The GOP Medicaid Phase-Out: Go Ahead, Make My Day

First, they came for Social Security.  But lots of people like Social Security, so they couldn’t privatize Social Security.  Then, they came for Medicare.  But lots of people like Medicare, so they couldn’t privatize Medicare.  So now, they are coming for Medicaid.  And Steve Benen and Ezra Klein are worried.

It’s hardly surprising that Paul Ryan and the GOP are going to try to hack Medicaid to bits: after all, it’s the only big thing left, if you leave Defense off the table, refuse to raise taxes on the wealthy, and beat hasty retreats with Social Security and Medicare.  Will it work?  Benen and Klein fear that it will, given that, as Klein argues

Medicaid goes to two groups of people: the poor and the disabled. Most of the program’s enrollees are kids from poor families, though most of the program’s money is spent on the small fraction of beneficiaries who are disabled and/or elderly. These groups have one thing in common, however: They’re politically powerless.

Perhaps this is over-optimism on my part, but I don’t think that the “disabled” and “elderly” are powerless.  They both have well-organized lobbies.  More to the point, however, is that Medicaid is the single largest payor in the country for nursing home care.  More than two-thirds of Medicaid money goes to nursing home care, or at least that’s the number I have heard quoted.  Put another way, there are literally tens of thousands of nursing homes around the country that rely upon Medicaid to pay their bills.  Soon every Congressmember will know just how many nursing homes they have in their districts.  Much of this care is scandalous, and you can just imagine what would happen if Medicaid was hacked apart across the country.

I’m not sure you could get worse visuals, either: we’re talking about elderly disabled people in wheelchairs.  The House GOP won’t care a fig for the human costs, but they will care about political costs, and I believe that those will be huge.  Can you imagine the thousands of families who will testify about how Medicaid has saved their families’ budgets?

Ezra also notes, accurately, that

Medicaid is a state-federal match, and it absolutely kills states during recessions, as unlike the federal government, states can’t run deficits, and so they find themselves with increased Medicaid costs because they have more people in need but decreased revenues.

True again.  But if the elderly disabled are thrown out on the street, guess who is going to have to pick up a lot of those costs?  States and localities.  There will be enormous political pressure on lower levels of government to somehow deal with the problem.  That’s the reason why, as much as the states don’t like Medicaid mandates, every single one of them has elected to have the program (remember, a state doesn’t have to have Medicaid).

So Steve and Ezra are right to be worried about the GOP’s plans.  But we should not undersell progressives’ bargaining leverage here.  Medicaid has a lot of important and sympathetic constituencies behind it.

Somehow Republicans have become convinced that their deeply unpopular policies are actually popular, and Democrats have become convinced that their deeply popular policies are actually unpopular.  I’m not exactly sure how that has happened; maybe it’s Beltway Fever.  But it’s time to stop internalizing it.  This is a fight we can win, and make the GOP look very bad in the process.

Author: Jonathan Zasloff

Jonathan Zasloff teaches Torts, Land Use, Environmental Law, Comparative Urban Planning Law, Legal History, and Public Policy Clinic - Land Use, the Environment and Local Government. He grew up and still lives in the San Fernando Valley, about which he remains immensely proud (to the mystification of his friends and colleagues). After graduating from Yale Law School, and while clerking for a federal appeals court judge in Boston, he decided to return to Los Angeles shortly after the January 1994 Northridge earthquake, reasoning that he would gladly risk tremors in order to avoid the average New England wind chill temperature of negative 55 degrees. Professor Zasloff has a keen interest in world politics; he holds a PhD in the history of American foreign policy from Harvard and an M.Phil. in International Relations from Cambridge University. Much of his recent work concerns the influence of lawyers and legalism in US external relations, and has published articles on these subjects in the New York University Law Review and the Yale Law Journal. More generally, his recent interests focus on the response of public institutions to social problems, and the role of ideology in framing policy responses. Professor Zasloff has long been active in state and local politics and policy. He recently co-authored an article discussing the relationship of Proposition 13 (California's landmark tax limitation initiative) and school finance reform, and served for several years as a senior policy advisor to the Speaker of California Assembly. His practice background reflects these interests: for two years, he represented welfare recipients attempting to obtain child care benefits and microbusinesses in low income areas. He then practiced for two more years at one of Los Angeles' leading public interest environmental and land use firms, challenging poorly planned development and working to expand the network of the city's urban park system. He currently serves as a member of the boards of the Santa Monica Mountains Conservancy (a state agency charged with purchasing and protecting open space), the Los Angeles Center for Law and Justice (the leading legal service firm for low-income clients in east Los Angeles), and Friends of Israel's Environment. Professor Zasloff's other major activity consists in explaining the Triangle Offense to his very patient wife, Kathy.

16 thoughts on “The GOP Medicaid Phase-Out: Go Ahead, Make My Day”

  1. (Zasloff): “…if the elderly disabled are thrown out on the street, guess who is going to have to pick up a lot of those costs? States and localities.
    Why suppose that an end to the government’s intervention in the elder-care industry would yield this result?
    Eduardo Zambrano
    “Formal Models of Authority: Introduction and Political Economy Applications”
    __Rationality and Society__, May 1999

    Aside from the important issue of how it is that a ruler may economize on communication, contracting and coercion costs, this leads to an interpretation of the state that cannot be contractarian in nature: citizens would not empower a ruler to solve collective action problems in any of the models discussed, for the ruler would always be redundant and costly. The results support a view of the state that is eminently predatory, (the ? MK.) case in which whether the collective actions problems are solved by the state or not depends on upon whether this is consistent with the objectives and opportunities of those with the (natural) monopoly of violence in society. This conclusion is also reached in a model of a predatory state by Moselle and Polak (1997). How the theory of economic policy changes in light of this interpretation is an important question left for further work.

  2. I recently talked to someone who said what they really needed to cut was Medicaid. (As though Medicaid reimbursements were somehow lavish. What’s to cut?) This was an older person who presumably uses Medicare. It makes me sad and angry to see programs for vulnerable attacked this way. Don’t the Tea Partiers attacking government programs realize that their Medicare could be next, that their political activism is what’s keeping the program alive? Or is it just, whatever benefits me and people like me is o.k., but if it’s for “those” people, forget it.

  3. (Dylan): “Don’t the Tea Partiers attacking government programs realize that their Medicare could be next, that their political activism is what’s keeping the program alive? Or is it just, whatever benefits me and people like me is o.k., but if it’s for “those” people, forget it.
    No. Why ask Waste Management Inc. to open a chain of coffee shops or Raytheon to open a chain of funeral homes? It’s not their area of expertise. Similarly, the government of a locality is the largest dealer in interpersonal violence in that locality (definition, after Weber). Suppression of competition in the violence business is their area of natural expertise. Aside from making an initial assignment of title and defining contract law and rules of the road, the government’s ability to make a positive contribution to most other industries has severe limits.

  4. James, you put it right. I was perplexed at Malcolm’s response. It didn’t seem apropos. I still want to know what it is that makes people justify some government programs and vilify others. And I suspect that race and class has to do with it. That is, other race, lower class, program bad. My race, my class, program o.k. Unless you’re a consistent libertarian who objects to government programs across the board. I still think that’s a terrible solution, but at least it’s not hypocritical.

  5. Interestingly for economics, what we have going on here is an example of the importance of path dependence. It’s very difficult to pass legisltation, but it appears to be even more difficult to repeal it. So once the dismantling is put in train, returning to the previous status quo is very difficult. Which may be what some of the right is counting on.

  6. As an expert on Medicare and Medicaid I see this over and over again: people are truly confused about the degree to which Medicaid funding goes to the same population served by Medicare, that is, the elderly. Many people, including the children of elderly people, are shocked to find out that Medicare provides not a single dollar for the cost of long term care and that their parents’ nursing home care will instead be funded by Medicaid. The confusion arises because the majority of people who use medicaid are under the age of 30 and born poor — but the majority of Medicaid dollars (in some states, like Pennsylvania, upwards of 70%) are expended on those who become poor at the end of their lives as a result of needing institutionalized care. Sure, there are more young single mothers eligible for Medicaid, but if you are elderly and living in a nursing home Medicaid is paying on a weekly or sometimes even daily basis the equivalent of a year’s worth of care for basically healthy young families, week after week, for an average of 18 months (at which point, most people in nursing homes die).

    So please step back and assess what the Republicans in Congress have in store for us under 55 year olds: we will not have guaranteed medical care ourselves through Medicare, and we will be expected to somehow find the wherewithal to figure out what our elderly parents are going to do when they no longer have the option of Medicaid funding of nursing homes.

    But yeah, I’m with the original post: nursing homes are going to go ballistic and “inform” the elderly and their children what is going to happen if Medicaid becomes a block grant. If you want to see Florida go blue, this would the thing to do.

  7. I’m leery of any prediction of Republican vulnerability on any issue. There was a time when repeal of the estate tax seemed absurdly unlikely, and when presidential approval of torture was unthinkable.

    The Right, in my lifetime, has had a knack for steering the agenda in their direction. The fact that we are talking this – the fact that it’s on the table at all – is a victory for the bad guys.

    I’m hoping Zasloff is correct. Heck, I’ll even say that I think Zasloff is correct. Republicans are capable of overreach. But if we’re right about that, we won’t actually know for another 20 years or so. The Republicans play a long game.

  8. (James): “Malcolm: please stop trolling. If all you have is a libertarian hammer, every problem looks like a statist nail.
    James, please go “troll” yourself. Then read this again:…
    (Zambrano): “Aside from the important issue of how it is that a ruler may economize on communication, contracting and coercion costs…
    Got that? I’m neither a libertarian nor a Libertarian. I accept a strong case for State intervention when “a ruler may economize on communication, contracting, and coercion costs” in the solution of collective action problems. Most of us benefit from national defense and environmental protection, and State action can address the free rider problem. The libertarians I know favor open borders, while I favor limits on immigration. Most people are either anti-abortion or pro-choice, while I’m pro-abortion. The world will come to a Chinese policy in the best case scenario.
    The problem with the free application of the “free rider” argument is this: corporate oversight is a public good and the State itself is a corporation. Therefore, oversight of State functions is a public good which the State itself cannot supply. State assumption of responsibility for the production of public goods transforms the free rider problem at the root of public goods analysis but does not eliminate it.

  9. Barbara wrote: “If you want to see Florida go blue, this would the thing to do.”

    My Mother’s Day call basically consisted of me sitting through a protracted rant at what the GOP is doing to Florida and to Medicaid/Medicare. They have awakened the angry beast.

  10. Barbara: are you sure the nursing homes won’t just see this as an opportunity to “restructure” medicaid and trouser the entire block grant, with the problem of poor younger people hived off somewhere else?

  11. Malcolm: “oversight of State functions is a public good which the State itself cannot supply.” That’s what constitutional democracy and an independent judicial system are for. See Federalist Papers, Magna Carta, Simon de Montfort, etc.
    What this has to do with Medicaid in particular escapes me, and I’m not alone.

  12. (James): “ That’s what constitutional democracy and an independent judicial system are for.
    Right. It’s also what constitutionally limited government, federalism, and markets are for. The most effective accountability mechanism that humans have yet devised is a policy which gives to unhappy customers the power to take their business elsewhere. If we disagree about a matter of taste, numerous providers of goods and services will allow for the expression of varied tastes, while the contest for control over a State-monopoly enterprise must inevitably create unhappy losers (who may constitute the vast majority; imagine the outcome of a nationwide vote on the one size and style of shoes we all must wear). If a policy dispute turns on a matter of fact, where “What works?” is an empirical question, numerous local policy regimes or competitive markets in goods and services will generate more information than will a State-monopoly provider. A State-monopoly enterprise is like an experiment with one treatment and no controls: a retarded experimental design.
    (James): “What this has to do with Medicaid in particular escapes me, and I’m not alone.
    Understandding is within your capability, but there’s not much of a payoff. It’s called “rational ignorance” and it’s part of the reason than democratic control of industry commonly fails to outperform competitive markets. See Mancur Olson, James Buchannan, and Gordon Tullock.

  13. If a policy dispute turns on a matter of fact, where “What works?” is an empirical question, numerous local policy regimes or competitive markets in goods and services will generate more information than will a State-monopoly provider.

    Which is why it’s been helpful to see how different governments and private entities handle healthcare. The problem is, if you’ve got an ideological commitment to not using that information, then generating it doesn’t do you any good at all.

  14. paul: No, I don’t. Nursing homes are already underfunded in the current system and they are already grabbing a huge percentage of dollars.

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