ACA Executive Order and Medicaid Block Grants

Let's discuss a terrifying and cruel development in the works.  This is far more substantive than any quibble over the size of an audience.  This is arguably the biggest news of any sort for domestic life in the United States in years.  Even if you hate Obamacare and think that the 20 million people who've gained insurance under the Affordable Care Act will be just fine without it, the implications for Medicaid, a bedrock of the modern American social contract, are terrifying.

The Affordable Care Act is getting eviscerated more quickly than many anticipated.  It may be possible to kill Obamacare without even repealing it proper:

[The executive order is] so broad it could allow many of the law's provisions, including many of taxes it imposes on insurers and the requirement that individuals buy insurance, to die from lack of enforcement.

There's no back-up plan announced as of yet, although block grants to the states will likely be involved.  

This move may mean the end of Medicaid as practiced.  That is a very scary prospect for those who depend on Medicaid.  It's much more radical than simply repealing Obamacare, a program that is still fairly young.  Medicaid has been with us for a long time now.  It covers 70 million people.  It's expensive, as far as cost goes, at around half a trillion dollars per year to maintain.  Nonetheless, a Republican Governor has already raised concerns regarding a transfer of Medicaid to the states:

“We are very concerned that a shift to block grants or per capita caps for Medicaid would remove flexibility from states as the result of reduced federal funding,” Gov. Charlie Baker of Massachusetts, a Republican, said this month in a letter to congressional leaders. “States would most likely make decisions based mainly on fiscal reasons rather than the health care needs of vulnerable populations.”

It appears likely to result in the end of coverage, or increased financial burdens, for many of our fellow Americans:

Gov. Robert Bentley of Alabama, a Republican, said that if a block grant reduced federal funds for the program, “states should be given the ability to reduce Medicaid benefits or enrollment, to impose premiums” or other cost-sharing requirements on beneficiaries, and to reduce Medicaid spending in other ways.

America is not going broke.  America cannot go broke as long as the dollar, a fiat currency which is the reserve currency of much of the world, continues to be accepted.  There is no credible challenger to the dollar, currency-wise.  Therefore there is no economic rationale to shifting the burden of Medicaid to the states.  The states do not print their own currency; they really do face a financial imposition from an entitlement program like Medicaid.  The federal government, by contrast, can permanently run deficits and turn out just fine. 

$500 billion sounds like a lot of money of course, but Pentagon expenditures on an annual basis are larger, and has America gone broke recently, or ever?  No.  America has not gone broke, recently, or ever.

It is worth noting that, as people are kicked off Medicaid, they will have to spend more of their discretionary income on medical expenses and therefore will not have that discretionary money to make additional purchases.  I put that in bold because I want to drive the point home.  These folks who might have bought a new television or pair of sneakers will not be making those purchases because they will be trying to fill the gaps left by their evaporated Medicaid coverage.  Therefore businesses who might have sold those TVs and sneakers and might have hired employees to facilitate that process will be unable to do so.  In other words, this is an economically contractionary measure.  This will off-set whatever economic gains might be made by Making America Great Again otherwise.

We haven't known what sort of President Donald Trump would be until now.  From the get-go, he has signed an executive order that is likely to slow down the economy at the expense of low-income households.  This is not bold, new thinking; this is standard Republican thinking.  

Donald Trump may play His Own Man on television; this action indicates that he, perhaps, is Just Another Republican.

UPDATE:  I neglected to mention that the ACA / Obamacare Medicaid expansion has been fairly good to the states financially.  Read the whole article linked-to there, or just read this if you don't have the time:

Medicaid expansion is a good deal for states financially, as the federal government pays the entire cost of covering the new Medicaid enrollees through this year [2016] and no less than 90 percent of the cost thereafter.  In expansion states there is now less demand for targeted Medicaid programs that serve low-income people with specific health conditions (such as certain women with breast and cervical cancers) but are funded at the state’s regular, lower matching rate, and for health programs that are entirely state-funded such as mental and behavioral health programs.  Expansion states also are collecting more revenue from their existing taxes on health plans and providers, such as the managed care plans that serve Medicaid beneficiaries in many states, which have experienced a surge in enrollment due to expansion.  The combination of these factors has produced savings for many state budgets.

(emphases added mine)