U.S. Markets closed

Point-Counterpoint: Is the Trump Administration Cutting Medicaid?

Yuval Rosenberg

The Trump administration last week announced major changes to Medicaid, the federal-state health care plan for the poor. The new guidance invites states to opt-in to block grants that provide capped federal payments for a subset of beneficiaries in exchange for increased state flexibility to make changes to their Medicaid programs, including eligibility standards and benefits.

“It’s the administration’s latest move to reconfigure Medicaid to discourage enrollment by able-bodied adults and prioritize care for the most vulnerable,” The Washington Post’s Paige Winfield Cunningham wrote last week.

The plan, which the administration calls “Healthy Adult Opportunity” (HAO), has come under heavy criticism from opponents who charge that it’s just another example of Trump officials seeking to curtail Obamacare expansion and reduce health care coverage.

So is the Trump administration slashing Medicaid? In two new Washington Post op-eds, the administration's top Medicaid official and a leading health care expert provide very different answers:

No, the administration is not cutting Medicaid. “Let me be clear: Fearmongering notwithstanding, HAO does not cut Medicaid funding,” Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, writes. “This optional demonstration continues federal funding to states based on their historical spending with a reasonable growth rate.”

Verma argues that Medicaid, as the largest or second-largest budget item for states, crowds out spending on other priorities, from public safety to infrastructure to education. And with the cost of long-term care projected to rise dramatically over the coming decades, the viability of Medicaid faces a threat. “We shouldn’t have to tell someone with a disability to get on a wait list for services because we’re diverting precious resources to cover someone who potentially doesn’t qualify,” Verma says. “HAO can help states prioritize these finite dollars for those who need them most.”

The administration’s policy will give states the ability to design solutions that meet their needs, Verma argues, while still making them accountable for adhering to federal standards. On top of that, given that the new policy is optional and potentially affects only a portion of the Medicaid population — working-age adults who aren’t disabled — those critics “railing against the Trump administration’s ‘cuts’ to the Medicaid program are railing against a policy that doesn’t exist.”

Yes, the Trump administration is trying to gut Medicaid. “There’s no mistaking that the Trump administration is moving to transform Medicaid from an entitlement program covering all the poor into a selective welfare program funded by fixed and limited block grants — a shift that, over time, could starve the program of funding,” writes Nicholas Bagley, a professor of law at the University of Michigan and supporter of the Affordable Care Act.

The structure of the Trump program incentivizes states to be stingy with their Medicaid programs so that they can keep more federal dollars and channel them to other health programs. “Pruning the Medicaid rolls will thus yield a financial windfall for them,” Bagley says. He adds:

“The agenda here isn’t subtle. Republicans see ‘block granting’ Medicaid — turning it into a fixed yearly payment rather than one that automatically rises to meet needs — as a way to limit the federal government’s obligations to the poor. There’s a clear parallel to 1990s-era welfare reform. In 1996, President Bill Clinton cut a deal with Republicans to transform cash assistance to the indigent into block grants to states. … The size of those block grants hasn’t budged in more than two decades. In real terms, they’re worth about one-third less than they initially were, even as the U.S. population has swelled by 60 million.”

Read Verma’s op-ed here and Bagley’s here. And you can find a new Kaiser Family Foundation report on the implications of the Trump policy here.

Like what you're reading? Sign up for our free newsletter.