Healthcare coverage for millions in U.S. will turn on a debate emerging in Washington

March 10, 2023 | By David Lauter

WASHINGTON —  After being eclipsed by immigration, crime and other issues in recent years, healthcare is moving back toward center stage in American politics.

It’s a shift that has divided Republicans, leaving them open to a surprisingly effective drive by President Biden to position himself as the defender of Americans’ health coverage.

Republicans have backed away from talk of cutting Medicare. But even as they do, they’re facing new divisions over the government’s other huge healthcare program, Medicaid. Conservative Republicans in Washington have proposed deep cuts in the safety-net health insurance program. But in one state after another, Republican voters have backed expanding Medicaid.

The resurgence of healthcare as a prime issue has big implications, both for this summer’s expected fight over the federal debt ceiling as well as next year’s presidential election.

Biden made defense of Medicare a central element of last month’s State of the Union speechhelped along by Republicans who stampeded into a rhetorical trap. He followed up Thursday with the release of his budget, which proposes to secure Medicare’s long-term finances by raising taxes on Americans earning more than $400,000 a year and launching a more aggressive government effort to hold down the cost of prescription drugs.

Biden’s plan will “ask the wealthiest to pay a little more to ensure that this program is around for at least 25 more years for our seniors who need it,” White House budget director Shalanda Young told reporters in unveiling the spending plan Thursday morning.

Those proposals won’t be adopted this year or next: The Republican-controlled House isn’t about to approve a tax increase. But that’s beside the point. Biden has teed up an issue he clearly plans to run on in 2024. If he wins, look for this week’s Medicare plan to form a main element of his agenda for a second term.

Republicans tied in knots

A few key facts: Medicare covers close to 65 million Americans, most of them retired, and in 2021 covered about $900 billion of medical bills.

Medicaid, the safety net program for low-income Americans, spends somewhat less — about $734 billion in 2021— but covers a larger group, almost 95 million people, including about 40% of the nation’s children, 16% of working-age adults and 60% of long-term residents of nursing homes.

Together, the two programs account for about $1 of every $4 the federal government spends. Costs have risen in recent years, especially for Medicare; spending for it is expected to climb sharply in the next decade as the baby boomers move into retirement.

Part A of Medicare — the portion that covers hospital bills — is financed by a payroll tax, which goes into a trust fund. In recent years, the program has usually paid out more than it has taken in. Unless that changes, the trust fund will be broke by 2028, the final year of the next presidential term, according to the most recent report from Medicare’s trustees. If that happened, Medicare wouldn’t be able to fully cover the people it insures.

Preventing insolvency — and putting Medicare on a stable path — will be a major task for whoever is elected president next year.

Expect to see Biden repeatedly push his Medicare plan in the coming campaign.

In 2020, healthcare divided Democrats as presidential hopefuls to Biden’s left debated ambitious government-funded universal health plans, none of which had the political support to advance once the election was over.

In 2024, Biden has a good shot at uniting Democrats around a simpler, politically safer proposition: defending the status quo by raising taxes on the most affluent Americans.

This time, it’s Republicans who face serious divisions on the issue.

During President Obama‘s tenure, Republicans in the House coalesced behind a plan written by then-Rep. Paul D. Ryan (R-Wis.), which would have turned Medicare into a voucher program for future retirees, shifting a share of the cost off the federal budget and onto individuals and families. Ryan’s plan also would have made deep cuts in Medicaid.

The proposal, although backed by many conservatives, proved unpopular with the wider electorate and was eventually defeated by a bipartisan vote in the Senate. But the Ryan plan remained the dominant Republican position until 2016 and the rise of Donald Trump.

“Trump really scrambled the equation for a lot of Republicans” by opposing any cuts to Medicare or Social Security, said Dean Rosen, a Republican healthcare policy expert and former top Senate healthcare aide. That’s led to “a bit of an identity crisis that Republicans are having now” about whether the party continues to stand for restraint on public spending.

That issue already has emerged as a dividing line in the Republican presidential primary: Trump has attacked Florida Gov. Ron DeSantis over his support for Ryan’s plan, accusing him of having voted as a member of Congress to “radically cut Medicare.” He’s made a similar attack against former South Carolina Gov. Nikki Haley, who has proposed raising the retirement age and making other changes to Medicare and Social Security for future retirees.

Many of Trump’s core supporters — who tend to be older, blue-collar and rural voters — rely on Medicare and Social Security and don’t share the ideological opposition to government spending that animates more traditional conservatives.

Squeezed by both Trump and Biden, House Republicans have mostly abandoned Ryan-style reductions in Medicare costs. At the same time, however, they’ve pledged to come up with a plan to balance the federal budget without raising taxes and have threatened to block an increase in the federal debt limit this summer to force Democrats to accept spending cuts.

To meet their goal without touching Medicare, conservatives have been looking at deep cuts in Medicaid.

From the Republican perspective, “it’s important to have this discussion” about how to restrain public spending on healthcare, Rosen said. “Unlimited spending is irresponsible.” Politically, however, “the president has a very strong hand” because he’s defending existing spending, while Republicans are proposing taking something away, he noted.

“That’s more difficult to sell politically.”

One Republican proposal would save billions of dollars by eliminating the part of the Affordable Care Act, Obama’s healthcare reform law, that allowed states to expand Medicaid to cover the working poor, with Washington picking up 90% of the cost.

But Republicans may find that road blocked as well. In 2017, the popularity of Medicaid was one of the factors that doomed the GOP effort to repeal the Affordable Care Act. Since then, eight more states have expanded Medicaid, including solidly conservative places such as Idaho, Nebraska and Oklahoma.

This month, Republican legislators in North Carolina, after years of debate, dropped their opposition to Medicaid expansion, a big victory for Democratic Gov. Roy Cooper, who has pushed for the move. If the plan passes in the summer, as expected, North Carolina will become the 40th state to expand Medicaid, providing coverage to 600,000 residents, including many blue-collar, rural Republicans.

As “the symbolism of Obamacare has faded,” it’s become much harder for Republicans to reject Medicaid expansion under the healthcare law, said Larry Levitt, executive vice president for healthcare policy at the Kaiser Family Foundation, which has tracked the expansion debate. That’s become especially true as rural hospitals have struggled to survive in states that have not adopted expansion, a problem for Republicans, who have increasingly become the party of rural America.

“Medicaid covers more people than Medicare or Social Security,” Levitt noted. “It’s now part of the same third rail of American politics.”

“It seems Republicans have backed themselves into quite a corner.”