TRP’s Shea McCarthy Forecasts Possible Entitlement Reforms in 2018

In an Inside Health Policy article published December 15, Thorn Run Partners Senior Vice President Shea McCarthy discusses the possibility of entitlement reform next year. Speaker Paul Ryan (R-WI) has said that Republicans plan to pass entitlement reform through the reconcilation process next year. McCarthy astutely points out that GOP leadership has been reading from the same playbook with respect to their biggest policy priorities this year, and it stands to reason they will plan to do so going forward. However, McCarthy noted that major cuts to Medicare and Medicaid would be a tough undertaking for the GOP-led Congress. "Major cuts to Medicare or Medicaid will be even more difficult to move through Congress than ACA repeal — and without all the sweeteners that come along with tax reform," said McCarthy. "And with a shrinking margin in the Senate, Republicans should be realistic about whether they’re writing their election year messaging platform, or a bill that can actually become law.” 

The article in its entirety can be read below. 

Despite Ryan's Press, Lobbyists Skeptical Medicare, Medicaid Reforms Will Move In 2018


While House Republican leaders say they will tackle entitlement reform in 2018 — which could include Medicare and Medicaid cuts — lobbyists and analysts say it would be difficult for such cuts to get through the Senate, especially in light of Senator-elect Doug Jones' (D) recent win in Alabama. On the House side, Energy & Commerce Chair Greg Walden (R-OR) said he hopes his committee will focus on priorities aside from health in the upcoming year.

House Speaker Paul Ryan (R-WI) and Deputy Majority Whip Tom Cole (R-OK) earlier this month said that, after wrapping up the tax bill and the budget, Republicans will move on to entitlement reform and work to cut Medicare and Medicaid spending. Cole said there was a strong interest from the Republican conference in taking up such reforms.

Ryan said again Thursday (Dec. 14) that Republicans plan to pass entitlement reform through the reconciliation process next year, though he did not specifically mention Medicare or Medicaid. When asked by Inside Health Policywhether Jones’ election win would affect plans to pass entitlement reform, Ryan’s office did not respond.

Ryan has long been a proponent of moving Medicare to a premium support system, and also pushed for Medicaid reforms included in the American Health Care Act earlier this year. The Affordable Care Act repeal and replacement bill passed the House but stalled in the Senate.

Walden said Jones’ election is a Senate issue. He added that if something major on entitlements were undertaken, it would have to be part of reconciliation so that it could pass the upper chamber with 51 votes.

Medicaid lobbyists and analysts also expect a renewed focus on Medicaid reforms. Gerard Vitti, CEO of Healthcare Financial Inc., said prior to Jones' election that he expected a continued focus on Medicaid on the scale of what Republicans had looked at earlier this year, though he wasn't sure how successful that would be.

“Medicaid will continue to be under siege, but Doug Jones's election gives a glimmer of hope to the underprivileged in Alabama and across the nation that rely on this crucial program. Among other things, Alabamans chose not to abandon the poor, who scored a victory alongside Jones,” Vitti said.

When asked about Jones’ election, Jeff Myers, president and CEO of Medicaid Health Plans of America, said: “Any development that makes any Medicaid reform effort more bipartisan is a good thing, which is something MHPA has been advocating all along.”

One beneficiary advocate said Jones' victory might make it a little harder for the Senate to do entitlement reform because it narrows the GOP majority. But, the advocate said, that doesn’t mean the GOP won't try.

The advocate said Medicaid is in a much more tenuous position than Medicare moving into next year, suggesting Medicaid reforms could be packaged with changes to the Supplemental Nutrition Assistance Program and others as part of entitlement reform.

Ryan on Thursday tied entitlement reform to changing what he called “welfare laws.”

Another potential stumbling block to Medicare reform is President Donald Trump's pledge during his presidential campaign not to cut Medicare. But Rep. Dave Brat (R-VA) suggested this week that reforming the program might be viewed differently by Trump than cutting it. Brat questioned whether anyone has asked Trump if he would be on board with some type of reform. The lawmaker said Medicare was actuarially sound when the average life span was 65, but now the average life span is 83 years. Because of that, Brat said, it “doesn’t take a rocket scientist to figure out what the reform might look like.”

Shea McCarthy, vice president at Thorn Run Partners, said there’s no doubt that Ryan’s policy statement, as laid out in the GOP's Better Way plan, lays the groundwork for Republicans' vision for entitlement reform next year. GOP leaders have been reading from the same playbook this year with respect to their biggest priorities — health care and tax reform — and it stands to reason that they’re planning to do so going forward.

“But realistically, major cuts to Medicare or Medicaid will be even more difficult to move through Congress than ACA repeal — and without all the sweeteners that come along with tax reform. And with a shrinking margin in the Senate, Republicans should be realistic about whether they’re writing their election year messaging platform, or a bill that can actually become law,” McCarthy said.

Sen. Ron Wyden (D-OR) said the GOP will make its own judgments on how to proceed next year, and Republicans went into the tax bill knowing they were going to create a huge deficit, which he said is a classic middle class betrayal and could lead GOP deficit hawks to come after Medicare, Medicaid and Social Security.

Joe Antos, with the American Enterprise Institute, said that despite the recent statements by Ryan and a few others, even Republicans know that cutting Medicare is politically dangerous in an election year.

Antos said he doesn’t see a move to Medicare premium support occurring, as that was not popular with Republicans in the House in previous years and nothing has changed. Moreover, the productivity adjustments have narrowed the scope of traditional provider pay cuts, he said.

Antos said Medicaid reform is another story — though he also noted that efforts to change Medicaid in 2017 demonstrated that any substantial Medicaid cut will be rejected by states regardless of their party affiliation, so it would be hard to get to 60 votes to support such policies in the Senate.

Majority Leader Mitch McConnell’s (R-KY) office did not respond when asked whether the entitlement reforms would be on the Senate’s agenda next year, or if Jones’ election would change that calculus.

On the House side, Walden said he has other priorities he hopes his committee will focus on next year.

“I would hope our work in committee would be focused on infrastructure, we’ve got some telecom issues we want to take up and address. There’s a lot of work we’ll be talking about once we take up our agenda … so entitlement reform, that may be on the table, but I haven’t been told that,” Walden told Inside Health Policy on Wednesday.