I have previously written in these pages that conservatives shouldn’t buy into the “leftist trope” when talking about “massive Medicaid cuts.” But it’s worth dissecting this issue in detail to explain how Democrats distort rhetoric and reality regarding government spending, and how conservatives can avoid falling into that trap.
There are numerous reasons why conservatives shouldn’t talk about a budget reconciliation bill as “cutting” Medicaid — and those reasons go far beyond the fact that the House-passed budget resolution itself mentions “Medicaid” not at all. The resolution calls for the House Energy and Commerce Committee to find $880 billion in deficit reduction over 10 years. While the text does not mention Medicaid, the list of programs within the committee’s jurisdiction suggests that much of those savings will end up coming from Medicaid and/or Medicare.
Rather than playing semantic games that “Medicaid” doesn’t appear in the budget resolution, which will only come back to bite conservatives when they have to outline specific deficit reduction proposals, policymakers should instead make an affirmative case for reform. The policies being envisioned would not “cut” Medicaid but rather slow the growth of a program that has exploded beyond recognition over the last several years.
Medicaid Spending Will Keep Growing
The most recent Congressional Budget Office (CBO) economic baseline, released early this year, tells the story. According to CBO, federal spending on Medicaid will total $656 billion in the current fiscal year, which ends on Sept. 30. Over the upcoming decade (2026 through 2035), federal Medicaid spending will total nearly $8.6 trillion.
Simple math indicates that, if federal Medicaid spending remained at current-year levels over the decade, it would total $6.56 trillion. Instead, CBO says federal Medicaid spending over that period will total $8.6 trillion, or over $2 trillion more than if program spending remained flat.
Even if the House Energy and Commerce Committee generates its entire $880 billion in directed deficit reduction from within Medicaid, the program will still grow by more than $1 trillion over the coming decade. If that constitutes a “cut,” I would hate to see what “growth” means.
Estimated Medicaid Spending Exploded by $817 Billion in a Matter of Months
The CBO baseline holds another revealing nugget. As I have previously noted here and elsewhere, the budget office in January increased its 10-year estimate of Medicaid spending by $817 billion. That’s a 12 percent increase in projected spending just since CBO released its last Medicaid baseline, all the way back in … June.
You read that right: Between last June and this January, CBO projected a double-digit increase in estimated Medicaid spending. And that projected $817 billion increase is more than the budgets of most federal agencies, even before the Department of Government Efficiency took steps to reduce wasteful federal spending.
To put it another way, Republicans can achieve virtually all of their intended deficit reduction — $817 billion of the total $880 billion savings target — if they just revert Medicaid policies to what they were last June. Correct me if I’m wrong, but I didn’t see anyone dying in the streets from lack of Medicaid coverage last June. So why do the press and Democrats (but I repeat myself) seem certain that Republican budget proposals will cause untold harm to millions? Moreover, why do lawmakers like Sen. Josh Hawley, R-Mo., buy into this mentality by accepting Democrats’ “cuts” rhetoric?
Biden Created the Medicaid Spending Explosion
As I have noted elsewhere, much of the $817 billion increase in projected spending came from various regulatory proposals put forward by the Biden administration, many of which were finalized just last year. Precise estimates for these proposals vary, but the numerous Biden-era regulations that will increase Medicaid spending include:
- Requiring Medicaid programs to cover GLP-1 drugs for obesity: $11 billion.
- A managed care rule that gives states matching funds for increasing payments to hospitals and other Medicaid providers: At least $17.6 billion, and as much as $83.6 billion, between now and 2028; another estimate claims that repealing this provision would save the federal government $140 billion over 10 years.
- A Medicaid access rule that reduces state flexibility to implement anti-fraud policies: $22 billion between now and 2028; another estimate quotes a $75 billion savings over 10 years from full repeal.
- A nursing home rule that will increase costs for facilities, while imposing unfunded mandates on state Medicaid programs: $16.5 billion; another estimate claims $25 billion in savings from repeal.
These regulatory proposals increasing Medicaid spending come on top of all the other Biden spending via the administrative state, from myriad student loan “forgiveness” plans to Obamacare subsidies for illegal immigrants, another Obamacare subsidy expansion that violated federal law, and on and on.
To call all these costly regulations a “spending spree” would put it mildly. Just as conservatives have advocated for returning to pre-Covid appropriations levels, they have every reason to support unwinding this breathtaking binge — not least because, as noted above, merely returning Medicaid to the spending levels of this past June would generate significant savings.
Stop Playing Democrats’ Game
If your boss said he hoped to give you a 10 percent raise at the end of the year, but when December came around, you only got a 5 percent raise instead, you wouldn’t go complain that your pay got “cut.” If you did, you might not get another paycheck at all.
That’s exactly what Democrats have done with Medicaid. The Biden administration helped generate an explosion in Medicaid spending via stealth changes in regulations. When Republicans now put forward proposals trying to rein in some — not all, but merely some — of that additional spending, Democrats scream bloody murder.
An Ivy League graduate like Hawley knows better than to fall for this semantic big-spending trap by calling any reduction in government spending a “cut.” Smart conservatives would be wise to rely on facts to make a compelling case for reform.
