Liberals: Leave Medicaid out of talks

Liberals are intensely — and successfully — pressing the White House to take Medicaid off the table in deficit-reduction talks.

Republicans have insisted on entitlement cuts in exchange for higher revenues in a deal to avoid the “fiscal cliff,” a combination of tax increases and automatic spending cuts set to take effect at the end of the year.

Congressional Democrats oppose almost all cuts to Medicare, Medicaid and Social Security, but they’re taking an especially hard line against Medicaid cuts, including proposals President Obama has supported in the past.

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“If you want to boil it down to one message: Keep your hands off the Medicaid program,” Rep. Henry Waxman (D-Calif.) said. “We don’t believe in cutting Medicare, either, but whatever they talk about in Medicare, maybe there’s some things we can live with. But we cannot live with any cut to Medicaid.”

Sen. Jay Rockefeller (D-W.Va.) was scheduled to talk to White House Chief of Staff Jack Lew and Treasury Secretary Timothy Geithner on Tuesday afternoon to make clear that Medicaid should not be touched in a fiscal-cliff agreement.

Rockefeller said Obama could lose Democratic support by agreeing to cut the program.

“He knows where we are, and he knows we’re not kidding,” Rockefeller said. “And he knows that in many cases our votes are at stake.”

He said all entitlements should be protected, but that Medicaid is his top priority.

“We’re not budging on Medicare, we’re not budging on Medicaid — Medicaid above all, because it’s the unknown. It’s the one people don’t talk about,” Rockefeller said at a press conference Tuesday. “AARP always talks about Medicare. They make a lot of money off that. They don’t make much off Medicaid.”

Medicaid isn’t as politically galvanizing as Medicare, which both parties are leery of discussing after a bruising round of attacks during the campaign season. Medicaid primarily serves the poor, but it’s also a major provider of long-term care, such as nursing-home stays, as well as benefits for children and people with disabilities.

It’s also a cornerstone of Obama’s signature healthcare law, and that has helped push the White House away from significant cuts. 

Medicaid was initially set to cover about half of the 30 million people expected to gain coverage under the Affordable Care Act. That number will fall, though, as a result of the Supreme Court decision making the Medicaid expansion optional for states.

That ruling has changed the dynamic for Medicaid cuts, liberals argue. Now that the administration must coax states into the Medicaid expansion, they say, it shouldn’t be endorsing other Medicaid cuts that would shift more costs to the states.

“I think the president and the administration understand that Medicaid cannot be cut, even along the lines of what was under consideration a couple of years ago,” Waxman said last week. “It would lead a lot of states to feel uncertain about whether they’re going to have the money they need to take on this extra load with Medicaid, and therefore some states may be more hesitant.”

The White House ultimately agreed.

On Monday, the Health and Human Services Department announced that the administration no longer supported one of its own proposals to cut Medicaid spending. Obama’s fiscal 2013 budget had proposed streamlining the various calculations that determine how much the federal government will contribute to each state’s Medicaid program.

The so-called “blended rate,” also floated in earlier debt talks with Speaker John Boehner (R-Ohio), would have saved the federal government roughly $18 billion.

The administration acknowledged that the Supreme Court’s healthcare ruling had changed the political landscape.

“The Supreme Court decision has made the higher matching rates available in the Affordable Care Act for the new groups covered even more important to incentivize states to expand Medicaid coverage,” HHS said as it retracted its support for the idea.

But the blended rate is hardly the only idea in Obama’s most recent budget that shifted Medicaid costs to the states rather than actually reducing them. The budget also sought to limit complicated taxes that states use to boost federal Medicaid payments.

A White House spokesman did not respond when asked whether the administration still supports that measure.

Taking Medicaid cuts off the table because they threaten to undermine the Affordable Care Act could put more pressure on other entitlements. 

Boehner has set an aggressive target of $600 billion in healthcare cuts in exchange for about $800 billion in new revenues, but Democrats are also opposed to changes in Medicare and Social Security.

Rep. Jan Schakowsky (D-Ill.) said negotiators need to understand that cuts to one program aren’t necessarily isolated, citing as an example the small but expensive group of seniors who receive both Medicare and Medicaid benefits.

“All these programs that serve the same person have to be looked at as a whole,” she said.

Senate Majority Leader Harry Reid (D-Nev.) has said Social Security should be off the table in fiscal-cliff talks, and liberals have rallied strong opposition lately to raising the Medicare eligibility age — a proposal that would save the federal government roughly $113 billion, according to the Congressional Budget Office, while raising the cost of healthcare for some retirees.

Waxman said Tuesday that he still opposes raising the Medicare age, and he also opposes further raising premiums on wealthy recipients. Asked which Medicare cuts he might be able to “live with,” he said he did not want to negotiate in public.

“I’ll see what the proposals are and I’ll evaluate them. But I’ll say one thing: No reductions in Medicaid,” he said. “It would be unthinkable. It would hurt the Affordable Care Act’s success. And it would be a real threat to people who are really vulnerable.”