Trump Admin Readies Big Changes for Medicaid

Trump Admin Readies Big Changes for Medicaid

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Plus: House Dems unveil a $760B infrastructure plan
Wednesday, January 29, 2020

Trump Administration Readies Big Changes for Medicaid

The Trump administration is reportedly taking steps toward achieving a longtime conservative goal: allowing states to turn Medicaid funds into block grants.

Health officials are expected to release a plan Thursday that would give states the option to convert some of their Medicaid funding from the federal government into block grants with a fixed cap.

The new program — which will be referred to as “Healthy Adult Opportunity” rather than block grants, according to Politico — would allow states to request capped funding for adults who gained Medicaid coverage through the expansion of the program under the Affordable Care Act. It would also allow states to set limits on benefits and drug coverage for some patients, Politico said.

A major change: Proponents of the block grant approach say it will give states more flexibility in how they spend their Medicaid funds while providing some limits on the federal government’s open-ended commitment to cover a significant percentage of costs within the program. Critics say capped funds would simply offer a way for states to cut services to vulnerable populations — and would likely be illegal, to boot. Either way, the imposition of a cap on Medicaid funding would represent a significant change in the 55-year-old program, which now covers about 20% of the U.S. population.

Motivation for states: The program will be voluntary, and Larry Levitt of the Kaiser Family Foundation said an important detail will be how much leeway states are given to limit eligibility and benefits. “No state would volunteer to just get less money from the federal government for Medicaid under a block grant,” Levitt said Wednesday. “But, if the Trump administration allows them to limit eligibility, benefits, or drugs and pocket the savings, some states may jump at the opportunity.”

Questions about the branding: “So states would be allowed to turn away qualified applicants, limit health benefits and deprive people access to medications they need,” said Paul Waldman of The Washington Post. “That’s ‘Healthy Adult Opportunity’ in the same sense that if I shoot you in the kneecap, I’ve given you ‘Mobility-Enhancing Pain Relief.’”

Democrats push back: In a letter to the White House Wednesday, several dozen House Democrats warned against the proposed rule change. “The administration should not issue any guidance encouraging block grant waivers, should reject these waivers and the concept of block grants, and urge any state that is considering this misguided policy to commit its energy to implementing Medicaid as Congress intends,” the Democrats wrote.

What’s next: States will have to apply to the Centers for Medicare and Medicaid Services for permission to begin deploying the block grant option. In the meantime, the new rules are expected to bet met with multiple legal challenges that could delay implementation until after the 2020 election.

House Democrats Roll Out 5-Year, $760 Billion Infrastructure Plan

House Democratic leaders on Wednesday unveiled the framework for a $760 billion, five-year package that aims to rebuild U.S. infrastructure and cut carbon pollution but does not yet provide specifics about how to pay for the proposed spending.

The plan calls for investments in roads, bridges, rail and transit systems, airports, ports and harbors, water infrastructure, electric grids, broadband internet access and “brownfields,” or land that may have been contaminated by previous industrial use.

“It’s past time to for transformational investments to make our infrastructure smarter, safer, and resilient to climate change, or else we will keep throwing money at an antiquated system that is only holding us and our economy back,” Rep. Peter DeFazio (D-OR), chair of the Transportation and Infrastructure Committee, said.

The Democratic plan proposes to spend:

  • $329 billion on surface transportation to modernize the nation’s highways, including an emphasis on fixing the 47,000 structurally deficient U.S. bridges;
  • $105 billion on public transit improvement and expansion and $55 billion on railways;
  • $86 billion to expand broadband access;
  • $50.5 billion on clean water and wastewater infrastructure and $25.4 billion to protect drinking water;
  • $34.3 billion on clean energy;
  • $30 billon on airports and air travel modernization.

The plan differs significantly from the Trump administration’s proposed infrastructure plan, both in its emphasis on climate change and in its overall structure. The Trump plan, announced nearly two years ago, called for spending $200 billion in federal money over a decade as a way to encourage infrastructure spending at other levels of government and in the private sector. But the Trump plan failed to gain any traction on Capitol Hill as the administration focused first on tax cuts and an attempt to repeal Obamacare.

Reviving negotiations with the White House: “The proposal is intended to get U.S. President Donald Trump to return to the bargaining table,” Reuters’ David Shepardson says. Last year, Trump and Democratic leaders agreed in principle to spend $2 trillion in infrastructure, but they did not work out how to pay for it, and talks broke down after Trump lashed out about investigations into Russian interference in the 2016 elections.

The funding question still looms large: "This is a big step, and a major expense," House Speaker Pelosi said. "We have to find the funding for it." But the question of funding has always been a point of contention when it comes to infrastructure. “Paying for any massive infrastructure initiative is always a tricky issue, especially considering that the simplest option — a hike to the gasoline tax, which hasn't been raised since 1993 — has been a political non-starter for most lawmakers in both parties,” Wolfe writes. Democrats will look to reach a deal with the White House before discussing how to pay for their plan.

Not happening any time soon: Pelosi did not lay out any timeframe for a House vote on legislation built on this framework. "We'll go to the floor when we're ready," she reportedly said. “We're not talking about next week.” Lawmakers face a September 30 deadline to reauthorize a five-year highway spending bill.

Quote of the Day: CBO Chief on the Dangers of the Debt

“There’s a problem that’s decades in the making and decades in the solving, and … when interest rates are low, as they are today, the cost of not acting is pretty modest. And so it might be that, until interest rates start inflecting upward, that it’s difficult to garner support for the difficult decisions involved. ... I worry about a crisis — again, not today, not even within our 10 years, but over the oncoming decades, there could be slower-moving negative impacts if interest rates move up some — not to a crisis, but some — inflation moves up, the fiscal space … diminishes, that would have a slower-moving but certainly negative impact on the nation.”

– Congressional Budget Office Director Phillip Swagel, in testimony Wednesday before the House Budget Committee on his agency’s new budget and economic forecast.

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