By Byron York | Commentary, Washington Examiner
MEDICAID, THE BBB, AND OBAMA’S REVENGE. It’s reasonable to view the angry debate over the Medicaid provisions of the recently signed-into-law One Big Beautiful Bill Act, with Democrats accusing President Donald Trump and Republicans of taking away healthcare from millions of people, as the inevitable result of the scheme that then-President Barack Obama and Democrats set in motion in 2010.
Back then, many in the party wanted to create a single-payer national healthcare system but did not have the political support to do so. So Democratic leaders debated among themselves about how to get as far as they could with their existing (big) majorities in the House and Senate. After much effort, they came up with the Affordable Care Act, better known as Obamacare, which they passed during a brief period in which they had 60 seats in the Senate.
Obama and his fellow Democrats knew Republicans wanted to repeal Obamacare — GOP lawmakers said so every day. So Democrats made Obamacare extremely difficult and politically risky to touch, much less eliminate. As time went by, there would be political hell to pay for changing, even improving, the system. That’s what we’re seeing play out now with Republican efforts to reform Medicaid in the “big, beautiful bill.”
Back in 2010, one prominent Democrat called Obamacare a “starter home, suitable for improvement” — that is, you buy as much house as you can, then next year you add a bedroom, and the year after you add a den, and so on. In terms of Obamacare, the idea was, let’s start with this, add to it as often as we can, and make our way toward single-payer national healthcare.
One major part of the starter home was expanding Medicaid. Begun in 1965, Medicaid was created to assist certain groups of the non-elderly poor: young children, pregnant women, and the disabled. One group not intended for Medicaid was able-bodied adults with incomes above the poverty line. The Medicaid “expansion” Democrats created in Obamacare changed that, offering Medicaid enrollment to all adults, including those without children, up to 138% of the poverty line.
Obama also hugely increased federal payments for Medicaid, which was originally designed as a program with costs shared between the individual states and the federal government. In the past, that often worked out to the feds paying 50% and the state paying 50%. The old arrangement meant that states would hesitate to take on big expansions of coverage because it would mean their state contribution would rise significantly. So, the Democrats creating Obamacare made the states an offer too good to refuse: In Medicaid expansion, the federal government would pay for 100% of the cost of the newly covered. Over the next decade, that 100% federal contribution would slide down to 90%, but it would not go below that.
The federal payment was so important that some states that expanded Medicaid included provisions in their law that would cancel the expansion if the federal government ever reduced the reimbursement rate below 90%. Obama’s move amounted to the federalization of a large part of Medicaid and the creeping federalization of the whole program.
Then, former President Joe Biden went even further with the American Rescue Plan, which, under the pretense of COVID relief, offered an additional 5% federal reimbursement for two years to states that newly expanded Medicaid.
North Carolina was one of those states. For years, it had not expanded Medicaid, but by the Biden presidency, the federal incentives were so large that some Republicans relented and went along with Democrats to expand the program. After all, with so much money from Washington, along with a small percentage from the state’s tax on hospitals, it wouldn’t cost the state government anything. “This is an opportunity to take federal dollars, actually present a savings to the state of North Carolina, and increase access to healthcare,” one GOP state lawmaker said at the time.
The free-money argument was so tempting, and so essential to the expansion, that budget-minded lawmakers included a strict provision: If North Carolina ever has to pay anything for expanded Medicaid, then the expansion will be canceled. With that included, the bill passed. It was signed into law in March 2023, and the expansion went into effect on Dec. 1, 2023. More than 600,000 people in North Carolina signed up for the plan, paid for almost entirely by the federal government.
It didn’t last long. Less than a year later, Trump and a Republican Congress were elected. One goal of many GOP lawmakers was to create some responsibility and accountability measures for the Obamacare-Medicaid federal spending spree. But that did not mean GOP lawmakers would eliminate the 90% reimbursement rate. Instead, in passing the One Big Beautiful Bill Act, they kept the 90% but inserted measures strengthening a work requirement for receiving Medicaid, plus a ban on Medicaid coverage for people in the United States illegally.
You’ve probably seen reports that Republicans were “cutting” or “slashing” or “gutting” or “savaging” or “destroying” Medicaid. In total dollar terms, the charges are false — Medicaid spending is set to increase every year covered by the “big, beautiful bill.” It’s not being cut, and the 90% reimbursement rate isn’t being cut, either.
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