Among the more striking changes in American politics over the past half-century is the evolution of Medicaid into a “third rail.” House Republicans, as they rushed early Thursday morning to cut not quite $1 trillion from Medicaid over the next 10 years, were at best only dimly aware of this. They’re in for a terrible shock.
Medicaid’s progress, from a stepchild program in 1965 that provided limited health care for the indigent, into today’s much more ambitious and capacious program serving significantly more lower-income Americans, happened gradually. Medicaid once served a small and politically powerless constituency that conservatives could threaten to defund without much fear of reprisal. But today, Medicaid commands not merely a significant voting bloc, but a significant Republican voting bloc. Not many House Republicans wished to hear about that when they passed the budget reconciliation bill, 215–214.
Until now, the “third rail” cliché (the metaphor being an electrified steel subway rail that kills any who touch it) was reserved exclusively for Social Security and Medicare. These two very expensive programs serve people age 65 and over, a cohort that’s long been the most powerful constituency in American politics, thanks to elevated voter turnout (and is more numerous now as the baby boom ages). Exempting these two programs from budget cuts is not always good policy (Social Security benefits should be taxed more aggressively at high incomes), but since 1982, when Tip O’Neill aide Kirk O’Donnell first coined the third-rail metaphor, it’s been smart politics.
Social Security and Medicare encompass 36 percent of all federal spending. Add in interest on the national debt that absolutely must be paid, and 47 percent of all federal spending is uncuttable. If the discussion is among Republicans (and it usually is), then defense spending, being sacrosanct, must also be exempted, taking 60 percent of all federal spending off the table.
You can see why Republicans are reluctant to grant Medicaid third-rail status. It constitutes 10 percent of all federal spending; protect Medicaid, and now you’re excluding from spending cuts 70 percent of the total (actually a little more, because Republicans won’t likely cut military pensions or veterans’ benefits either). Even with just 60 percent of spending off-limits, Republicans aren’t going to find anywhere near enough in cuts to pay for $4.6 trillion in tax cuts over the next 10 years. This week’s Freedom Caucus rebellion was about adding a teensy bit less to the current $1.9 trillion deficit by whacking Medicaid a little more. To characterize these rebels as fiscal conservatives is, as I’ve noted, preposterous.
The main vehicle for the House GOP’s Medicaid cuts is to require Medicaid recipients to get a job. That’s pretty ironic, because the program, as it was first implemented in 1966, required Medicaid recipients to be unemployed. Enrollment was almost entirely limited to people receiving Aid to Families With Dependent Children, the pre-1986 cash welfare program for jobless mothers. The federal program’s cost-sharing with the states further limited enrollment because many states didn’t want to pay up. As late as the mid-1970s, Medicaid still excluded about 40 percent of the nation’s poor, and enrollees struggled to find a doctor willing to accept Medicaid patients. That was fine by conservatives, who, according to Laura Katz Olson, a political scientist at Lehigh University, writing in her 2010 book The Politics of Medicaid, “were assuming that the program’s scope would be kept in check by its clients’ lowly status.”
That calculus was wrong from the beginning because, unlike cash welfare, Medicaid distributed funds directly to nursing homes, hospitals, and physicians, all constituencies with political clout. From the start, Medicaid also provided nursing home care to middle-class elderly people who spent down their savings to qualify for subsidies. States warmed to the program as they figured out clever accounting tricks to shift more program costs to the federal government.
Liberal members of Congress—most notably Representative Henry Waxman, a California Democrat—quietly extended Medicaid eligibility year after year. Waxman was aided, the Rutgers political scientist Frank J. Thompson writes in his 2012 book Medicaid Politics, by “keen negotiating skills and an understanding of how to take advantage of budgetary rules,” which through the 1980s did not oblige Waxman to show how much these expansions would cost. Colleen Grogan, a University of Chicago political scientist, calls this strategy “Grow and Hide.”
Much of the growth, however, was right out in the open. In 1997, a Children’s Health Insurance Program—created as a sort of consolation prize after Hillarycare went down in flames—was appended to Medicaid. Passage of the Affordable Care Act in 2010 included a provision further expanding Medicaid eligibility, with the federal government picking up 90 percent of the cost. Despite initial partisan resistance by red states, today only 10 states continue to refuse the money. The price these 10 states pay for their principled resistance is more deaths among lower-income people. A recent paper by economists Angela Wyse of Dartmouth and Bruce D. Meyer of the University of Chicago (and reported by NPR) found that those states that chose to expand Medicaid saved 27,400 lives.
A program that had only four million enrollees in 1966, and 22 million in 1980, today has 71.3 million enrollees—78.5 million if you include CHIP. That’s more than Medicare, which has 68.5 million enrollees. Let me say that again. More people are on Medicaid than on Medicare. And yes, most of these Medicaid enrollees—64 percent—have jobs. (The rest mostly attend school, take care of a family member, or are disabled.)
In a March poll by the Kaiser Family Foundation, a 53 percent majority reported that either they or a family member had received Medicaid coverage; when close friends were added in, that rose to 65 percent. Seventy-seven percent reported a favorable opinion of Medicaid, including 64 percent of Republicans. Among Republicans, only 33 percent favored a federal decrease in Medicaid spending, against 67 percent who wanted the spending level to rise or stay the same. “Medicaid, you gotta be careful,” Steve Bannon warned in February. “Because a lot of MAGAs are on Medicaid, I’m telling you.”
Nobody listened. Now Republicans are slashing away at at a program on which their political base has come to rely. If the bill clears the Senate in anything like its present form, these cuts will be extremely bad for America. But they will also be bad for those Republicans who signed their name to them.
