions of Americans.

''It's health care for a huge chunk of the country,'' said James A. Morone, a political-science professor at Brown University, ''and as Donald Trump discovered, it's really, really complicated to mess around with.''

Facing Need Back Home

As he waited to see what would happen to the Republican proposal last week, Myrone Pickett said, ''I've got a question mark hanging over my head.''

Mr. Pickett, of Bloomfield, N.J., got health insurance under the A.C.A.'s expansion of Medicaid, and has used it for monthly shots of Vivitrol, a drug that reduces cravings for opioids and alcohol. A heroin addict for 16 years, Mr. Pickett, 51, said the treatment had helped him stay clean for the past year, get medication for bipolar disorder and land a job at a grocery store.

The A.C.A. offered a tempting deal to states that agreed to expand Medicaid eligibility to everyone with incomes up to 138 percent of the poverty level -- $16,400 for a single person -- mostly low-wage workers like cooks, hairdressers and cashiers. The federal government would initially pay 100 percent of the costs of covering their medical care, and never less than 90 percent under the terms of the law. Over the past three years, 31 states and the District of Columbia took the deal.

The move was especially helpful to states overwhelmed by the opioid epidemic. It required Medicaid to cover addiction and mental health treatment for those newly eligible.

Announcing his vote against the G.O.P. proposal last week, Representative Brian Fitzpatrick, a Pennsylvania Republican who represents a politically moderate district north of Philadelphia, said his top concern was ''the impact on the single most important issue plaguing Bucks and Montgomery Counties, and the issue that I have made my priority in Congress: opioid abuse prevention, treatment and recovery.''

The Republican bill would have allowed Medicaid payments to grow per person at an inflation rate that would have eroded their value over time. The C.B.O. estimated that states would have gradually had to devote more of their own money to Medicaid, cut payments to doctors, tighten eligibility or cut services covered.

In 2020, states would have started losing the 90 percent federal match for anyone who had gained Medicaid under the A.C.A. expansion but was dropped from the rolls, even briefly. And the bill required beneficiaries in the expansion population to re-enroll every six months, instead of annually, increasing the likelihood that many would be dropped.

As a result, the C.B.O. estimated that by 2026, less than 5 percent of Medicaid recipients enrolled under the A.C.A. would have been covered at the higher matching rate. But more broadly, the cuts would have almost inevitably affected every group covered by Medicaid, including the biggest block of recipients: 36 million children as of last year.

Representative Jaime Herrera Beutler, a Washington State Republican, announced her ''no'' vote on the bill Thursday, saying, ''Protecting vulnerable children is a core purpose of the Medicaid program and when the program fails to do so, it fails entirely.''

The cuts would also likely have eventually hit poor, chronically ill mothers like Tracie Scott of Paulding, Ohio. She has multiple sclerosis and quit her job at a dollar store two years ago because of it. Medicaid covers her and her four children, including her 2-week-old daughter and an 8-year-old son with brittle-bone disease who has needed expensive medication and care for frequent fractures.

''I'd be afraid to see some of the bills for my son,'' Ms. Scott, 30, said as she cradled her newborn, Izabella, in their hospital room recently. ''It's been a lifesaver.''

For more than six million Americans older than 64, Medicaid pays for nursing homes and other long-term care that they would never otherwise be able to afford, while Medicare covers their medical care.

The threat to such care propelled Representative Webster, whose Central Florida district includes The Villages, a retirement community with more than 150,000 residents, to lean ''no'' on the bill.

''This uniquely impacted Florida and our growing senior population that's only going to explode in years to come,'' said Jaryn Emhof, his spokeswoman.

Representative Smith of New Jersey said he was voting no because of concerns about the impact on people with disabilities, who make up just 15 percent of all Medicaid recipients but account for 42 percent of spending, making them particularly vulnerable to cuts.

For millions of disabled people, Medicaid covers services provided at home or through local programs -- aides who help them walk, eat and bathe, for example, and physical and speech therapy -- that allow them to stay out of institutions, where care is often more expensive. But those services are optional for states, while the cost of institutional care is not. The law would have given states an incentive to place them in institutions.

Medicaid pays for Barbara Theus, 67, to attend a day program in Southfield, Mich., so that her son and caregiver, Royale Theus, can work. Ms. Theus sustained a serious head injury in a car accident 11 years ago and has not been able to care for herself since then. Medicaid also pays for home health aides who help Ms. Theus, a former nurse who did not have much savings at the time of her accident, get showered and fed.

Mr. Theus was relieved when the bill failed. Had his mother lost coverage, he said, he would have had to leave his job to care for her. ''I was hopeful that the powers that be would make the best decisions for the people, and that's what happened,'' he said.

The Battle Against Medicaid

This was the third major effort by Republicans to end Medicaid as an open-ended entitlement. The first was under President Ronald Reagan, the second was in 1995, after President Bill Clinton's unsuccessful attempt to expand health care coverage. But this was the first time Republicans tried it while they controlled the White House and both houses of Congress.

For all the battles over the years, Medicaid started as something of an afterthought.

By 1960, both parties were worried that the country's growing reliance on employer-based insurance was leaving out elderly people, who were unable to pay the rapidly rising cost of health care.

The night of President John F. Kennedy's assassination in November 1963, Lyndon Johnson returned to his home in Washington and, unable to sleep, summoned three aides. ''That's when he took out his pen and wrote down the priorities that he was going to pursue,'' one of those aides, Bill Moyers, recalled in an interview. Among them was government health insurance.

President Harry S. Truman had sought to establish national health insurance -- and failed. Democrats decided to take on a more limited goal: insurance for elderly people. They called it Medicare. Democrats pushed for it to cover hospital bills for the elderly; Republicans wanted it to pay for private doctor's bills.

The American Medical Association had long lobbied against Medicare, hiring Reagan, then a Hollywood actor, to be the face of its campaign, producing a 1961 LP titled ''Ronald Reagan Speaks Out Against Socialized Medicine.''

And the doctors' group had an ally in Wilbur Mills, a conservative Democrat who was chairman of the powerful House Ways and Means Committee, who like the doctors' group did not think that well-off elderly people should have their bills covered. In 1960, Mr. Mills had co-sponsored a law that established a small program to help the states treat the needy, as a way to stave off proposals for Medicare. The doctors' group suggested expanding this program, preferring it because it would be administered by states, not the federal government.

Mr. Mills had a change of heart after Johnson's landslide victory in 1964. Johnson's Republican opponent, Senator Barry Goldwater of Arizona, had denounced Medicare, and Mr. Mills, and many Republicans, were eager to distance themselves from him.

In early 1965, Mr. Mills proposed what became known as the three-layer cake: Medicare for hospital insurance, Medicare for doctor's bills and a broadened version of the law that helped states pay for the care of the poor, the program that would become Medicaid.

''Hardly anybody talked about Medicaid,'' said Paul Starr, a sociology professor at Princeton. ''It just got added on.''

At first, Medicaid helped states provide medical care only for single parents and children on welfare.

Over the next 25 years, Democrats -- sometimes working with Republicans -- gradually pushed to expand benefits -- to two-parent families, to children with speech and development delays, to home treatment for people who would otherwise be institutionalized, to children up to age 5, then to age 8 and later to age 18, and to pregnant women.

Ironically, some of the biggest expansions in Medicaid came in the 1980s under Reagan, the onetime A.M.A. mouthpiece.

After Republicans failed to turn Medicaid into a block grant, Democrats, who still controlled Congress, worked on compromises with the president and other Republicans, sometimes allowing cuts in programs like Medicare in exchange for expanding Medicaid, said former Representative Henry Waxman, a Democrat who shepherded many of those expansions.

Democrats carefully calibrated each expansion to fit within the annual budget, submitting plans to the Congressional Budget Office for ''scoring,'' to see how much each would cost. ''We couldn't do it all at once because we didn't have enough money in the budgets,'' Mr. Waxman said. But eventually, the goal to decouple Medicaid from the welfare system was achieved. ''We broke the link to welfare,'' he said.

By the 1980s and '90s, health insurance was becoming prohibitively costly, and wages were starting to stagnate. Employer-based health insurance was eroding. States led by Republicans as well as Democrats began to expand their Medicaid programs.

''What people began to accept, including Republicans, was that the assumption that you could afford health insurance if you were an able-bodied adult was not true,'' said Colleen M. Grogan, a professor at the School of Social Service Administration at the University of Chicago, who has written extensively on health care. ''You could be working and still not afford health insurance.''

In 1996, Mr. Clinton expanded Medicaid to cover more working families as part of his welfare overhaul. Campaigning for re-election that year, he depicted Medicaid as a middle-class program, telling audiences it was helping their grandparents.

''He is the first Democrat to start calling Medicaid one of 'our programs,''' said Professor Morone of Brown. ''There was a sense that Medicaid had sort of grown up as an entitlement.''

The expansion of Medicaid in the Children's Health Insurance Program, passed with Republican sponsorship in 1997, set the stage for the sweeping expansions of the Affordable Care Act 13 years later.

But politics during Mr. Obama's presidency had become highly polarized. While earlier expansions of Medicaid had sometimes been bipartisan, the A.C.A. passed without a single Republican vote in Congress. The Tea Party had risen in opposition to the legislation, and later helped elect many of those who now form the conservative Freedom Caucus.

Gradually, though, Republican-led states have adopted the expansion. And now that the law known as Obamacare has survived the effort to repeal it, more states may choose to expand Medicaid. In Maine, voters will decide this fall whether to do so, and in Kansas, the Legislature has all but approved an expansion, although Gov. Sam Brownback could veto it.

Last week, despite their desire to repeal Mr. Obama's biggest domestic legacy, some Republicans recognized that any bill that would lead to such drastic cuts in Medicaid would simply hurt too many of their constituents.

In Ashland, Va., Medicaid made it possible for Kim Goodloe and her husband, Tom, to start a small company making metal parts for semiconductors and medical devices after the birth of twin boys with tuberous sclerosis 27 years ago. The genetic disorder causes tumors in vital organs, leading to frequent seizures, and Mrs. Goodloe had quit her job to take care of the boys when they were 4 -- Medicaid did not cover services for them back then. But now, Medicaid provides a home aide for Matthew, who is incontinent and nonverbal, suffers daily seizures and needs help walking.

For the other twin, Christopher, who is less severely developmentally disabled, Medicaid provided a job coach, helping him to work at their company and earn enough money that he now pays taxes.

The Goodloes have private insurance, but it is not required to pay for the twins' services, she said. With Virginia facing such steep cuts to its federal Medicaid payments, Mrs. Goodloe worried about losing the home health aide. They would have had to downsize the business, which employs 30 people.

''Even within my own family, when you say 'Medicaid' it comes with some, 'Those people don't want to work.' They believe there's a lot of fraud, there's people that don't deserve it.''

''But then,'' she said, ''They'll say, 'How could they take it away from Matthew?'''

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PHOTOS: Royale Theus and his mother, Barbara. Medicaid pays for her day program and home aides. (PHOTOGRAPH BY LAURA McDERMOTT FOR THE NEW YORK TIMES) (A1); Representative Wilbur Mills, 1965 (PHOTOGRAPH BY FRANCIS MILLER/TIME & LIFE/GETTY); President Lyndon B. Johnson, 1965 (PHOTOGRAPH BY ASSOCIATED PRESS); Medicaid enrollee line, 1971 (PHOTOGRAPH BY ZVI LOWENTHAL/THE NEW YORK TIMES); Top, Pamela Johnson, a home health aide, helped Matthew Goodloe get dressed in Ashland, Va. He and his twin, Christopher Goodloe, shown above at work, were both born with tuberous sclerosis and receive assistance from Medicaid. (PHOTOGRAPHS BY AL DRAGO/THE NEW YORK TIMES) (A14); TRACIE SCOTT, above, of Paulding, Ohio, has multiple sclerosis and quit her job because of it. Medicaid covers her and her four children, including her 2-week-old daughter and an 8-year-old son who has brittle-bone disease. (PHOTOGRAPH BY MADDIE MCGARVEY FOR THE NEW YORK TIMES); Jimmy Carter, candidate, 1980 (PHOTOGRAPH BY BETTMANN/GETTY IMAGES) (A14-A15); President Bill Clinton, 1996 (PHOTOGRAPH BY PAUL HOSEFROS/THE NEW YORK TIMES) (A15)

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