California’s Case for Medicaid Reform
As House Republicans considered Medicaid reform in budget reconciliation legislation last week, the most important development in the debate was happening thousands of miles away. In California, an unlikely ally unwittingly made the case for fixing Medicaid.
Gov. Gavin Newsom on May 14 included as part of a revised state budget changes to Medicaid coverage for undocumented immigrants. He proposed freezing new enrollment for undocumented adults and charging a $100 monthly premium beginning in 2027 for those already enrolled. In one stroke he revealed both the weakness of Democrats’ opposition to national Medicaid reform and the urgency for congressional Republicans to take a serious crack at it.
Hours later, Sen. Bernie Sanders appeared on MSNBC to denounce the House GOP reconciliation bill, in part because it permits states to require cost-sharing of up to $35 for Medicaid beneficiaries. “If you are making $16,000 a year, you know what? You can’t afford that 35 bucks, you are not going to go to the doctor,” he railed. “When you throw 13 million people off of health insurance, when you raise copayments for poor people, it is a death sentence. Thousands and thousands of low-income and working people will die.”
An objective journalist would ask Mr. Sanders the obvious question: If $35 copayments spell the deaths of thousands, how many lives does he think Mr. Newsom’s $100 monthly premium will take? Yet I doubt Mr. Sanders and his fellow traveler Rep. Alexandria Ocasio-Cortez will take their “Fighting Oligarchy” tour to Mr. Newsom’s doorstep—in part because it’s obvious California can’t afford to do anything else but reform.
Mr. Newsom didn’t have a Damascene conversion on basic economics. His state’s health-insurance program is $2.7 billion over budget, and California is struggling under a structural budget deficit. Similar concerns led Gov. J.B. Pritzker to end an Illinois program offering government-funded health coverage to legal and undocumented immigrants under 65. Neither he nor Mr. Newsom had much choice.
But neither does the federal government. More than $36 trillion of debt, built on deficits that run high even in good economic years, is financially unsustainable in the long term—as Moody’s demonstrated by downgrading the country’s credit rating last week. Medicaid has become a growing contributor to those deficits, with the Congressional Budget Office raising the program’s 10-year costs by 12% in January.
Rather than waiting for a crisis, Congress must make common-sense changes to Medicaid now. Democrats can demagogue all they like, but it’s obvious from their silence on Mr. Newsom that they roll out the histrionics only when reforms come from Republicans.
Mr. Newsom gives the GOP the opening they need to pass major Medicaid fixes. The only question is if they have the courage to take it.
This post was originally published at The Wall Street Journal.