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Less vulnerable than it appears, Medicaid misses the ax

By Tom Baxter

Last week, the government’s largest health insurance program was spared the ax because those in control of the ax couldn’t agree on how to swing it. If you think we’re talking about Obamacare here, you missed much of what was really going on.

The nation’s largest health insurance program, having surpassed Medicare, is now Medicaid and its companion program, the Children’s Health Insurance Program (CHIP), which cover more than 70 million Americans. Obviously, the Obamacare expansion of Medicaid in 31 states to people with slightly more than squat has had something to do with why Medicaid has moved past Medicare, the other blockbuster government health program.

But while the deepest political passions have been stirred around Obamacare, those with any skin in the game (save, maybe, one) understood this was at heart a battle over the older, and larger, program.

When Paul Ryan spoke last Friday of having “dreamed of this” since he was a 27-year-old at a keg party with National Review editor Rich Lowry, he wasn’t talking about a bill that displaced Obamacare, which didn’t exist back then. He was talking about Medicaid. No doubt the grandees of the American Medical Association and the American Hospital Association have opinions about Obamacare, but it was Medicaid which had to be much more in their focus when they came out in opposition to the American Health Care Act.

It made political sense when the programs were created in 1965 to divide the government’s health insurance system between one program which is entirely run by the federal government and open to any American who meets one single qualification — Medicare, the medical insurance program for American 65 and over — and another run jointly between the federal government and each state, intended to cover the poor and disabled, with a patchwork quilt of regulations in all the states about what that means — Medicaid. But increasingly, 65 seems like an arbitrary line dividing those who qualify for socialized medicine from those who don’t, and the sack-race logic of the parallel systems grows thin.

As we’ve noted recently,  Medicaid is a program which threads its way up through the middle class, sometimes innocently, sometimes understandably, and sometimes quite fraudulently. It’s the concept that Medicaid is a poverty program which makes it seem vulnerable. The reality that a lot of middle-class people’s parents are in nursing homes on Medicaid debunks that notion. One of the most effective talking points against Obamacare was that it would somehow upset this winking system. I think one reason the spurious claim that Obamacare mandated “death panels” had such power is that so many Americans were in on some scam or another, and like all amateurs at crime, feared retribution.

The really big scammers, the ones who live on Key Biscayne and drive sports cars, are a relative minority: some research has suggested the Medicaid fraud rate isn’t as fabulous as some have claimed. But the Department of Health and Human Service’s anti-fraud department has an eight-to-one return rate on the dollars it spends. If both sides really wanted to do something about health care costs, more vigorous enforcement against Medicaid fraud would seem like a great place to start. That there has not been more grandstanding around this idea is one indication of the hidden political sensitivities involved.

The bill which failed last week would have capped Medicaid, and shifted to a block grant system for the states electing to take that route. In doing so it would have shifted many of the crucial decisions about how the money would be spent into the domain of the sleeping giant of this story, the nursing homes. They may not seem so consequential at the Washington level, but in the states they are a powerful lobby. The struggle over dwindling dollars could have gotten ugly in some states, including our.

Even before the collapse of the short-lived American Health Care Act Friday, Kansas and North Carolina, two of the 19 states which have so far declined to accept the Medicaid expansion, were considering proposals to accept the expansion and the federal dollars that come with it. The Kansas Senate approved an expansion bill Monday afternoon which the Kansas House passed last week.

Like Gov. Nathan Deal, Kansas Gov. Sam Brownback supported a measure which gave the legislature rather than the governor the power to decide whether to accept the Medicaid expansion. Now he will have to decide whether to veto that decision. And ultimately, as the holdouts dwindle, the Georgia General Assembly will have to decide what it will do also.

Tom Baxter

Tom Baxter has written about politics and the South for more than four decades. He was national editor and chief political correspondent at the Atlanta Journal-Constitution, and later edited The Southern Political Report, an online publication, for four years. Tom was the consultant for the 2008 election night coverage sponsored jointly by Current TV, Digg and Twitter, and a 2011 fellow at the Robert J. Dole Institute of Politics at the University of Kansas. He has written about the impact of Georgia’s and Alabama's immigration laws in reports for the Center for American Progress. Tom and his wife, Lili, have three adult children and seven grandchildren.


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