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.”

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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 in every year covered by the “big, beautiful bill.” It’s not being cut, and the 90% reimbursement rate isn’t being cut, either.

Instead, the GOP introduced those two measures they hope will increase accountability in Medicaid. First is the work requirement. The new law requires “able-bodied adults between the ages of 19 and 64 who have no dependents” or who are not already engaged in some sort of community service to work or volunteer for at least 80 hours a month — essentially, to have a part-time job. Recently, the Congressional Budget Office estimated that 4.8 million such people would probably leave the Medicaid rolls nationally because of the work requirement.

The CBO also said “about 1.4 million … people who do not meet citizenship and immigration status requirements for Medicaid enrollment but who would be covered under current law in programs funded by the states” would also be taken off the Medicaid rolls under the new law. In other words, the Republican congressional majority declared that Medicaid is not for illegal immigrants.

Finally, the CBO estimated that about 2.2 million people would lose Medicaid “because of other provisions” in the new law, including a requirement that recipients verify their Medicaid eligibility regularly.

All of that seems quite reasonable. A work requirement is entirely consistent with the history and practice of Medicaid. A citizenship requirement seems obvious. Ensuring eligibility also seems obvious. And yet we have seen prominent Democrats make frenzied predictions of disaster. “Congressional Republicans are forcing through the largest cuts to Medicaid in our nation’s history,” said Gov. JB Pritzker (D-IL), a 2028 Democratic presidential hopeful. “Blood will be on the hands of Donald Trump and his cronies.”

Yale University researchers predicted that 42,500 people will die each year because of changes like the Medicaid work requirement. Others said it’s just too much to require new paperwork for the work requirement; the Atlantic called the new policy “annoying people to death.” 

Extreme rhetoric like this, amplified throughout the media, is the kind of political discourse that makes it so hard to change Medicaid. That is not an accident. Back in 2010, Obama and his Democratic colleagues knew that if they could just get the starter home built, they could add to it over the years, until it housed more and more people and consumed a greater and greater part of the federal budget. They also knew they could scream bloody murder, literally, if any Republican tried to slow Medicaid’s growth, or rationalize the system, or make it more balanced between the federal government and the states. Democrats always knew what they could do if Republicans attempted even relatively minor reforms like imposing a simple (and generous) work requirement on Medicaid. And now you’re seeing them do it.