David Frum

03.22.12

You Can't Fix Medicaid by Making it Bigger

I'm the last guy in the bar still defending the old Heritage plan to provide universal health insurance coverage through subsidized exchanges.

But in reply to Ezra Klein's column in Bloomberg today, let's remember why so many conscientious conservatives have opposed an Obama healthcare plan that supposedly built on the old Heritage idea:

[Paul Ryan] opted to apply their old policy framework -- the one the Democrats stole -- to Medicare. That has left the two parties in a somewhat odd position: Democrats support the Republicans’ old idea for the under-65 set, but oppose it for the over-65 set. Republicans support the Democrats’ new idea for the over-65 set, but oppose it for the under-65 set.

Yes, it is ironic. But let's remember this about the Affordable Care Act: while the mandate and the exchanges dominate our policy-wonk conversation, the act's main mechanism—at least in the early years—is the expansion of the most dysfunctional of all major social insurance programs: Medicaid.

Most of those expected to gain coverage under the Affordable Care Act—18 million people!—will gain coverage through expanded enrollment in Medicaid, not from joining the exchanges. You might aptly call the ACA, "Medicaid Plus." And there are excellent reasons why Republicans mistrust Medicaid expansion.

By adding to enrollments without reforming healthcare delivery, Medicaid Plus only adds to costs without forcing expansions. Medicaid Plus will thus aggravate the horrific budget crisis of the states. True, ACA offers states added $ to cover those costs. But the extra $ is only temporary; the costs are permanent. Also permanent, the stricter regulations and controls upon how the states spend those Medicaid dollars.

In a big bill like ACA, the devil is always in the details. Perhaps those details could have been different had Republicans done business to shape the ACA. In my opinion, it would have been very much worth the try. It didn't happen, however, and we are here with a bill that works in rather different ways than anticipated by Stuart Butler all those years ago. It's not entirely opportunistic that Republicans would dislike those actual workings in the ACA—even as they recover from the overheated rhetoric of the past 3 years and begin to rehabilitate the exchange/subsidy concept for use inside Medicare.