The dirty little secret no one in politics or the press will mention is that Medicaid -- the free health care for the poor -- is the biggest driver of inflation in medical prices, and is slowly driving state budgets into the ground.
In repealing Obamacare, Republicans will fix that.
First the facts.
1. Medicaid is a federal subsidy of state Medicaid plans mandated by Congress. The feds pay between 50% and 75% of a state's spending on Medicaid, depending on how wealthy the state is.
2. Medicaid now accounts for 15% of the state budgets of the various states.
3. That's more than the states spend on higher education (13%) and second only to school spending (24%) on things states spend money on.
4. While Congress mandates the minimum states can provide, the real problem is the maximums.
Here is why that is a problem.
Lobbying by the $3 trillion-a-year medical industry makes it nearly impossible for state legislators to say no to an extra service Congress offers help in funding.
Often the argument is for every dollar the state spends, it gets a dollar from the federal government.
All that money out there chasing a finite supply of medical services jacks up medical prices, even when Medicaid "negotiates" a lower price.
The percentage of state funds that go to Medicaid rose from 6% in 1988 to 15% in 2014. That is unsustainable.
How do we solve this? In repealing the Patient Protection and Affordable Care Act of 2010, Republicans in the House want to reform Medicaid.
From the Associated Press:
The plan would repeal the statute's unpopular fines on people who don't carry health insurance. It would replace income-based premium subsidies in the law with age-based ones that may not provide as much assistance to people with low incomes. The payments would phase out for higher-earning people.
The proposal would continue the expansion of Medicaid to additional low-earning Americans until 2020. After that, states adding Medicaid recipients would no longer receive the additional federal funds Obama's law has provided.
More significantly, Republicans would overhaul the federal-state Medicaid program, changing its open-ended federal financing to a limit based on enrollment and costs in each state.And from Fox News:
“We begin by repealing the awful taxes, the mandate penalties and the subsidies in ObamaCare,” House Ways and Means Committee Chairman Kevin Brady, R-Texas, told Fox News’ “Special Report with Bret Baier” in an exclusive interview.
Asked about some conservatives’ concerns that GOP leaders are merely pushing ‘ObamaCare Lite,’ Brady countered, “It is ObamaCare gone.”
House Energy and Commerce Committee Chairman Greg Walden, R-Ore., told Fox News they also “are not pulling the rug out from under people.” Rather, he said Republicans want to restore power to the states and control costs in Medicaid and elsewhere.
“It’ll amount to the biggest entitlement reform, probably in at least the last 20 years,” he said.Zero Hedge summed up the plan:
A breakdown of core aspects removed from the existing law (courtesy of Axios):
- All Obamacare taxes
- All Obamacare subsidies, including its premium tax credit
- Individual, employer mandate penalties
- "Cadillac tax"
- No longer will limit the tax break for employer-sponsored health coverage
- No payments to insurers for cost-sharing reductions
- Selling insurance across state lines (can't be done in the "reconciliation" bill)
- Medical malpractice reform (can't be done in the "reconciliation" bill)
What is being added:
People are overlooking the importance of that Medicaid cap. Medicaid is a half-trillion-dollar-a-year program.
- Pre-existing condition coverage
- Continuous coverage — 30 percent penalty if people don't keep themselves insured
- Special fund to help states set up "high-risk" pools, fix their insurance markets, or help low-income patients
- Enrollment in expanded Medicaid will be frozen
- Current enrollees can stay until 2020, and keep getting extra federal funds, until they leave the program on their own
- Medicaid will change to "per capita caps" (funding limits for each person) in fiscal year 2020
- A new, refundable tax credit will be available in 2020 to help people buy health insurance
- Covers five age groups — starts at $2,000 for people in their 20s, increases to $4,000 for people in their 60s
- It's not means tested, but phased out for upper-income people (starting at $75,000 for individuals, $150,000 for families)
- Insurers can charge older customers five times as much as young adults
That's where the big money is.
Medicaid is the sacred cow that President Trump must turn into hamburger by ending the "open-ended federal financing" of Medicaid.
You think the medical industry will let that happen without a fight?
Their crony Social Justice Warriors will turn this into a battle royale.
President Trump and House Speaker Paul Ryan have a battle cry that will trump them on that:
Repeal Obamacare.Kind of ironic that the Democratic Party's attempt to expand government control of the medical industry may actually lead to a reform that makes health care insurance affordable again.
This bill is 66 pages. Obamacare topped 2,700. Unlike Obamacare, legislators do not have to pas it to see what's in the bill. It is online.
Don't let the purists and Politically Correct Conservatives in Washington and Manhattan lead you astray.
Repealing coverage of pre-existing conditions and the like are not worth bothering with. They are popular, so keep them because they do not drive up medical prices.
Medicaid does. You want lower medical prices? Reduce Medicaid spending.
This is the best chance to rein it in -- ever.
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