Support for Trump’s Medicaid Proposal


Last week I discussed President Trump’s plans to improve Medicaid (Trump Improving Medicaid). His administration has proposed offering states block grants to design their own plans to improve Medicaid efficiency and control costs so that those who need Medicaid the most will get the treatment they need.

Support for this program comes now from an unexpected place. Insurance industry analyst, Robert Laszewski, says those who support ObamaCare should support Trump’s proposal.

Laszewski is a strong supporter of Medicaid expansion, if not the failed provisions of ObamaCare. He believes Republicans should expand Medicaid eligibility in all states as ObamaCare permits.

The Trump proposal would enable states to choose to accept either a single annual lump-sum payment, or a lump-sum payment based on the number of able-bodied adults in that state’s Medicaid program. The proposed block grant program would not apply to people traditionally eligible for Medicaid such as pregnant women, poor children, and the disabled.

Currently 36 states have expanded Medicaid eligibility under the ObamaCare rules. That means anyone, even able-bodied adults, earning 138% of the Federal Poverty Level (FPL) or less is eligible. States get reimbursed 90% of their costs from the federal government on these patients, but less on those eligible by the old guidelines.

This expansion of Medicaid eligibility has produced much higher usage of Medicaid by this newly eligible population than those previously enrolled; 16 times higher according to some studies. The result of these higher than expected costs has been tremendous strain on state budgets. The Trump proposal is designed to address this situation.

There is wide variation in the eligibility of Medicaid enrollees in those 14 states that have not expanded Medicaid. The graphic below shows this variation:

Wisconsin has created its own Medicaid expansion apart from ObamaCare by allowing anyone earning up to 100% of FPL to be eligible, but not accepting the ObamaCare rules that permit up to 138% of FPL.

Critics of the new Trump proposal argue that by fixing funds for Medicaid at a growth rate lower than paid in the past will result in less money and therefore fewer benefits and fewer people covered. Laszewski calls out these critics: “In my mind, the people that are opposing the Trump administration’s block grant proposals are letting their ideology stand in the way of millions of people becoming eligible for substantial, if not optimal, Medicaid benefits.”

If you favor expanded Medicaid eligibility to all 50 states, you should favor the Trump proposal.