Schrödinger‘s Medicaid reform
Is it dead? Is it alive? No one knows until Republicans pass their planned reconciliation bill - or in Trump‘s own words the “big beautiful bill“.
Let me share my thoughts with you on the potential for Medicaid reform, leaving aside how probable it is since comments by Congressional Republicans vary and contradict each other on a daily basis, meaning the negotiations are quite fluid.
US spending on entitlements has been growing rapidly - and unchecked - for decades now and the spending trajectory correlates with a steady growth of the structural deficit and with the growing national debt, in an environment of elevated interest rates, growing uncertainty surrounding the Dollar, doubts about US fiscal credibility, the potential for a technical recession this year and a growing need for a $1 trillion USD base defense budget.
Despite DOGE‘s painstaking search for non-military discretionary spending cuts, these reductions are just not going to cut it (pun intended). They‘re focused on too marginal a fraction of overall annual spending to bend the fiscal curve in any meaningful way. Besides, discretionary spending is both volatile (a Democratic Congress could just ramp it up again) and it‘d have to be decreased in a regular appropriations process which means Democrats will have to agree to any final budget and they’re not going to agree to steep cuts. Even Republicans are concerned about USAID cuts or cuts to medical R&D among other things.
So if Republicans want to square the circle, extend the TCJA, increase military spending and spending on homeland security, add some tax benefits on top of the TCJA while seriously financing at least a large part of these federal expenses, a structural adjustment i.e entitlement reform will be crucial.
Part of Trump‘s populist appeal in 2016 , however, was that he promised tax cuts without paying for them so he could make promises that traditional Republican candidates, like Mitt Romney, Paul Ryan or Jeb Bush couldn’t make, namely not to reform either Social Security or Medicare. That is regrettable and one of many policy regressions linked to the new MAGA-esque GOP.
Nevertheless, these constraints still leave Medicaid (and potentially SNAP) open for long overdue adjustments.
The idea would be quite simple and modelled after the Clinton administration’s welfare reform of 1996 - the last structural adjustment of any entitlement program which actually curtailed federal spending.
Instead of providing unlimited federal matching funds for newly enrolled Medicaid recipients who qualify under the ObamaCare (ACA) expansion, matching funds for this group of recipients would be restructured into individual block grants - thus capping the federal matching rates. On top of that, states would have to introduce work requirements for these recipients (not the vulnerable groups who were originally the only ones covered by Medicaid).
It‘s a win-win. A sensible reform but Republicans would likely lose the House over it - although they‘ll probably lose it anyway. Since a Democratic victory in 2026 would be essential to counter the endless constitutional challenges of this imperial administration, it‘d be a truly useful reform.
Let me share my thoughts with you on the potential for Medicaid reform, leaving aside how probable it is since comments by Congressional Republicans vary and contradict each other on a daily basis, meaning the negotiations are quite fluid.
US spending on entitlements has been growing rapidly - and unchecked - for decades now and the spending trajectory correlates with a steady growth of the structural deficit and with the growing national debt, in an environment of elevated interest rates, growing uncertainty surrounding the Dollar, doubts about US fiscal credibility, the potential for a technical recession this year and a growing need for a $1 trillion USD base defense budget.
Despite DOGE‘s painstaking search for non-military discretionary spending cuts, these reductions are just not going to cut it (pun intended). They‘re focused on too marginal a fraction of overall annual spending to bend the fiscal curve in any meaningful way. Besides, discretionary spending is both volatile (a Democratic Congress could just ramp it up again) and it‘d have to be decreased in a regular appropriations process which means Democrats will have to agree to any final budget and they’re not going to agree to steep cuts. Even Republicans are concerned about USAID cuts or cuts to medical R&D among other things.
So if Republicans want to square the circle, extend the TCJA, increase military spending and spending on homeland security, add some tax benefits on top of the TCJA while seriously financing at least a large part of these federal expenses, a structural adjustment i.e entitlement reform will be crucial.
Part of Trump‘s populist appeal in 2016 , however, was that he promised tax cuts without paying for them so he could make promises that traditional Republican candidates, like Mitt Romney, Paul Ryan or Jeb Bush couldn’t make, namely not to reform either Social Security or Medicare. That is regrettable and one of many policy regressions linked to the new MAGA-esque GOP.
Nevertheless, these constraints still leave Medicaid (and potentially SNAP) open for long overdue adjustments.
The idea would be quite simple and modelled after the Clinton administration’s welfare reform of 1996 - the last structural adjustment of any entitlement program which actually curtailed federal spending.
Instead of providing unlimited federal matching funds for newly enrolled Medicaid recipients who qualify under the ObamaCare (ACA) expansion, matching funds for this group of recipients would be restructured into individual block grants - thus capping the federal matching rates. On top of that, states would have to introduce work requirements for these recipients (not the vulnerable groups who were originally the only ones covered by Medicaid).
It‘s a win-win. A sensible reform but Republicans would likely lose the House over it - although they‘ll probably lose it anyway. Since a Democratic victory in 2026 would be essential to counter the endless constitutional challenges of this imperial administration, it‘d be a truly useful reform.
