When Republican leaders in the House of Representatives released the proposed American Health Care Act to replace Obamacare, it was the shot heard around the Beltway. It represents the first major step in fulfilling a key mandate issued by the American people in November’s election results. However, despite a flurry of headlines, meetings and negotiations, key technical points about implementation have been lost in the discussion.
Medicaid is the one area that these technical points matter most in repealing Obamacare. The Medicaid expansion is already facing massive budget overruns and crowding out resources for the truly needy. Unwinding this expansion to able-bodied adults and refocusing the Medicaid program on the most vulnerable is critical to any repeal effort.
The AHCA makes a bold play to set the Medicaid program back on a more sustainable path. It charts a path forward to slow the long-term growth of the program. Those changes, if combined with additional flexibility for states, could make the truly needy a priority once again. This is a tremendously encouraging sign.
But the details really matter. This may be the best opportunity to reform Medicaid for years to come. With a few technical tweaks, the AHCA could solidify its legacy as the most meaningful welfare policy change in a generation, helping to both reduce dependency and protect resources for the most vulnerable. Without these improvements, the AHCA could lose ground by increasing the federal deficit and encouraging more states to expand Medicaid to a new class of able-bodied adults.
Here are four small, common-sense ways to improve the current bill:
1. Immediately stop or freeze all new Medicaid expansion enrollment
Stopping new states from expanding Medicaid under Obamacare and freezing enrollment in states that have already expanded will allow larger reforms to the Medicaid program in the future. This would allow current enrollees to keep their current plans, but no new enrollees would be allowed to sign up.
This is a politically popular solution with bipartisan support that would save taxpayers more than $600 billion over the next decade. This change is also necessary to protect truly needy individuals who depend on the traditional Medicaid program and are often the target of heartbreaking cuts as state money is instead funneled toward able-bodied adults in the expansion population. In order to keep our existing promises to those with developmental and physical disabilities, we need to stop making new ones to able-bodied adults.
The current AHCA does not freeze enrollment, though it does start rolling back the extra Obamacare funding for new enrollees. This move is not as effective as freezing enrollment, but it could represent a huge step forward if done immediately and paired with explicit authority for states to freeze enrollment in Medicaid expansion on their own.
2. States should be given explicit authority to freeze enrollment in Medicaid expansion.
If Congress does not immediately stop or freeze all new Medicaid expansion enrollment, it must give states explicit statutory authority to do so on their own. Several states have already signaled an interest in this possibility.
The Arkansas House, for example, has already passed legislation to seek a waiver to accomplish this. Lawmakers in other states have started to raise the idea as well. Congress should give states the explicit option to stop enrollment through a simple state plan amendment.
This will help states protect their states budgets, as the AHCA is currently structured to shift more costs to states who sign up new Medicaid expansion enrollees in 2020 and beyond. Allowing states to freeze enrollment would give them meaningful flexibility and a real choice in the matter. Without a tweak, Congress can expect states to lobby every few years to push back any changes, hindering efforts at real reform and reducing or eliminating any projected savings.
3. No new states should be allowed to expand Medicaid through Obamacare
The AHCA allows new states to expand Medicaid under Obamacare and continue to receive the enhanced matching rate until 2020, at which point they are treated the same as all current expansion states. Allowing new states to expand will offset any potential savings from repeal and replace and may even wipe out those savings altogether. Some lobbyists are already using the availability of this continued funding to push forward new expansions in states that have wisely rejected them. Without a tweak, this will make Obamacare’s Medicaid expansion a hot political topic in multiple key races for governor, the U.S. Senate and state legislative races.
4. Include work requirements for all able-bodied enrollees.
Currently, states are generally prohibited from imposing work requirements on any non-disabled adult in Medicaid. Without these requirements in place, the program essentially operates as a welfare trap as enrollees have to maintain a low-income to stay enrolled.
Numerous states have expressed an interest in work requirements including expansion states (Arizona, Arkansas, Kentucky) and non-expansion states (Maine, Wisconsin) alike.
Congress should put work requirements in place for all non-disabled, working-age adults on Medicaid. Medicaid work requirements have strong bipartisan support with voters and similar work requirements have proven incredibly successful for welfare cash assistance programs and for certain populations on food stamps. It is time to extend them to Medicaid.
The AHCA is a historic opportunity to not only deliver on campaign promises but to correct decades-old failed healthcare policies. Medicaid reform should be front and center. We all want to effectively help the truly needy, but in order to do so, we must prioritize the most vulnerable and remove the incentives for states to expand the program further.
Obamacare’s Medicaid expansion has cost billions of dollars, stealing state and federal resources from education, public safety, infrastructure, and services for seniors and individuals with disabilities in the process. There are still several opportunities to improve the bill as it goes through the process, and it is imperative that Congress address Medicaid head-on to fulfill their promises of repeal and a fiscally responsible reform.
Josh Archambault (@josharchambault) is a senior fellow with the Foundation for Government Accountability.
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