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 ACA Repeal and Replace Failure Likely Keeps Medicaid Funding Status Quo

Even as President Trump pressures leaders of his own Republican party to take up Affordable Care Act (ACA) “repeal and replace” legislation when Congress returns to work after Labor Day, the political reality will almost assuredly prevent that from happening.

This is according to Naomi Lopez Bauman, the director of health care policy for the Goldwater Institute, who also says the failure of the Republican majority to revamp the ACA will also mean that long term and post-acute care (LT/PAC) providers will not see sweeping changes to Medicaid funding anytime soon.

“There is no appetite to go back and start over on health care,” she tells Provider. “And, the trend line is not there either. You have tax reform and the debt ceiling and then soon enough midterms ahead of it.”

This will, however, not prevent Congress from passing legislation this fall to salvage the individual health insurance markets, Bauman says. Many of the state-based marketplaces are in disarray as health insurers are unsure of whether the Trump administration will maintain federal payments to backstop their heavy losses, leaving some locales without health plans to provide coverage to qualified individuals and/or major premium rate increases.

Against this political backdrop, Bauman says it is clear the Medicaid program will not be seeing massive changes as spelled out in Republican ACA repeal and replace legislation. Measures in the House-approved bill and the proposals that failed in the Senate both would have switched federal outlays to the states for Medicaid to a per-capita cap or block grant system from the traditional open-ended model.

How these possible changes would have affected all of the various populations covered by Medicaid is not certain, but the LT/PAC profession pushed hard against the ACA repeal and replace measures affecting Medicaid and the elderly that could have been harmed by changes to funding mechanisms.

Bauman says the crux of the problem for many Republicans is not to do with how long term care services are funded by Medicaid, but by the expansion of Medicaid under the ACA to include able-bodied adults. She also stresses that the broad issue of Medicaid being able to sustain itself is not new, and not really a partisan issue.

“Members of Congress and the federal executive establishment know Medicaid is unsustainable as it is designed now,” Bauman says. She says, for example, that President Obama had proposed caps on hospital assessment matches and changes to the FMAP (Federal Medical Assistance Percentage) for states in order to bolster the overburdened program.

“There is a lot more recognition than what people may admit to the problems with Medicaid. But it has really become the third rail in American politics,” Bauman says.

“You have a Congress that is well aware of the problem, even if they won’t say it, and they know reform has to happen.

“This is because, quite frankly, Medicaid is already a crisis in the states. Medicaid is squeezing out education and transportation funding in many places, because it is a very significant budget item.”

In Bauman’s mind, the question of changing the funding model is paramount but so is allowing states the flexibility to change their Medicaid programs.

The Trump administration has also emphasized the need to allow states to ask for waivers from the Centers for Medicare & Medicaid Services (CMS) to do just that. For instance, on Aug. 3, CMS said it had approved a demonstration program for Florida that allows the state to operate a capitated Medicaid managed care program and a low-income pool to provide continuing support for the safety-net providers that furnish charity care to the uninsured.

Ash Shehata, partner for KPMG’s Global Healthcare Center of Excellence, agrees that the Medicaid program, as designed currently, cannot keep going. “You’ve got some states like Kentucky where you have estimates that 40 percent to 50 percent of the population is eligible for some sort of assistance like this,” he says.

And, the pressure on Medicaid is only growing, fueled of late by what President Trump on Aug. 10 said was a national emergency of opioid addiction. “The opioid crisis is also affecting this and driving up Medicaid costs,” Shehata says. Some of the alternatives beings discussed in the states are to go back to some form of wider welfare reform and look at work requirements for the able-bodied adults able to get Medicaid under the ACA.

He says that elders, people with disabilities, and dependent children already push state budgets to the limit, but if states “pull off some Medicaid work eligibility limits that may help a little but does not solve the problem at all” of how to sustain the program for its intended populations.

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