The GOP pivoted from an overt ACA repeal in 2017 to stealth policy changes today, but the budget reconciliation bill still will reduce coverage.
A number of readers and listeners have contacted me to have me help sort out the number of Americans who will be uninsured if the House-passed budget reconciliation also clears the Senate. After all, they note, didn’t President Donald Trump, House Speaker Mike Johnson, and other GOP officials promise no coverage cuts in healthcare, at least in Medicaid? It is a great point and here is my take on it.
First, we need a little history. Back in 2017 under Trump 45, the president and a GOP Congress explicitly set out to repeal insurance coverage by substantially gutting the Affordable Care Act (ACA). A repeal bill passed the House, but a skinny one failed in the Senate when Sen. John McCain, R-AZ, returned from his terminal brain cancer diagnosis to give the bill a literal thumbs down. Nonetheless, the explicit attempt to repeal the coverage act led the GOP to lose the House in the 2018 midterms. As of 2017, the GOP had a substantial majority in the House, but after the 2018 elections that majority literally swung the other way to Democrats. The Senate stayed in GOP hands after the 2018 election. The party in the White House tends to see poor results in midterm elections, but the ACA repeal clearly impacted the results of the House races and the number of seats lost to the Democrats.
The GOP is still spooked by the losses back in 2018. In general, party leaders felt that more overt attacks on healthcare coverage would undermine the GOP’s ability to maintain control of the House as of 2027. And their concern is certainly merited especially given the very tight numbers in the House today and the fact that most Americans like Medicaid and even the ACA. Consider a recent healthcare policy group KFF poll that finds that at least 4 in 10 Republicans are worried about the consequences of Medicaid cuts. Further, of the Republican respondents, the poll found that 75% are worried that sweeping changes to the program would hurt their family’s ability to get and pay for care. About 70% are concerned that the cuts would lead to an increase in the uninsured and negatively impact providers. Support for government healthcare programs (as well as the worries and concerns) increases even more among independents and Democrats. That means, at least in swing districts, these coverage issues certainly resonate in elections.
That is why Trump and some GOP leaders swore off overt reductions to healthcare coverage. They promised no coverage losses and just an effort to reduce fraud, waste, and abuse in healthcare. In reality, though, they adopted what I would call a covert or stealth approach to paring back insurance programs and the number of insured in Medicaid and the Exchanges. This was absolutely clear when the Congressional Budget Office (CBO) revealed its final bill score on the House-passed budget reconciliation bill. Even the stealth approach to cuts in Medicaid and the Exchanges has wide and far-reaching impacts to healthcare coverage and the uninsured rate.
The major reductions and impact on the uninsured
After a manager’s amendment in the House that added to healthcare reductions, the CBO finds that healthcare cuts amount to about $1 trillion over the 10-year budget horizon.
The big Medicaid policy changes include work requirements, limitations on the provider taxes that generate state matching contributions, and various enrollment changes and restrictions. Medicaid reductions in the bill are about $864 billion over 10 years. The CBO says about 7.8 million lose Medicaid due to the bill’s Medicaid provisions.
The bill also has reductions impacting the ACA, including changes to premium tax credits for migrants, increased recoupment at tax time of premium subsidies (if they were paid out at too high a level against final income), and increased eligibility checks. These ACA changes save about $230 billion over ten years. About 3.1 million lose coverage due to the bill’s ACA provisions and some other provisions.
The CBO also said that about 4.2 million will exit the Exchanges and remain uninsured due to the expiration of the enhanced premium subsidies at the end of 2025. Now, the bill does not repeal the enhancements. They sunset under existing law.
An additional approximate 900,000 would lose Exchange coverage as a result of a proposed Trump administration rule issued in March that would shorten the annual enrollment period, require stricter eligibility reviews, and make other changes.
This brings the total increase in the number of uninsured to 16 million by 2034.
How are states impacted?
With the CBO’s new score for the bill, KFF has updated its analysis of the impact of the increase in the uninsured rate by states. Much is dependent on how states react to the policy changes and whether they fill the void with other state revenue for some changes. But KFF estimates that the reconciliation bill likely would result in increases in the uninsured rates of 3 percentage points or more in 16 states and the District of Columbia. California and Florida would be the top two states in terms of newly uninsured (1.7M and 990k, respectively). New York, Texas, and Illinois follow at 920K, 770k, and 500k, respectively.
If you take all of the coverage impacts noted earlier in this blog, KFF finds that the greatest uninsured increases would be in Florida, Georgia, Louisiana, Texas, Mississippi, Washington, and the District of Columbia — where the uninsured rates would increase by at least 5 percentage points. The national increase in the uninsured rate would also be 5%.
Thirty-five states and the District of Columbia would see an increase in their uninsured rates of 3 percentage points or more. About half of the 16 million more people uninsured would be in Florida (2.3M or a 9% increase in the uninsured rate), Texas (1.9M or a 6% increase in the uninsured rate), California (1.8M or a 4% increase in the uninsured rate), New York (920k or a 4% increase in the uninsured rate), and Georgia (750k or a 6% increase in the uninsured rate).
Is it fair to have work requirements?
Many would argue work requirements are fair, but if you dig deep into the issue, you will learn the following.
- Many studies put the number of people in Medicaid who would continue to qualify due to work or exemptions could be more than 90%.
- The program to track and document work requirements is very expensive.
- The number of people who are slated to lose coverage due to work requirements is not primarily related to their lack of work or exemptions, but due to administrative snafus by the states that will administer the requirement, a convoluted and broken Medicaid enrollment and eligibility process that will become worse, and health literacy and language barriers of enrollees.
- State experiments in Arkansas and Georgia show that work requirements are expensive and lock people out of coverage.
- Upfront coverage, too, saves compared with crisis emergency room and inpatient coverage. In the end, we all pay for the crisis intervention – and pay more.
Thus, healthcare coverage should not be linked to work. People will lose coverage because of a lack of awareness and confusion over the overall process, and it will cost society more down the road. Speaker Johnson argues people will not lose coverage if they follow the rules. But it is not that simple, as any of us know when we battle each year during healthcare open enrollment and help our parents sign up for Medicare. Johnson’s elitist statement rivals that of Marie Antoniette losing touch with the plight of the people during the French Revolution.
Is it fair to tighten eligibility and validate it more often?
I would argue that states and the federal government investing in systems to prevent fraud and improper enrollment is not unreasonable. I actually am supportive of some of the proposals for tightening eligibility.
But at the same time, many of the proposals in the reconciliation bill put unreasonable barriers to enrollment in place. The cost of more frequent qualification is huge, and states struggle now to timely and accurately process enrollments. We saw this during the return of redeterminations post pandemic. Most people were disenrolled for administrative reasons. It is hard to ask people who need coverage to jump through even more hoops to get or maintain coverage when states themselves are wholly unable to administer a clean and fair enrollment system. Add to this the philosophical disposition in some states to do anything to limit Medicaid enrollment and growth and the inequity is even worse.
Is the GOP taking away the premium enhancements?
The Democratic-passed law is expiring. If Democrats wanted to, they could have made the enhancements permanent when they had the chance. But the GOP most assuredly will get blamed for the expiration during election campaigns in 2028. After all, over 4 million will lose coverage.
On the policy front, I am worried about some of the likely fraud in the Exchange program. The Paragon Institute, a conservative health policy think tank with influence in the administration, has done a good job documenting some of this. So, some reform in Exchange enrollment and perhaps the size of subsidies (enhanced or not) is something to look at.
But I also take a long view of things. Whether I personally like the size of the subsidy enhancements or not, they have driven coverage and ultimately that is good for healthcare and the country in my view. Letting the enhanced subsidies expire is not the right move. Perhaps an extension (with some tweaks) might be reasonable as we debate the virtues and harm over time.
Conclusion
In the end, whether the GOP is operating in overt or stealth mode, major impacts on coverage are the reality and that will have 2026 midterm election impacts. The reconciliation bill does not repeal the ACA, but it and related changes, including the expiration of the enhanced subsidies, would lead to 16 million fewer insured. By my count, the ACA Medicaid expansion and Exchanges have reduced who would have been uninsured by over 45 million people as of today. Thus, more than a third of that coverage would evaporate if the CBO predictions are accurate. That will resonate with voters.
None of this says that overall spending reductions should be pared back, though. Perhaps overall spending cuts need to be increased or some new tax reductions abandoned. I happen to believe the following:
- A $37 trillion national debt is outlandish.
- A bill that increases deficits to over $2 trillion annually is fiscally irresponsible.
- Economists say a budget deficit in good times of over 6% annually is twice any reasonable level.
- Spending (and effectively borrowing) $1 trillion annually and growing to service debt has so many ugly repercussions over time for funding needed services.
The Trump administration is on a public relations campaign now attacking the CBO’s analysis of what will happen to deficits and debt if the reconciliation bill passes. I will admit that it has a point. The CBO score is very much a static analysis and the Trump folks argue there are dynamic economic and revenue growth effects related to passage of the bill. True, but most of the tax cuts are already on line and any dynamic effect has largely been seen. And it is hard to argue that the remaining dynamic effect of the bill will do anything to substantially cancel out huge ongoing deficits and rising debt.
There are other ways to find spending cuts to tackle our deficit and debt problems than to fundamentally pare back healthcare coverage. This is so even on healthcare. Some see a huge disparity between states in terms of Medicaid funding, with blue states garnering far more than red states due to overly generous benefits and programs. A case could be made that benefit structures in Medicaid and the Exchanges could be standardized (with some diminution) and price reformed to lower the cost of care. There could also be real attempts to rein in fraud, waste, and abuse as opposed to what the GOP proposes. This would then help ensure everyone could maintain coverage.
The problem is Washington is entirely dysfunctional. There is no consensus to do right by people or the country’s finances in either the Democratic or Republican parties. If Mercutio were around today, he might say: “A plague on both your houses!”
#budgetreconciliation #trump #congress #aca #obamacare #exchanges #uninsured #medicaid #coverage
— Marc S. Ryan
