Colorado’s clinics and hospitals are already feeling the strain of losing half a million patients from the post-COVID Medicaid wind-down, and now Congress is threatening to slash and burn the nation’s safety-net health insurance.
We’ve been down this road before, about a dozen times since Obamacare first became law in 2010. The Affordable Care Act dramatically increased the number of people who would qualify for Medicaid health insurance, which is funded by a combination of state and federal dollars. That expansion was expensive, but it helped reduce uncompensated care costs that were stressing the private health care and insurance systems.
Remember when Sen. John McCain saved the Affordable Care Act’s Medicaid expansion with a dramatic thumbs-down vote on the Senate floor that rejected President Donald Trump’s attempt at a skinny repeal? Well, McCain isn’t in the Senate anymore, and now Republicans are trying (again) to roll back the Medicaid expansion.
That is bad news for all Coloradans, not just those on the Medicaid bubble who are making more than the bottom threshold for Medicaid (about 35% of the federal poverty level) but less than the expansion threshold (138% of the federal poverty level).
Those already living on the bubble would likely lose their insurance immediately if Congress were to dramatically slash funding to states for Medicaid programs. And the program also wouldn’t be available to those who suffer a job loss in the future. Medicaid isn’t just for those who find themselves in chronic poverty. Our health care system is so broken that private insurance is cost-prohibitive for most Americans unless their employer is picking up much of the tab, and incentives on the Obamacare exchanges rarely are enough to fill the gap. Job loss is stressful. Add in the cost of intermediary health insurance, and savings, if they exist, can get depleted rapidly. Going uninsured is an unacceptable risk for most, as a single hospital stay could cost tens of thousands of dollars.
The popular refrain from supporters of ending the expansion is that able-bodied, single individuals shouldn’t be eligible for government-funded health care. But the KFF (formerly the Kaiser Family Foundation) found that data from the Census Bureau shows that only 8% of single people aren’t working, and we’re pretty certain that traumatic injuries, cancer, and liver failure aren’t solely reserved for people with children and spouses.
For reference, 138% of the federal poverty level is about $21,000 for individuals and $36,000 for families. Annual premiums on the exchange vary widely by county but can range from $1,700 a year to $3,756 a year for someone who is single.
Republicans who are backing the Heritage Foundation’s plans in Project 2025 to reduce the federal government’s coverage of the Medicaid expansion need to know that their decision will cost lives and life savings.
Colorado could be particularly hard hit. Gov. Jared Polis told The Denver Post that the result would be some combination of a reduction in the number of people covered, a reduction in coverage, and a reduction in reimbursement rates to doctors and hospitals.
The state covered the relatively small amount needed for the expansion population by creating the bipartisan Hospital Provider Fee, landmark legislation that assessed a fee on hospital stays to cover the cost of expansion to the state. That fee could, in theory, be increased to cover some of the funding lost from a Republican drawdown, but political support for further taxation on hospital stays is unlikely to emerge, especially given that hospitals are not transparent about the fee.
Republicans are not wrong to attempt to tackle this issue. Medicaid is a hungry federal program that gobbles up a huge share of our out-of-control federal budget. Reducing the federal portion of the expansion from 90% to 50% could save the federal government $1.9 trillion over 10 years, according to a KFF (Kaiser Family Foundation) analysis from 2025.
Those savings will be illusory.
The impact to hospitals and clinics would be dire, and states would be forced to step in with their own funding. Unlike the federal government, Colorado can’t go into debt to cover a shortfall, which is a blessing of fiscal responsibility but a curse when overnight federal funding is getting slashed left and right.
The KFF also estimates that 20 million people across America would lose Medicaid coverage and that a majority of those enrollees would be unable to get alternative coverage. Because in America, we don’t deny people suffering acute emergencies urgent care because they cannot pay, uncompensated care would soar, hospitals could fail, or more likely, states will pick up the costs one way or the other. Solving the federal budget crisis by passing it off to states is taking money from one pocket to put it in another. Our taxes are still our money, no matter the level of government.
Is there another way to save $1.9 trillion in Medicaid spending in the next decade? Maybe, but it’ll take a lot more work and nuanced policy analysis than this slash-and-burn effort that hides the damage being done by Congress, instead handing the knife to states to do Congress’s dirty work.
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