As members of Congress return from their Thanksgiving recess and continue the debate over what to do about tax cuts, Medicaid is clearly on the chopping block for devastating cuts at a time when it is increasingly needed. The stakes of these cuts are cavalierly discussed but little understood or cared about by GOP legislators.

Most Americans do not understand that Medicaid is not only the mainstay of U. S. health care, but the major access to care for tens of millions of uninsured, disabled, poor, and increasingly, middle class working people above the poverty line who cannot afford necessary care. A recent article by Phil Galewitz in Kaiser Health News describes the reach of the program which now serves as “the backstop for America’s scattershot health care system.” As the largest health care program (74 million compared to Medicare’s 55 million), Medicaid covers more than one in five Americans, with about one in four being on Medicaid at some point over the course of a year. As the workhorse of our system, Medicaid now covers 39 percent of all children, almost one-half of all births, more than 60 percent of nursing home and long-term care expenses, 41 percent of adults ages 18 to 64 with HIV, more than one-quarter of mental health services, and over one-fifth of spending on substance abuse treatment. Figure 1 shows the enrollment of the Medicaid population on a state-by-state basis.

Figure 1
Total U.S. Health Spending

Source:  Galewitz, P. Medicaid covers all that? It’s the backstop of America’s ailing health system. Kaiser Health News, September 25, 2017.

Since its enactment as part of the Great Society program in 1965 as a  program to help those living in poverty, Medicaid has progressively been expanded to other population groups in subsequent years—

  • in 1987, coverage was added for pregnant women and children living in families with incomes almost twice the federal poverty level FPL;
  • in 1997, the Children’s Health Insurance Program (CHIP) was enacted to cover eligible children
  • and since 2013, the Affordable Care Act (ACA) allowed states to expand Medicaid to 17 million people earning less than 138 percent of the FPL, as 31 states did.

Although critics will point to the expansion of Medicaid as a major reason for increased health care spending, that claim is belied by Figure 2, which shows that it plays a relatively small role in runaway health care spending in this country. (Galewitz, Medicaid nation. Medicaid has a bull’s –eye on its back, which means no one is entirely safe. Kaiser Health News, September 25, 2017).  Other factors primarily account for the uncontrolled escalation of health care costs and spending: lack of containment of costs and prices, profiteering by corporate stakeholders, increasing privatization of care, growing bureaucracy, waste, and even fraud.

Figure 2

Medicaid-Landscape
https://www.medscape.com/viewarticle/886187#vp_3

At this point, we don’t know all of the details of what is likely to emerge as the GOP’s version of “tax reform,’’ except that it will be large permanent tax cuts for corporations and the super wealthy, temporary and small tax cuts at best for the middle class, and enormous cuts in domestic social programs. According to a just-released analysis by Americans for Tax Fairness of the latest iteration of the Senate GOP tax bill, two-thirds of families earning $55,000 to $93,000 a year will see a tax increase, 53 percent of the tax cuts will go to corporations and businesses, and 62 percent of tax cuts will go to the richest 1 percent in 2027, up from 18 percent in 2019. These cuts will be paid for by slashing Medicaid over ten years by $1 trillion, Medicare by $473 billion, while reducing the corporate tax rate from 35% to 20%. As a number of important details remain unresolved, such as repeal of the individual mandate and federal deductions of state and local income and property taxes, it is still unclear whether the bill will clear the Senate and House Conference committee involving both chambers of Congress. The threat to Medicaid, however, is a dire and imminent reality.

If the GOP’s proposed draconian cuts in Medicaid and Medicare go through, there will be serious adverse impacts on hospitals, nursing homes, community health centers, family planning, other necessary services, and all the millions of individuals who depend on these services. Trump’s proposed 2018 budget has called for cutting food stamp programs (SNAP) by $193 billion, CHIP by $5.8 billion, defunding public schools by $9.2 billion, and eliminating a number of community-assisted programs for the poor and young people.

As long as we have our profit-driven, wasteful multi-payer financing system in the U. S., we can expect runaway health care inflation to continue unchecked, with essential health care becoming unaffordable and inaccessible to ever increasing parts of our population. According to the 2017 Milliman Medical Index, the annual costs for insurance and health care for a typical family of four with an average employer-sponsored PPO health plan is now $27,000, almost one-half of the median annual household income in the U. S. Table 1 shows how unaffordable annual deductibles of $3,000 for individuals and $6,000 for families have become for 60 percent of non-elderly households with incomes between 150 and 400 percent, and even for 20 percent earning more than 400% of FPL. The 400 percent level of FPL in 2018 is $48,240 for an individual and $98,400 for a family of four. By further comparison, the median annual income in the U. S. in 2017 is $56,516.

TABLE 1

Share of Non-Elderly Households with Liquid Assets Less Than Their Deductibles, Among People With Private Insurance

Deductible of $1,500 single/$3,000 family (average in employer-based plan)
28%    All non-elderly households
63%    Less than 150% of FPL
44%     150-400% of FPL
10%    400% or more of FPL

Deductible of $3,000 single/$6,000 family (common in individual market)
40 %  All non-elderly households
76%    Less than 150% of FPL
60%    150-400% of FPL
20%    400% or more of FPL

Source: Altman, D. The biggest health issue we aren’t debating. Axios, November 22, 2017.

In the event of getting sick or having an accident, those not able to afford their deductibles are generally forced to forego necessary care and have worse outcomes if and when they ever get care. If they encounter high costs of care for a serious medical condition, they will need the backstop of Medicaid, but even then will be forced to spend down their assets in order to qualify for Medicaid.

The bottom line is: in the face of rapidly rising health care costs with no containment in sight, we will need Medicaid more than ever before. Without it, there will be no safety net for a large part of our population.

What is the purpose of our government: to protect the wealth of the 1 percent on the backs of the 99 percent, or to serve the common good?  Protection of the wealthy has been the answer in recent decades, and has become the status quo, whether or not acknowledged by corporate benefactors and special interests. We can expect the government to perpetuate the status quo until it is effectively challenged through a progressive political process. This observation by Hubert Humphrey, Jr., Vice President of the United States from 1965 to 1969, is especially relevant today:

The way we treat our children in the dawn of their lives, and the way we treat our elderly in the twilight of their lives, is a measure of the quality of a nation.   —Humphrey, H. as quoted by Erin Conley, editor. Older and Wiser: Celebrating Your Years. New York. Barnes & Noble Books, 2003).

John Geyman, M.D. is the author of Common Sense about Health Care Reform in America (2017), and Crisis in U.S. Health Care: Corporate Power vs. The Common Good, and The Human Face of ObamaCare: Promises vs. Reality and What Comes Next

Visit John at: http://www.johngeymanmd.org/