Repealing the Affordable Care Act, as President Donald Trump and a Republican-controlled Congress promise to do, would have major implications for Medicaid, the government’s health-care program for the poor. Obamacare, as the ACA is known, expanded Medicaid as a way to provide insurance to millions of previously uncovered Americans. Congressional leaders have targeted that expansion. Trump promised not to cut Medicaid, but he proposes restructuring its funding in a way that could do just that.
1. Why do Medicaid changes matter?
Medicaid is the biggest health insurer in the U.S., providing benefits to about one in four Americans. Total Medicaid spending was $552 billion in the 2015 fiscal year, 17 percent of overall health spending. Along with education, Medicaid is one of the two largest components of spending by state governments, which administer the program and fund it in partnership with the federal government. Even people with private insurance are affected by Medicaid, either through their taxes or through the safety net it provides.
2. How did Medicaid change under Obamacare?
It was expanded to cover those who were unable to afford private insurance but didn’t have a low-enough income to qualify for Medicaid before. Thirty-one states and the District of Columbia used financial incentives offered under the Obamacare law to extend Medicaid eligibility. By offering Medicaid to those with a household income of as much as 138 percent of the federal poverty line, which works out to about $16,000 for an individual or $28,000 for a family, Obamacare added about 12 million people to the rolls of the insured. To congressional Republicans’ ire, the expansion was funded in part by tax increases on higher-income people. The federal government pays more than 90 percent of the cost of the Medicaid expansion.
3. What happens if the expansion is repealed?
It depends on what, if anything, would replace the Medicaid expansion and other jettisoned pieces of Obamacare. If Congress were to roll back the Medicaid expansion, the millions who gained health insurance as a result of it would lose that coverage. Only some would qualify for government subsidies established by Obamacare to help low- and middle-income people purchase private coverage. And those subsidies are also targeted by congressional Republicans for repeal.
4. What do Republicans propose instead?
Trump’s nominee for secretary of health and human services, Representative Tom Price of Georgia, wrote a plan in 2015 that would repeal Obamacare entirely, including funding for the Medicaid expansion. Under his proposal, the government would provide tax credits to encourage more Americans to purchase private health insurance. House Speaker Paul Ryan’s health plan is less drastic: It would seek to curb spending by doing away with the policy in which states receive federal Medicaid funds based on how much they spend on the program. Instead, each state would choose to receive one of two types of subsidies. They could receive a block grant, essentially a sum equal to their current federal funding, or a per-capita allotment, based on their number of Medicaid enrollees. In either case, federal funds would grow at a rate slower than under current law.
5. What is Trump’s position?
Trump campaigned on a promise to kill Obamacare, and he signed an executive order on his first day in office declaring that his administration would seek “prompt repeal” of the law. The president has said a plan for replacing the program would be released after Price is confirmed in his position. Trump has repeatedly pledged that there will be “insurance for everybody,” and has said that he won’t cut Medicare, Medicaid or Social Security. His adviser Kellyanne Conway said in a Jan. 22 interview with NBC that the president’s replacement plan for Obamacare would propose block grants for Medicaid.
6. What are the pros and cons of block grants?
Proponents say block grants give states more control over how they use funds and provide certainty for state budgets. Block grants also would cut federal spending, since the government would no longer provide unlimited matching funds. Critics say that by reducing aid funneled to states, block grants result in less health coverage or more spending at the state level.
The Reference Shelf
- QuickTake explainers on Obamacare and plans to repeal it.
- A Medicaid overview from the Center on Budget and Policy Priorities.
- A report from the Centers for Medicare and Medicaid Services on expansion of coverage.
- A Medicaid financing overview from the Kaiser Family Foundation.
- Paul Ryan’s health-care reform plan.