'Trimming hedges?' Analyst warns massive GOP Medicaid cut looms — and 'people will notice'

House Republicans have long insisted they won't include Medicaid cuts in President Donald Trump's "big, beautiful bill" on tax cuts, energy, and border security — despite Democrats' repeated warning their budget framework only balances with such cuts. Soon, the rubber will meet the road, Jim Newell wrote for Slate on Wednesday, and Republicans will have to tip their hand on how they're actually going to squeeze savings out of Medicaid.

In short, he wrote, there will indeed be cuts coming that they can't easily defend to voters.

For starters, Newell wrote, it's important to distinguish how Medicaid is structured.

"'Traditional' Medicaid focuses primarily on covering the most vulnerable low-income populations, like children, parents, caregivers, pregnant women, and disabled people," he wrote, and states have an income-based formula to determine how much the federal government pays for the program, generally 50 to 75 percent.

Meanwhile, "Obamacare, now more than 15 years old, expanded Medicaid by making those who earn up to 138 percent of the federal poverty line eligible for the program. Crucially, it enticed states to accept the expansion by promising that the feds would cover 90 percent of the costs for these new enrollees. Under that generous financial arrangement, 41 states and the District of Columbia have expanded Medicaid."

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Republicans have tried to give themselves an out on their promise not to cut Medicaid, Newell continued, by phrasing their promise only to talk about traditional Medicaid. For instance, the more moderate wing of the House GOP signed a letter warning, “We cannot and will not support a final reconciliation bill that includes any reduction in Medicaid coverage for vulnerable populations” — but that could be read as a commitment only to protect traditional Medicaid.

That means the GOP could take a hatchet to the Medicaid expansion funding — and they could do so in one of two ways. First, they could cut their share of the federal obligation for Medicaid expansion to the same formula used by traditional Medicaid.

"Their argument for this is that it’s unfair for states to get a better deal covering 'able-bodied' people who are simply poor than for their most vulnerable populations," he noted.

Alternatively, they could also set per-capita caps on the growth of funding for expansion enrollees, which would ultimately lead to the same result — and could also let the GOP claim they're not ordering anyone removed from the program, it's the states doing it, even though they were forced to by their funds being limited.

"This can’t be spun away," wrote Newell. "Republicans can’t say they’re cutting 'waste,' or that they’re finding administrative efficiencies, or that it’s the mean old governors who would be kicking people off. There will come a point when House Republicans pursuing this path have to attempt to make an honest case for what they’re doing: that Medicaid spending has grown too sharply, and flattening its trajectory is necessary as the government approaches $40 trillion in federal debt and rising borrowing costs. (Also, because they need the cash for delicious tax cuts.)"

"This argument wouldn’t make people happy, but it would be less insulting to the intelligence than arguing that they’re just trimming the hedges a bit," he concluded. "Instead, they’re talking about taking out trees. People will notice."