Democrats threaten Medicaid, Too

After a public outcry stopped the Republican plan to radically transform Medicare, a new threat to our health care is coming, this time from a surprising direction.

In the negotiations with Republicans about raising the debt ceiling, the Obama administration has proposed new rules for federal matching of state expenditures for Medicaid — we call it “medical assistance” in Pennsylvania — and CHIP, the Children’s Health Insurance Program. These rules are troubling. They would lead to substantial cuts in federal support programs that provide health care to low-income children and parents, people with disabilities and senior citizens, including the 62 percent of seniors in Pennsylvania whose nursing home care is paid for by medical assistance.

States now receive different matching rates for different groups of people. The federal government pays 50 percent to 75 percent of the costs for people currently receiving Medicaid. The federal match for CHIP averages 70 percent. But the federal government will pay the entire cost for people newly eligible for Medicaid in 2014 under the Affordable Care Act. That match will decline to 90 percent over time.

The administration is proposing that a new “blended” federal matching rate replace the existing law. That is questionable for three reasons.

The calculation of the blended rate would require difficult predictions about how many people will enroll in Medicaid in 2014 and how healthy or sick those people will be. The result might be a totally inadequate matching rate.

The federal government promised a 100 percent match for people newly eligible for Medicaid for a reason — to give states an incentive to enroll more people starting in 2014. Expanding the number of insured is, after all, the goal of the Affordable Care Act, not only because health care is a right but because covering as many people as possible is critical to controlling health care costs and helping hospitals that serve those who now are uninsured.

Worse is that the new blended matching rate surreptitiously would hide a reduction in the federal contribution to the program of $100 billion or more. And as Republicans demand steeper reductions in spending while resisting tax increases, the blended rate could be adjusted in closed-door negotiations to generate even deeper reductions in the federal Medicaid contribution to medical assistance and CHIP.

Shortfalls in federal funding can be made up by states spending more or by cutting back medical services. At a time when states are financially stressed, the likely result is cutbacks in nursing home care and health care for seniors, children and those with low incomes. Either we will see limits on care or reductions in the already too-low reimbursement rates for doctors and hospitals, which will make it difficult for seniors, children and people with disabilities to find care.

Why is the administration proposing measures that undo its signature achievement and undermine programs that serve so many people so well?

Much of the blame falls on the Republicans for using the once-routine debt ceiling legislation as a means of enacting radical spending reductions. The Republicans are willing to bring the world economy to the brink of disaster to pursue their radical agenda of undermining the social safety net.

The administration’s response to this radical agenda is also deeply flawed, both as policy and politics. If we are going to use this moment to deal with the long-term deficit, then let’s address the real problems. We do need to cut health care costs. But we should do so in ways that wring out the waste and inefficiency in our health care system, not by reducing benefits for those who need them most. And, when federal taxes take a lower share of our GDP than at any time in the last 60 years, long-term deficit reduction requires that the very rich and global corporations pay their fair share of revenue.

A crisis manufactured by a Republican party that has utterly lost its way is no time for budgetary sleights of hand that retreat on our commitments. Instead the Obama administration should set the real choices before the American people: We can keep the promise we have made to one another to provide health care and long-term care to those who can’t provide for themselves. Or we can keep cutting taxes for those who have already benefited from most of the economic growth of the last couple of decades.

We know how the American people will respond if offered that choice. It’s up to the administration to make it.