The Medicaid Mess

The American Health Care Act, spearheaded by Speaker of the House Rep. Paul Ryan (R- WI), has failed. For now.

AHCA was characterized as nothing short of a public health crisis by Democrat critics, dubbed “Obamacare lite” by conservative Republican critics, tweaked time and time again to pacify moderate Republican critics, and deconstructed by everyone – from media pundits to thousands of citizens – until in the end the bill satisfied nobody.

On March 24, Ryan called the vote off, informing President Donald Trump he didn’t have enough Republicans to pass the bill which would have restructured President Barack Obama’s Affordable Care Act.

Trump wasted little time moving on to addressing tax reform, a sentiment Republican leadership echoed. Congresswoman McMorris Rodgers (R-WA), chair of the House Republican Conference, for example, is hopeful.

“Although I’m disappointed we couldn’t find consensus on how to repeal and replace Obamacare, I’m optimistic about the agenda House Republicans have proposed,” she said to the Juneau Empire, via email. “I’m eager to continue work on the many issues that are important to people in Eastern Washington and around the country, like lowering taxes and putting the people back at the center of our government.”

Likewise, Ryan didn’t dwell on the loss. In a tweet following the bill’s cancellation, he thanked the president, House GOP members, and the Secretary of Health. “There remains so much more we can do to improve people’s live,” he wrote. “And we will.”

The bill’s failure is welcome news for the 11 million Americans who gained coverage under Medicaid expansion in 2014, an option under the ACA, as well as for states who can’t afford to pay for the expansion on their own.

For the Republican party, though, the failure reveals fault lines.

Ryan’s proposed bill could not bridge the growing gap between moderate Republicans who accepted certain portions of the ACA and conservative Republicans who hated how little the complicated bill seemed to want to wipe Obamacare out entirely.

Conservative Republicans refused to budge on the ACA, a signature piece of Obama’s administration that in large part birthed the growth of the conservative Tea Party faction. In the end, they refused to vote at all, even after amendments were added to mollify them.

If there was a suitable compromise, it was unknown and unreachable.

“If you can figure that out, I recommend buying a lottery ticket,” said Marc Williams of the Colorado Department of Health and Human Services in an interview with the Empire.

The health care dilemma

Insurance companies want salvation from the Affordable Care Act’s premium-spiking results. Many Americans are demanding a repeal, having never wanted the ACA in the first place. Meanwhile, states which expanded Medicaid, some now wobbling under budget shortfalls, cannot risk losing the federal dollars Medicaid pumped into their treasuries or the inevitable political blowback of cutting medical coverage for 14 million Americans.

No matter what happens, too much money or too many midterm votes are at stake — exactly the kind of Beltway politicianship that tends to drive elections and the kind of politicianship Trump and hardline Republicans ran in opposition to.

Repeal, replace, or repair, no legislator would have escaped unscathed. The proposed bill brought out what can be arguably be called a push poll that demonstrated the political cost to Republicans who might endanger coverage.

According to the Quinnipiac University Poll, 56 percent of American voters disapproved of the plan, while only 17 percent supported it. Among Republicans, only 41 percent supported the plan.

“Replacing Obamacare will come with a price for elected representatives who vote to scrap it, say many Americans, who clearly feel their health is in peril under the Republican alternative,” said Tim Malloy, assistant director of the Quinnipiac University Poll.

Hooked on Medicaid

In policy, “ratchet effect” describes when government programs dial back, but not to the original levels before being introduced. A ratchet for Medicaid may not get the chance, and ironically it was Republicans who cranked it tighter despite making the health care issue a talking point for the last eight years.

According to the Congressional Budget Office, 14 million more people would have been uninsured under the proposed health care law than under Obamacare. By 2026, an estimated 52 million people under age 65 would be uninsured. (Under the ACA, only 28 million would be uninsured by the same year.)

While Republicans agree the current Affordable Care Act is not sustainable, the reasons are not unanimous. Congressional delegations and governors of several states say it’s only unsustainable because of Medicaid expansion – one of Obamacare’s biggest building blocks. After the ACA went into effect in 2014, 31 states, more than half the country, expanded Medicaid, which offers subsidized health care to low income individuals through federal and state funding.

Critics of the ACA claim that these states are now “hooked” on federal dollars. Florida Republican Gov. Rick Scott — whose state opted not to expand Medicaid and is currently supporting a full ACA repeal — made various statements to this effect.

“Why would we do that to our citizens – get people hooked on something they didn’t ask for?” Scott said during Politico’s Fifth Annual State Solutions Conference in February 2015.

Indeed, conservative warnings about government program growth have now crystallized. For some of these states, a Medicaid cut could worsen a budget gap or potentially cause one.

The congressional delegations and governors of states including Alaska, Arkansas, Colorado, Michigan, New Hampshire, Nevada, and Ohio — all but one of which have Republican governors — opposed any kind of Medicaid restructuring that would either lessen coverage for those in the expanded class or dump more of Medicaid’s costs onto state governments.

Congressmen and state officials in some of the states opposing a Medicaid rollback say treasuries won’t be able to absorb the financial effects of a wide-ranging repeal of the Affordable Care Act, particularly when there are budget holes.

“With a $3 billion budget deficit in Alaska, we simply cannot absorb a shift in federal responsibility to states,” said Valerie Davidson, Alaska’s Department of Health and Social Services Commissioner.

[Q&A: How Medicaid expansion affects Alaskans]

Davidson noted that Alaskans have received too much under Medicaid expansion — an option under Obama’s Affordable Care Act — to cut anything without tens of thousands previously uncovered citizens taking the blow.

In 2015, Gov. Bill Walker had expanded Medicaid to over 30,000 enrollees, via executive order, much to the Republican-led Legislature’s annoyance.

Alaska’s Medicaid expansion has paid out over $382 million in claims, nearly all of which came from the federal government. The state now opposes a federal rollback of the Affordable Care Act because it can’t afford to take lead, according to officials.

Alaska is in the early stages of what some state economists predict will be a years-long recession. When the price of oil dropped nearly $80 per barrel in early 2015, the state’s oil-dependent budget gaped open. Legislators in Juneau are currently debating solutions, though rounds of cuts to state services continue.

Opposition to alternatives

A quartet of U.S. Senators wrote a letter to Senate Majority Leader Mitch McConnell, asking him not to make any hasty decisions with GOP plans to overhaul the ACA. The letter was signed by Rob Portman (R-OH), Shelley Moore Capito (R-WV), Cory Gardner (R-CO) and Lisa Murkowski, R-AK.

“The Affordable Care Act is not working for states or the federal government and must be repealed and replaced with a plan that reforms Medicaid and protects individuals and their families over the long term,” the senators wrote. “However, the February 10th draft proposal from the House does not meet the test of stability for individuals currently enrolled in the program and we will not support a plan that does not include stability for Medicaid expansion populations or flexibility for states.”

Governors from four more states proposed the same.

In a March 16 letter, John Kasich of Ohio, Rick Snyder of Michigan, Brian Sandoval of Nevada and Asa Hutchinson of Arkansas wrote to McConnell and Ryan:

“Unfortunately the current version of the House bill…provides almost no new flexibility for states, does not ensure the resources necessary to make sure no one is left out, and shifts significant new costs to states.”

When asked for examples of what constitutes flexibility, Gov. Kasich’s office simply referred the Empire back to the letter.

Seeking stability?

Why Portman, Capito, Gardner and Murkowski co-wrote a letter together is anyone’s guess. Staffers from each of their offices give little weight to the fact that each senator holds a financial committee assignment. (Murkowski serves on the Appropriations Committee along with Capito, Portman on the Finance Committee, and Gardner on the Budget Committee.)

More likely, the states simply have financial issues in common.

When talking about stability, the senators mean two things: keeping the expanded Medicaid class in health care and keeping their state budgets afloat in the process.

Like Alaska, some of the other states have approaching budget shortfalls and fiscal cliffs.

With a budget deficit of over $400 million, West Virginia Gov. Jim Justice has said Congress’s Medicaid cuts would lead to a “public health emergency.” To balance its budget, the West Virginia Legislature has proposed a $50 million cut to the state’s Medicaid program, part of a larger $150 million cut package.

Oregon’s budget deficit for the upcoming year totals $1.7 billion, despite the buzz around recreational marijuana tax revenues.

Colorado has a budget shortfall of $119 million. Marc Williams of Colorado’s DHHS said a Medicaid rollback would produce a huge budget gap. Currently, 1.3 million Coloradoans are covered under the expanded Medicaid, 407,000 of whom are new enrollees.

“If we want to maintain the current services to the current level, there would be about a billion dollar shortfall,” Williams explained to the Empire.

Even states with otherwise bursting budgets are looking out for a bottom line of some kind.

New Hampshire’s treasury, for example, is as healthy as it’s ever been, but the state’s DHHS budget is facing a $66 million hole, according to DHHS Commissioner Jeffrey Meyers. New Hampshire Gov. Chris Sununu said he won’t support Ryan’s bill, offering the same reasons as the four senators who wrote the letter to McConnell.

Market exit

Staffers from congressional offices explained that the biggest problem with the ACA has been its effect on the insurance market, and the governors pinpointed the same in their letter. Stabilizing the insurance market should be the “first priority,” they wrote.

“Obamacare has destabilized the private health insurance market and set Medicaid on an increasingly unsustainable path for states and the federal government alike,” reads their proposal. “As the primary regulators of private insurance and significant funders of Medicaid, states need to be equity partners with the federal government in developing and implementing reforms.”

Simply put, these states want the ability to manage their respective Medicaid programs as needed to keep federal dollars flowing and take some of the strain off insurers.

In some states, insurers raised individual plan premiums, saying they were unable to make up the costs of increased coverage for high risk patients under ACA Medicaid expansion.

Opinions differ as to whether insurance companies are truly hurting or if they are just crying wolf. The Brookings Institution published a study back in 2014 claiming the ACA caused premiums to spike. Another study said the exact opposite just two years later.

The U.S. Department of Health and Human Services estimated that the average silver plan would rise by 22 percent this year.

Regardless of whether insurers make profits or not, some states have every reason to want to keep them happy and prevent insurers from exiting the marketplace.

In Alaska, just one individual insurance provider remains: Premera Blue Cross, which received a $55 million subsidy from the state. In Ohio, the number of individual insurers dropped from 18 to 11 in the face of an average 91 percent premium increase as of 2017. Colorado saw similar premium spikes prompting Gardner to say, “The people of Colorado can’t afford Obamacare.”

Ryan’s bill would have made premiums rise even more before they dropped slightly in several years, according to the Congressional Budget Office.

“In 2018 and 2019, according to CBO and JCT’s estimates, average premiums for single policyholders in the nongroup market would be 15 percent to 20 percent higher under the legislation than under current law,” the report reads. “By 2026, average premiums for single policyholders in the nongroup market would be roughly 10 percent lower than under current law.”

Additions were not enough

As conservatives balked on the bill, Ryan added last-minute amendments to address what is deemed as “personal responsibility.”

For example, part of the manager’s amendment added just days before the scheduled House vote, said states could opt to require non-disabled, non-elderly and non-pregnant Medicaid recipients to work in order to receive coverage. Rep. Jodey Arrington (R-Tex.) said this would prevent the program from becoming a “seductive entitlement.”

Working requirements for benefit recipients, however, are more a political concession than a workable solution to wean Americans off government programs, according to studies.

“Nearly 8 in 10 Medicaid adults are in working families, and most (59 percent) are working themselves without being required to do so as a condition of coverage,” reads a report from the Henry J. Kaiser Family Foundation.

Those who aren’t working, the study says, report illness, disability, or responsibilities like school and home life as the reason for joblessness. Half of Medicaid recipients in the ACA expansions said the program made it easier to look for work.

“Given these data and findings, Medicaid work requirements would have a narrow reach and could negatively affect those who are not working due to disability or caregiving responsibilities if they are not exempted from the requirement,” the study concludes.

Lobbying efforts from medical proponents underscored what kind of people the working requirements might have cut off from care — and the kind of support elected officials would lose if they endangered them.

The American Heart Association mounted a lobbying effort in favor of Medicaid expansion even further through the “Expanding Medicaid Works For America” campaign. The campaign builds on the fact that 53 percent of Medicaid recipients have cardiovascular disease.

“The American Heart Association (AHA) opposes policies that reduce access to, or significantly increase the cost of, necessary care for individuals with CVD,” wrote the association. “The Association also encourages States to accept federal funding to cover low-income adults with incomes up to 138 percent of the federal poverty level as a way of ensuring that these individuals will have affordable access to the health care services they need.”

Ryan and Republicans – What next?

Whatever schism exists between moderates and conservatives is likely to grow worse following the bill’s failure.

Both Ryan and Trump stayed polite after the vote cancellation. Trump said he didn’t blame Ryan for the fiasco, while Ryan thanked the president for his support.

Despite the manners though, the bill’s failure could set the stage for a coup in the warring GOP. The scripted responses paint a chummy version of Trump and Ryan, with mutual respect on both sides and no blame on either for the ACA overhaul’s flop.

In private and on airwaves, the tone changes.

Conservative Fox television show host Jeanine Pirro called for Ryan to step down just a day after the bill was pulled. Other White House sources said Ryan should be blamed for the bill’s failure.

The Freedom Caucus and hardline Republicans whose voter base in part drove Trump to the presidency have every reason to distrust Ryan to begin with. Ryan butted heads with Trump during the election bid, and in a leaked audio clip said he was “not going to defend Donald Trump — not now, not in the future” regarding one of Trump’s tawdrier scandals about fondling women.

Soon after the cancelled vote, rumors started about who will replace Ryan as chair, including conservative voices like House Freedom Caucus chairman Rep. Mark Meadows (R-NC), former Freedom Caucus chair Rep. Jim Jordan (R-OH), House Majority Leader Kevin McCarthy, and House Appropriations Committee chairman Rep. Rodney Frelinghuysen (R-NJ). Rep. Jordan’s office told the Empire there is nothing to the rumors.

DJ Summers is a national correspondent and author of The Business of Cannabis, due out in 2018. He can be reached at


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