We’ve noted that as much as Rep. Tom Cotton likes to talk about repealing Obamacare, he doesn’t much like talking about just what would happen if Obamacare was repealed. In particular, he really doesn’t like talking about the 200,000 Arkansans who have gained coverage via the private option, coverage that would go away if Obamacare went away.
The talking points he uses to dodge the question — and the votes he’s taken — reveal that Cotton in fact would both eliminate all funding for the 200,000 people on the private option and dramatically slash the Medicaid and CHIP funds used in Arkansas to provide health coverage to the elderly in nursing homes, children in ARKids, the disabled, and very poor parents.
If you ask Cotton (and I have, quite a few times), he will studiously avoid taking a position on the private option, but will rattle off some boiler-plate conservative talking points — none of which amount to a plan to cover anywhere near the number of people covered by Obamacare. One of these talking points: turning Medicaid into a block grant program. States would be granted more flexibility but given flat lump sums — unlike the current open-ended program, in which everyone who is eligible is guaranteed coverage, the funding would be flat. If the states ran out of money, they’d have to make cuts.
Block granting Medicaid was one of the key points raised by Cotton in both Monday and Tuesday’s debates when asked about repealing Obamacare. He refused to say whether he had a plan for the people who would lose private option coverage if Obamacare was repealed, but said he would “start over” and…block grant Medicaid. Unlike some of his vaguer ideas, we have a somewhat detailed picture of what Cotton means here. Block granting Medicaid is a key feature of the Ryan budget and the Republican Study Committee budget, both of which Cotton voted for.
The first thing to understand about the Ryan budget and the RSC budget is that they eliminate Medicaid expansion entirely. All funding for Obamacare’s expansion of coverage: gone. (Goodbye private option.) So what about Medicaid in non-expansion states, or the smaller version of Medicaid which existed in expansion states before Obamacare? Well, the Ryan budget and RSC budgets use block granting to also cut funding for old Medicaid — including CHIP coverage for kids, like the ARKids program in Arkansas. According to an evaluation by the Center on Budget and Policy Priorities (CBPP), compared to current law, the Ryan budget would cut Medicaid funding available to states by 26 percent by 2024, and even more after that on top of cutting all funds available via expansion. The RSC budget would cut even more.
Keep in mind that Cotton has, multiple times, brought up block granting Medicaid when asked directly about about Medicaid expansion — about what would happen to those hundreds of thousands of Arkansans who would lose private option coverage if Obamacare was repealed. But this is a disingenuous non-sequitur: Cotton wants to repeal the funding for Medicaid expansion entirely; he’s only talking about block granting the pre-existing Medicaid program. Cotton has voted to repeal the Medicaid expansion (again, that’s bye bye private option) numerous times. The Ryan budget does it, the RSC budget does it, and of course the various stunt bills in the House to repeal Obamacare do it. Not only does he have no plan to replace that coverage, his preferred policy — the budgets he has voted for — would threaten even more people’s coverage.
The Ryan budget and the RSC budget dole out block grants by giving states annual lump sums to fund the Medicaid program — including the Children’s Health Insurance Program, or CHIP — based on the funding the state was getting when the budgets go into effect (from now on, when I say Medicaid, I mean the old Medicaid program, not the Medicaid expansion, which the budgets eliminate entirely). The problem, as CBPP explains, is that the block grant funds wouldn’t keep up with the costs of maintaining coverage:
[T]he block grant funding levels would not keep pace with health care costs or the expected increase in the number of Medicaid beneficiaries — especially the growth in the number of elderly beneficiaries, who cost more to serve — the block-grant funding levels would fall further behind need with each passing year. The percentage increase in the block-grant funding level from one year to the next would average about 3.5 percentage points less per year than what CBO expects to be the Medicaid program’s average growth rate over the coming decade under current law (outside of health reform’s Medicaid expansion).
That means that unless states raised taxes or cut other services in order to pick up the slack on their own, they would have to make cuts to Medicaid/CHIP: to provider reimbursements, to coverage offered to beneficiaries, or to the number of people eligible for the program.
How big would those cuts be? As we noted, the Center on Budget and Policy Priorities found that compared to current law, the Ryan budget’s block grants would cut Medicaid funds — including funds for CHIP programs for kids like ARKids — by more than a quarter by 2024, with the cuts increasing even more after that. Over the course of ten years, it would mean slashing $732 billion, or 20 percent of the funding which would be available under current law.
What would that mean for a state like Arkansas? The 2014 Ryan budget didn’t have a state-by-state breakdown of funding formulas, but the similar 2012 Ryan budget did. CBPP did an analysis of what the budget’s block granting would do to the funding states received for Medicaid and CHIP. Working backwards, CBPP applied the block grant funding formulas and imagined that the budget had been enacted in 2001. Over the ten-year period 2001-2010, a hypothetical Ryan budget block granting would have wiped out more than $8 billion in funding for Medicaid and ARKids here in Arkansas, a 39 percent cut. Again, the cuts would get worse over time — the hypothetical block grants would cut $1.5 billion in 2010 alone, wiping out half of the federal funds for Medicaid and ARKids.
The RSC cuts are even deeper. CBPP doesn’t have a detailed analysis of the 2014 RSC budget, but did one for the similar 2012 budget, and found that the RSC budget’s block granting would slash more than a trillion dollars from Medicaid and CHIP — 30 percent — over ten years, with funding for the programs cut by nearly 50 percent by 2022.
Again, I know I’m a broken record here but it’s a key point — the stats above don’t even count the impact of the Medicaid expansion (in Arkansas, the private option) that these budgets would repeal. These mammoth cuts to Medicaid/CHIP would come on top of kicking millions of Americans (including hundreds of thousands of Arkansans) off the coverage they’ve gained via expansion.
For all of the talk of “waste, fraud, and abuse,” cuts to the Medicaid program often amount to scraping at the bone. Medicaid is a program that delivers coverage at much cheaper rates than private insurance. Part of this is because reimbursement rates are already low (indeed, conservative critics of the program often complain that under-reimbursement leads to access problems and worse health outcomes in Medicaid). When you start cutting an already underfunded program, you end up losing so many providers that Medicaid programs will be faced with an access crisis. Or you end up simply taking away benefits or booting people out of the program. These cuts (as we saw when there was a potential Medicaid shortfall here in Arkansas) are painful.
It’s helpful to remember that in Arkansas, the Medicaid program before the private option was one of the stingiest in the nation. No non-disabled childless adult qualified at all, no matter how poor. Parents only qualified if they made less than 17 percent of the federal poverty level (that’s $2,674 a year for a family of two, $4,055 for a family of four). There just isn’t much to cut in Arkansas, but the state would have no choice if Cotton got his way on block granting. Who would be hit with cuts if one of the budgets that Cotton voted for passed? Children? Extremely poor parents? The elderly in nursing homes? People with disabilities? These would be the options facing Arkansas.
Those difficult choices would be left to the states. The Ryan budget and RSC budget do not have any requirements for “maintenance of effort.” States wouldn’t have to maintain any particular piece of their existing Medicaid program. The other thing to bear in mind is that any expansion of coverage would become nearly impossible unless the state funded it without any help from the feds. A state like Arkansas with barebones pre-ACA coverage would be locked into a funding level based on that barebones level. There would be no money from the feds if, say, the state wanted to give coverage to parents at 50 percent of the poverty level.
And what about ARKids? ARKids is a CHIP program. The Ryan budget and RCS budget would simply dole out one lump sum for CHIP and Medicaid. Because CHIP is small relative to the Medicaid program, it would likely take a smaller proportion of the hit, but programs for children would face cuts too.
This is Cotton’s sincere policy vision — a drastically reduced public safety net. Slashing funding for the pre-ACA-level Medicaid program and ARKids, and doing away with the private option altogether. 200,000 would lose private option coverage (plus another 40,000 on the Obamacare Marketplace). Arkansas would be given a fixed amount of money and be forced to cut billions from the remaining barebones Medicaid program over the next decade. Those cuts would hurt the neediest and most vulnerable citizens in Arkansas — the elderly, the disabled, children, and extremely poor parents.
When he starts spewing talking points when asked what would happen after he repeals Obamacare, this is what he means.