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The White House Wants To Overhaul Entitlements


Next month, lawmakers are going to start looking for ways to pay for the tax bill they just passed. House Speaker Paul Ryan wants to overhaul federal entitlement programs. He says they cost too much and they make people dependent. Medicaid is one of the programs under review. More than 70 million Americans are enrolled. So I called up Caroline Pearson. She's a senior vice president of Avalere Health, which advises companies on health care policy. And I asked her, who exactly is enrolled in Medicaid?

CAROLINE PEARSON: I would think about them in three main groups. The biggest group - about half of the program - is actually low-income children. Medicaid pays for about half of the births in this country. So that's the biggest cohort.

KING: Wow.

PEARSON: The other two groups are seniors and people with disabilities. So Medicaid actually pays for the costs of coverage for about 1 in 5 Medicare beneficiaries - our nation's seniors - as well as people who have very serious health conditions. And then the last group is other low-income adults who simply can't afford other sources of insurance.

KING: All right. With any entitlement program, there are always going to be complaints that the people on it should go out and get jobs, they should work, they're abusing the system. Is there evidence that a lot of people are, quote, unquote, "taking advantage of Medicaid"?

PEARSON: That's not the case. In fact, most of the research suggests people who are able to be working and are on Medicaid are doing so, and the people who are on Medicaid and not working generally aren't able to do so either because they're kids or, as I said, they've got disabilities and aren't in a health state where they can really go to work on a daily basis.

KING: OK, so a lot at stake for people here, and I wonder, if there are cuts to Medicaid, could recipients just get subsidized insurance through Obamacare?

PEARSON: Unfortunately, no. Medicaid is really the safety-net system that we have for the lowest-income Americans. Obamacare doesn't cover anyone below the poverty level, so for our poorest individuals in the country, Medicaid is really the only option.

KING: Have you had any conversations of note with either hospitals or insurance providers? Are people concerned that this is really something that might happen or is it like, nah, that's just politics?

PEARSON: Hospitals and other health care providers are some of the most concerned stakeholders about Medicaid. They are the people that have to provide coverage when sick people show up in their emergency rooms, and so they would much rather get paid in a rational way and be able to take good care of those people throughout the year, not just when they are very sick. And then the health insurers certainly want to get more people buying into the system on a regular basis rather than just paying for them in emergency situations only.

KING: What are your clients telling you?

PEARSON: Well, I think Medicaid survived some big hits this year. The Affordable Care Act repeal-and-replace efforts tried to remove big chunks of Medicaid, and that was one of the things that really brought those bills down. But I think next year's efforts are really going to turn to trying to control spending, so the question is, can you cover very sick populations and very needy populations for less money? And I think that's something we're going to need to wrestle with in 2018.

KING: What are you keeping an eye on in this week and in the week ahead?

PEARSON: Well, we're looking at how Congress is going to move forward with efforts on entitlement reform and then what role the states are going to play. The states are co-funders of this program, and so the governors tend to have a strong voice in saying what is feasible in terms of reforming Medicaid and what isn't.

KING: Because they'd be picking up the slack. If Medicaid nationally is cut, it will be states that pay for it.

PEARSON: Right. When the federal government cuts its spending, states are left holding the bag, and so the governors get very worried about that situation.

KING: Caroline Pearson is a senior vice president of Avalere Health. We spoke to her via Skype. Caroline, thank you so much.

PEARSON: Thanks for having me. Transcript provided by NPR, Copyright NPR.