"It's unfair for the citizens of tomorrow to bear the burden through our debt load for the health care of today's poor," Rep. Todd Rokita said. | AP Photo GOP split over Medicaid imperils Obamacare plans Republicans want to cut costs, return control to states and keep people covered — a near impossibility.

Top GOP lawmakers and President Donald Trump are coalescing around a plan to turn Medicaid over to the states as part of their Obamacare replacement. But the push is already driving a wedge between congressional Republicans and could gum up the repeal process altogether.

Conservatives have long called for block-granting Medicaid, which would cap spending and give states direct control over the program that provides health care coverage for low-income Americans. That goal is finally within reach now that Republicans control both chambers of Congress and the White House.


But divisions over how to do it are already causing tension. At the crux of the matter is an impossible task set forth by Trump: In recent interviews he has said he wants to block-grant Medicaid funding to the states but also ensure the roughly 11 million people who received coverage under the Affordable Care Act’s Medicaid expansion do not lose it.

Those two things are fundamentally at odds with each other because block grants are widely viewed as likely to result in sweeping cuts in government-subsidized health insurance for the poor. The mixed signals to the Hill are making it hard for lawmakers to get on the same page and coalesce around a plan.

Some, like Sen. Steve Daines (R-Mont.), whose state expanded Medicaid under Obamacare to cover 60,000 Montanans, say it’s important that low-income individuals not lose the help they currently receive.

“I’m not seeing any proposal or discussion around a replacement that doesn’t address the fact that we’ve got to take care of these folks that have expanded Medicaid,” Daines said.

Contrast that with House Budget Vice Chairman Todd Rokita, a strong advocate of block granting.

“Medicaid is among the top three drivers of our debt,” the Indiana Republican said. “It’s unfair for the citizens of tomorrow to bear the burden through our debt load for the health care of today’s poor, and it’s especially not fair for them to pay for [able-bodied adults] who otherwise should be making their own way.”

How to handle Medicaid is one of the most pressing issues on the Hill: Republicans can’t repeal Obamacare until they figure out what to do with Medicaid, given that GOP lawmakers from expansion states are worried about what’s going to happen to their constituents.

Trump’s ambiguous signals about how he wants to proceed will likely come up at the GOP retreat in Philadelphia this week. In the meantime, White House officials and Hill leaders are looking into whether they can tuck Medicaid reforms into the fast-track Obamacare repeal bill set to pass both chambers in March or April.

If Republicans can figure out how to reform Medicaid using the so-called budget reconciliation procedure, they won’t need Democratic help. If they can’t, they will need the support of at least eight Democrats to get 60 votes in the Senate, a task that’s likely to prove impossible.

But even if they can ignore Democrats, they will still need to reconcile the push for program cutbacks with Trump’s promise to keep coverage for low-income Americans.

“We’re going to continue with the Medicaid expansion but with a form hopefully that gives the states a lot more flexibility,” said Sen. John Hoeven (R-N.D.), who hails from a state that expanded Medicaid.

More conservative Republicans prefer block granting Medicaid funding to the states at a fixed rate, which would save Uncle Sam money but would also mean steep cuts to the program aimed at the nation’s poorest. In total, Medicaid covers roughly 70 million Americans, all of whom might be affected depending on how a plan is constructed.

Almost all of the House GOP budgets for the past few years have included a block-granting proposal. Trump’s pick to lead the Department of Health and Human Services, Rep. Tom Price, has also backed the idea. And conservatives say it will cut anywhere from $1 trillion to $2 trillion over a decade — savings they could use to pay for their own Obamacare alternative.

“My view is that was an inappropriate expansion of Medicaid. And it’s part of what needs to be repealed,” said Sen. Pat Toomey of Pennsylvania, who argued the expansion of Medicaid never should have happened.

Although nearly 700,000 of Toomey’s constituents have benefited from the Medicaid expansion, Toomey said Republicans should “make health care more affordable so people can buy it, not to make them dependent on a government program that has a very mixed record.”

Constituents rally supporting the Affordable Care Act in an event organized by MoveOn.org outside Sen. Pat Toomey's office on Dec. 20, 2016, in Philadelphia. | Getty

But most Senate Republicans, and more than a few House moderates, are leaning toward a plan that would base Medicaid funding on the number of people who qualify for it rather than on a fixed cap. Known as “per beneficiary” or “per capita” payments, the system allocates a set amount of money per enrollee, which would be more generous in years when there’s greater demand among low-income people for health insurance rather than a fixed annual number under strict block grants.

Supporters say this is a less extreme reform that’s more likely to win bipartisan support. Straight block grants, said Sen. Bill Cassidy (R-La.), don’t account for demographic or population changes or health costs that vary significantly from state to state.

“What I would like to do is take the revenue that a state or federal receiver would receive, give it to the state, free them from the encumbrances of Medicaid and allow them to come up with a plan to cover more people, per beneficiary,” said Cassidy, whose home state has covered roughly 375,000 people under Obamacare’s expansion of the program.

Conservatives, like Rokita, say that’s not what he called a “true” block grant and that it will be expensive. Plus, he argues, it means the federal government “still decides who is entitled to the benefit,” he said.

“States should decide this based on local circumstance,” he said. “One-size-fits-all type categories and formulas just cause inefficiency and bad allocation of resources. And limiting a resource, like block grants do, always increases innovation and efficiency.”

Speaker Paul Ryan in his “Better Way” agenda tried to split the differences, proposing that states be allowed to choose which option they prefer.

Both plans could face an uphill battle. Critics, especially Democrats, say the basic goal of transforming Medicaid from an open-ended entitlement to one in which federal funds are limited, would put coverage for millions of low-income people at risk. They’re unlikely to support either plan.

“I can’t conceive of any way in which a block grant would not put vulnerable people at risk,” Sen. Ron Wyden (D-Ore.) said. Republicans want, he said, “an ideological trophy — the repeal of [Obamacare] — and then maybe down the road we’ll talk about poor people.”

Republican governors, meanwhile, have been pleading with Hill leaders to make sure Medicaid expansion states aren’t given short shrift, as several met with GOP senators last week to discuss overhauling Obamacare and making broader changes to Medicaid.

“Everybody is very clear that the states that expanded and those that didn’t, that there be some sort of way that we equitably treat both,” Sen. John Thune (R-S.D.) said after meeting with state officials Thursday. “You can’t punish people for expanding.”

Even Trump’s top advisers are starting from different places, given states’ varying choices on whether to expand Medicaid as part of Obamacare. While Price’s home state of Georgia did not expand Medicaid, Vice President Mike Pence took up that piece of Obamacare as Indiana governor. And many conservative states have not expanded the program, complicating efforts to treat each state equally because they receive vastly different amounts of federal funding.

“Many of the states that voted for President Trump hadn’t expanded Medicaid,” said a lawmaker close to both GOP leaders and the Trump administration. “It’s hard to imagine that we’ll come up with a solution that penalizes them for making that decision.”

