GOP ObamaCare Repeal/Replace Draft Misses the Mark on Medicaid Expansion

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Washington, D.C. — For eight years, Republican leadership promised the American people a swift repeal and replacement of ObamaCare. Last night, they released the first draft of their plan. But unfortunately, this proposal fails to keep many of those promises and gives permanent life to ObamaCare’s disastrous expansion of Medicaid.

Freezing enrollment in ObamaCare’s Medicaid expansion is critical to protecting taxpayers and freeing up resources for the truly needy. This is a politically popular solution that would save taxpayers more than $600 billion over the next decade.

Unfortunately, the current draft does not stop new states from expanding ObamaCare and does not freeze enrollment in existing expansions. The draft does not even give states the statutory authority to implement their own enrollment freezes.

Instead, the draft legislation would reduce the federal matching funds for individuals who enroll in the expansion after December 31, 2019 to states’ traditional matching rates, in lieu of the 90 percent rate promised by ObamaCare. The proposal would also allow new states to expand Medicaid to ObamaCare’s new class of able-bodied adults, continue ObamaCare’s enhanced funding for all expansion enrollees until 2020, and continue into perpetuity the enhanced funding for enrollees who sign up before 2020.

The legislation could also incentivize expansion in states that previously rejected it, potentially offsetting or even eliminating any potential federal savings gained by shifting a portion of Medicaid expansion costs for new enrollees onto states. Ultimately, this could open the door to billions in additional state and federal Medicaid expansion spending.

The Foundation for Government Accountability suggests the following changes to the bill:

  1. Immediately freeze all new Medicaid expansion enrollment.
  • Freezing enrollment would allow current enrollees to keep their current plans but no new enrollees would be allowed to sign up. This would result in immediate savings to taxpayers and protects limited sources for truly needy individuals that depend on traditional Medicaid.
  1. Eliminate enhanced matching rates for all new enrollees and give states explicit statutory authority to freeze enrollment on their own.
  • If Congress declines to close enrollment to Medicaid expansion, it should – at a minimum – immediately eliminate the enhanced matching rate for new enrollees in the expansion. This would create an incentive for states to reduce enrollment on their own, freeing up limited resources for the truly needy and providing relief for taxpayers. This should be paired with statutory authority for states to freeze enrollment.
  • The Arkansas House has already passed legislation – currently pending in the Senate – to seek a waiver from HHS to freeze Medicaid expansion enrollment. However, the waiver process is long, complicated, and provides only temporary authority. If Congress declines to freeze enrollment nationwide, it should give states the explicit option to stop enrollment through a simple state plan amendment.
  1. Stop new states from expanding Medicaid through ObamaCare or eliminate enhanced matching rates for new expansion states
  • ObamaCare’s Medicaid expansion has been a fiscal and moral disaster. New states should not be allowed to expand the program to a new class of able-bodied adults as Congress works to repeal and unwind it.
  • If Congress declines to stop new states from expanding Medicaid through ObamaCare, it should eliminate the enhanced matching rates for expansion enrollees. This would help remove ObamaCare’s incentive to prioritize welfare for able-bodied adults or services for traditional Medicaid enrollees in new states pursuing expansion.
  1. All able-bodied adults in Medicaid should be subject to work requirements
  • States are generally prohibited from imposing work requirements on any non-disabled adults on Medicaid. Without these requirements in place, the program becomes a mechanism to trap individuals in government dependence.
  • Congress should put work requirements in place for all non-disabled, working-age adults on Medicaid, whether they are in the expansion population or not. These requirements should mirror food stamp work requirements – enrollees must work, train, or volunteer for at least 20 hours per week as a condition of eligibility.

For more information on Medicaid expansion enrollment freezes, click here.

The Foundation for Government Accountability is a nonprofit, multistate think tank that specializes in health care, welfare, and regulatory reform. To learn more, visit TheFGA.org.

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