Senate, House Republicans Need Big Spending Cuts to Pay for Even Bigger Tax Cut
The House has narrowly approved a budget calling for $2 trillion in spending cuts, increased border security spending and $4.5 trillion in tax cuts over the next 10 years. All eyes will be trained on potential Medicaid cuts to reach the reduced spending target.
House Speaker Mike Johnson gained votes from his conservative Freedom Caucus members by tying spending cuts directly to tax cuts. Under his proposal, tax cuts would be reduced in proportion to spending cuts if lower than $2 trillion. The flip side is also in play. Larger spending cuts would allow larger tax cuts. Supporters referred to this deal as “deficit neutrality”.
All House Democrats and one Republican opposed the budget bill on the House floor.
Now House and Senate GOP leaders must reconcile their respective measures that sharply differ. The Senate-passed budget doesn’t include a tax cut and would require far less in spending reductions. Republicans control both chambers and are using budget reconciliation that prevents a Senate filibuster by Democrats. They have until mid-March to figure it out.
That bicameral conversation has begun with nine GOP members of the Senate Finance Committee insisting the tax cut, originally enacted in 2017, must be made permanent in any budget deal.
Medicaid in Cross-Hairs
However the tax issue is resolved, significant cuts in Medicaid will dominate the spending debate. The House budget measure directs the Energy and Commerce Committee to identify $880 billion in spending cuts over 10 years. The committee has jurisdiction over energy, communications, environment, interstate and foreign commerce and health, including Medicare, Medicaid and the Affordable Care Act.
President Trump and Republican leaders have declared Medicare off limits, so the only other big-ticket program the committee oversees is Medicaid.
In paired interviews this week on OPB’s Think Out Loud, Democratic Senator Ron Wyden and Republican Congressman Cliff Bentz commented on budget negotiations. Wyden, who served on Energy and Commerce when in the House, says Medicaid is the only pocket deep enough to reach the House spending cut target.
Bentz, who sits on Energy and Commerce, said the committee can generate revenue and find cuts in programs other than Medicaid. One specific he mentioned was auctioning spectrums to telecommunications companies. He also suggested work requirements could be imposed for able-bodied Medicaid beneficiaries.
Wyden warned Medicaid cuts would be deeply unpopular as a third of Oregonians are enrolled in Medicaid, with larger percentages in rural counties that Bentz represents. Wyden called potential Medicaid cuts “unconscionable and unsustainable”.
Bentz acknowledged Medicaid enrollment is higher in his district than statewide, reaching 50 percent in Malheur County. But he deplored what he called “Mediscare” tactics and insisted current Medicaid spending levels are “not sustainable”. Bentz also predicted there would be a political uproar if the 2017 tax cuts aren’t extended.
Medicaid Enrollees
More than 72 million Americans in all 50 states and the District of Columbia are enrolled in Medicaid. Some 7.2 million children are covered by the Children’s Health Insurance Program (CHIP). Many children are enrolled in both Medicaid and CHIP.
Medicaid enrollment in Oregon as of last October stood at more than 1.3 million. CHIP enrollment was 185,539 with almost 480,000 children enrolled in both Medicaid and CHIP. Washington’s Medicaid and CHIP enrollment exceeds 1.8 million with 840,117 children enrolled in both programs. Sixty percent of long-term care facility ressidents are covered by Medicaid.
The Oregon Health Plan
The Oregon Health Plan includes Medicaid, CHIP and the Family Health Insurance Assistance Program, which helps low-income families obtain private health insurance.
Oregon Health Plan services include medical check-ups, vaccinations, mental health care, dental care, prescriptions, hospital care, addiction treatment and rides to and from medical appointments.
The policy priorities for the Oregon Health Plan are reducing health disparities, promoting fairer distribution of healthcare resources, focusing on preventive care and protecting vulnerable populations.
Coordinated Care Organizations (CCOs) are one of the distinctive and pioneering aspects of the Oregon Health Plan. Conceived by former Governor John Kitzhaber and granted a waiver by President Clinton, CCOs are networks of health care providers that serve different communities throughout the state.
CCOs tailor and coordinate their services to the communities they serve. A key goal is improving health care outcomes for Oregonians throughout the state. CCOs receive fixed amounts of reimbursement from the state for their services. In his OPB interview, Bentz singled out CCOs as an organizational innovation that provides fiscal accountability and restrains spending.
Political Tight Rope for Republicans
In a radio interview, Steve Bannon provided the best synopsis of the political challenge for Republicans in cutting Medicaid. “Medicaid, you got to be careful because a lot of MAGAs on Medicaid. I’m telling you, if you don’t think so, you are dead wrong. Medicaid’s going to be a complicated one. Just can’t take a meat axe to it, although I would love to.”
When asked about Medicaid spending cuts, Republican Missouri Senator Josh Hawley conceded, “Yeah, I do have concern. I think the President’s right when he says we should not be cutting Medicaid. Work requirements, sure. I think probably every Republican is for that. But if you’re going to talk about people who are working and otherwise qualify, if we’re talking about significant benefit cuts, I’d be really concerned about that.”
Speaker Mike Johnson takes a more aggressive position by saying, “Medicaid is infamous for fraud, waste and abuse. By some estimates, large percentages of the dollars that are allocated there are wasted and stolen. And we do right to go into those programs and find that and show the people what’s happened and make sure it doesn’t happen again. If you’ve eliminate fraud, waste and abuse in Medicaid, you’ve got a huge amount of money that you can spend on real priorities for the country.”
