On Political Books

March/ April 2013 Consequential Drift

The government program where party differences have widened the most, and matter the most, is Medicaid.

By Ed Kilgore

Medicaid Politics: Federalism, Policy Durability, and Health Reform
by Frank J. Thompson
Georgetown University Press, 288 pp.

On June 28, 2012, when the U.S. Supreme Court announced its decision in the case of National Federation of Independent Business v. Sebelius, the happiness of progressives over the upholding of the Affordable Care Act’s individual health insurance purchasing mandate was accompanied by a rare moment of dismay over the Court’s treatment of provisions affecting Medicaid. Long called “Medicare’s poor second cousin,” the principal federal-state program supplying health care for the poor and disabled (and long-term care for the improvident elderly) had been transformed by the ACA, from being a stopgap and sloppily designed entitlement destined to be ultimately supplanted by a universal health care initiative into a key element of health care reform.

With the Court’s ruling that the ACA’s expansion of Medicaid would be optional rather than mandatory for the states, the program was thrust into the spotlight of national politics, where it remains today as Republican-controlled states seek to thwart Obamacare by rejecting the Medicaid expansion. There were even brief moments when Medicaid served as an issue during the 2012 presidential campaign, albeit a minor one when compared with the constant references to each party’s thrusts and parries over Medicare, considered the most politically crucial existing health care program.

For those with a special concern over the fate of low-income Americans, and for the states in whose budgets Medicaid is typically the weightiest item, the emergence of Medicaid as what the vice president would call a “BFD” was long overdue. But for everyone else, a crash remedial course in the ever-evolving history, arcane structure, and multi-dimensional politics of the program has become essential. It is largely supplied by Medicaid Politics: Federalism, Policy Durability, and Health Reform, a new book by Rutgers professor Frank J. Thompson.

Thompson’s book focuses on the period from the beginning of the Clinton administration through most of Barack Obama’s first term. Its sustaining concern is explaining how a program with so many flaws and anomalies—widely varying levels of funding and commitment among the states, an early unsavory reputation as second-class “welfare medicine,” disparate and often competing constituencies, and an occasionally receding but eventually powerful hostility from the Republican Party—has come to cover sixty-seven million Americans and potentially fifteen to twenty-two million more.

Medicaid has never really been the “health care for the welfare population” it is so often presumed to be. As Thompson notes, prior to the ACA 15 percent of Medicaid beneficiaries suffered from disabilities, and another 10 percent were over sixty-five. Half were children, and thus only a quarter were able-bodied adults. From the perspective of Medicaid expenditures, seniors and the disabled account for about two-thirds, and other adults and children only a third.

But precisely because Medicaid has served as the ever-changeable, ever-expandable vehicle for health care initiatives at the federal and state levels, its political identity has been hard to pin down. Since it originally reflected the Republican alternative to universal health coverage—a state-administered means-tested program for the very poor— it enjoyed bipartisan support until the Reagan administration, where the first of four major attempts to limit federal responsibility for it fell short in Congress. In the late 1980s and early ’90s, Medicaid became the object of liberal efforts to expand coverage (particularly for children in families with incomes a bit higher than the original Medicaid population) and also to provide alternatives to nursing home care for the very elderly and the disabled. By the ’90s (and up through the George W. Bush administration) first Democrats and then Republicans expanded the executive branch’s waiver authority significantly to support a series of state variations from the program’s original design, including use of managed care, expansion of coverage into the ranks of working families with limited income, and, eventually, conservative privatization schemes for Medicaid service delivery.

A major departure point for Medicaid occurred with the enactment of welfare reform legislation in 1996, which effectively de-linked income support and health care services for the poor. Less dramatically but still significantly, the creation of the Children’s Health Insurance Program, or CHIP—part of Medicaid in some states, a free-standing but parallel program in others—made Medicaid-style services more of a middle-class phenomenon, reinforcing the middle-class stake in the program created by its original and continuing long-term-care component.

Thompson treats all these phenomena as further complicating an already complex program, but also as increasing its “durability” as a politically broad-based federal-state service.

A less visible but major contributor to partisan differences over Medicaid have been Democratic efforts to increase the “take-up rate” of Medicaid and CHIP—the number of eligible people who actually participate in the program—and Republican efforts to reduce expenditures via heavy-handed procedures designed to deter “waste, fraud and abuse.”

The major threats to the entitlement status of Medicaid have been a series of three Republican efforts to turn it into a “block grant” with capped funding and extensive state control over eligibility and services. The first effort was probably the most serious, made by a Republican Congress in 1995 in the budget showdown with Bill Clinton that produced two government shutdowns before Congress retreated. Thompson analyzes this and subsequent “block grant” battles in great detail, noting that in each case the typical unity of governors over Medicaid policy succumbed to national partisan pressures. The ’95 fight had another political by-product Thompson does not mention: the elevation of Medicaid into a big Democratic Party priority, as evidenced by the 1996 Clinton-Gore ticket’s mantra of balancing the budget while protecting what became known as “M2E2”: Medicare, Medicaid, Education, and the Environment.

The third Medicaid block grant fight is theoretically still under way: it was a feature of the “Ryan budget” passed twice by House Republicans in 2011 and 2012. Indeed, the relative treatment of Medicaid and Medicare in the Ryan budget showed that perceptions of the two programs’ political saliency remained: even as analysts showed that the Medicaid block grant would reduce real funding for the program by about a third over ten years, the budget’s treatment of Medicare (with the biggest cuts back-loaded to the distant future and eliminated entirely for current and soon-to-be beneficiaries) got vastly more attention.

But the extraordinarily varying treatment of Medicaid in the Ryan budget and in the Affordable Care Act dramatized the vast differences between the two parties over the program that have only fully emerged during the Obama administration. Another area of big partisan differences has only begun to become apparent, as conservative “entitlement reform” enthusiasts view Medicaid’s long-term care component as a potential fiscal nightmare and as the final factor that will convert Medicaid into an unassailable “middle-class entitlement” like Medicare.

And that brings us back to the Medicaid-expansion battle.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.