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Tuesday, 12 December 2017 06:29

The Impending Destruction of Medicaid by Republican Tax Cuts

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medicaidmattersMedicaid is threatened by Republican tax restructuring bills. (Photo: Jobs With Justice)

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As the debate in Congress continues 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. (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, it plays a relatively small role in runaway health care spending in this country.  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.

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. ($56,517 IN 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 one 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." 

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 Geyman at: http://www.johngeymanmd.org .