Republicans in the Senate have spent very little time crafting their health care bill, attempting to ram it through with scant input from experts or advocates. That frenzy to get something done without stopping to think about the consequences has landed the bill in trouble: On Tuesday, Senate Majority Leader Mitch McConnell delayed a vote on the legislation after the Congressional Budget Office reported that it would leave 22 million Americans uninsured over the next 10 years. But the bill’s flaws go deeper than that headline number, repeating some of the worst mistakes of welfare reform two decades ago. Whether or not it turns out to be bad politics, the bill is horrible policy.
One provision tucked into the Senate’s health care bill allows states to not just seek a waiver to try something new with health care, but to get nearly carte blanche to do whatever they want. Under the ACA, states had to prove that their experiments would still cover the same number of people with comparably generous coverage without increasing federal spending.
Under the Senate’s Better Care Reconciliation Act, however, states would only have to prove that their plans won’t increase the federal deficit. Worse, the language is such that so long as that stipulation is met, the Department of Health and Human Services has to approve those plans, no matter what the other details may be.
So, as University of Michigan law professor Nicholas Bagley explains at Vox, a state could submit a plan to take the federal money it gets for health care and instead spend it on something else entirely. “What’s stopping a state from … using Obamacare money to fund public schools or affordable housing?” he muses. Such a request wouldn’t change the amount of government spending, so HHS would have to give it the green light.
This one provision, then, threatens to turn federal health care funding into a slush fund for states. And that will be a very tempting proposition, because state governments are strictly constrained by how much revenue they take in and must balance every year.
We don’t have to speculate what the outcome will be, however. Welfare reform has been a two-decade-long experiment in what happens when states can use federal funding for nearly anything they want. It has been nothing less than a disaster for the poor.
In 1996, Congress reformed the cash welfare program, which now goes by the name Temporary Assistance for Needy Families. The legislation changed the structure of welfare from cost-sharing, where states and the federal government shared the burden of rising cost, to a block grant. Part of that bargain was that Congress also handed much of the authority over how the programs get implemented over to the states, with incredibly limited oversight.
TANF’s core purpose is to give either cash or work supports to low-income Americans. But after welfare reform, states could use any money that didn’t go toward cash benefits for virtually anything they wanted. And they have since used the funding for lots of other, unrelated projects. One way they can do that is by simply using TANF money to pay for an existing poverty- or work-focused program and then use the freed-up funding for other initiatives. Others have been able to shift the money around to plug budget holes or cover other activities. They easily justify it because no one is really watching.
Today, just half of TANF funding goes to basic assistance, work supports, or childcare. The rest goes elsewhere, including completely unrelated policy items. For example, a number of states have directed the money toward college scholarships for middle-class families.
That has eroded TANF’s ability to hand out checks to poor people, what people typically think welfare is. The number of people enrolled has dropped by nearly two-thirds, fueled in part by the incentive for states to help fewer people and keep the savings for themselves. Any actual cash benefits people can get are now worth less than they were in 1996. They leave a poor family below the poverty line.
On top of all of this, just as TANF allows states to take unused funding and direct it elsewhere, the Senate bill appears to let states do the exact same thing to Medicaid, the health care program for low-income and disabled Americans. If they opt to get Medicaid funding through a block grant, the bill would allow them to take any excess funding that they don’t need to deliver care and put it toward “roads, bridges, stadiums, or any other item or service.”
It’s not hard to see, then, what states would likely do with the powers the Senate wants to grant them. They could simply request to use federal health care dollars for other programs or projects that are more pressing. They could attempt to whittle down their Medicaid programs and use the leftover money for other purposes. But that will mean hollowing out care for their residents.
There are other lessons that could be learned from welfare reform that have clearly gone unheeded by congressional Republicans. Both the House and Senate bills propose putting a cap on federal Medicaid spending. But after TANF was block-granted, and Congress simply started handing states a fixed pot of money, the value of that money has fallen 36 percent. It’s another factor that prods states to simply serve fewer people and give them less help.
Both bills also allow states to impose work requirements on Medicaid. This was a huge feature of welfare reform: Democrats and Republicans alike were obsessed with the so-called welfare queen, a woman who supposedly refused to get a job and had more children to collect bigger benefits, living off the government dole. Despite this figure being a fiction, the legislation included a strict requirement that recipients either have a job or actively be seeking one.
While some people left the program and got a job, particularly during the economy’s boom in the late 1990s, the work requirements have been far more likely to increase hardship. In Maryland, most people who were kicked off for failure to meet them had either no job or very little work a year later. The same pattern held true in a number of other states: The people who were pushed off the rolls were less likely to have work than those who weren’t sanctioned. Instead, a rising number of people are simply going without any work or cash assistance at all.
Adding a work requirement to Medicaid would almost certainly do the same thing. Most recipients already either work or live with someone who does. But many of them work in low-wage jobs that either don’t offer health insurance or don’t offer coverage that the recipients themselves could afford. Those who don’t work, meanwhile, usually have good reason: a disability, an illness, or the need to care for a family member with one. Sanctioning these people for a failure to work will only hurt, not help, them.
The dismal CBO report has now led some Republican senators to balk. Perhaps they might slow down and think about all of the ramifications of the legislation they’ve whipped up virtually overnight.