President Trump has proposed a budget that increases government spending from $4 trillion today to $5.5 trillion in 2027. Only in the alternative reality of Washington can this be described as “budget cuts.” Looking at individual programs, it is a gross mischaracterization to state that spending on Medicaid programs will be cut. The new budget proposes to increase federal Medicaid spending from $378 billion a year today to $524 billion a year in 2027. It shows how far removed Washington is from everyday Americans for this increase of $146 billion to be called a cut. The fundamental problem is that special interests are addicted to the rising path of spending. Altering this path by increasing spending at a slower rate opens change-makers to extraordinary attacks.

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In the United States, the difference between being in poverty and out of poverty is a job. The nation’s public assistance programs successfully alleviate suffering among low-income households, but they fail to raise self-sufficiency because they do not connect able-bodied people to work. Going forward, policymakers must incorporate work requirements throughout the safety net, which are proven to enhance programs like TANF and the EITC. Medicaid is an ideal candidate for work requirements, as it would encourage over 1 million people to find work without greatly disrupting the program itself.

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The Trump administration appears to have scrapped one of the key tools the Obama administration used to encourage states to expand Medicaid under the Affordable Care Act.

The shift involves funding that the federal government provides to help hospitals defray the cost of caring for low-income people who are uninsured. Under a deal with Florida, the federal government has tentatively agreed to provide additional money for the state’s “low-income pool,” in a reversal of the previous administration’s policy.

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Congressional Republicans have called for restructuring Medicaid, reviving a debate that has largely remained dormant for two decades. During the mid-1990s, Congress and President Clinton advanced competing Medicaid reform proposals. Republicans urged that the federal government issue Medicaid block grants to states. The White House and congressional Democrats proposed instead to place per capita limits on federal Medicaid payments to states. The most salient difference between these approaches is that per capita allotments retain the individual entitlement to Medicaid while block grants generally do not. Today, Republicans who once resisted Medicaid per capita allotments support them, and Democrats who backed such allotments oppose them. Given this legislative history, policymakers seeking common ground might look to Medicaid per capita allotments as a point of departure.

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In what will be a busy week in Washington, the Republican House hopes to take another whack at ObamaCare reform, a large chunk of which is Medicaid. As if this were not enough to handle, Donald Trump promises a “big announcement” Wednesday about his tax plan, which will likely include cuts in the corporate tax rate.

Let us stipulate that Medicaid reform and corporate tax cuts are both excellent initiatives. Done properly, each would offer Americans, including those at the lower end of the income scale, a better deal than they have now. Unfortunately, pitching health-care reform as the way to help “pay for” corporate tax cuts undermines the best arguments for both.

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As Republicans take another crack at devising a plan to replace ObamaCare, here’s an idea they should consider: Give each Medicaid patient a health savings account—and put $7,000 in it every year. Under ObamaCare, Medicaid has become the only option for millions of Americans. But that doesn’t mean much if the doctors in their communities don’t accept new patients through the program.

The GOP’s recently benched health care bill would have substantially reformed Medicaid by giving the states block grants, along with more flexibility on how to spend the money. But there’s a better model. Republicans should empower Medicaid patients by providing funds to them directly, which would allow them to build a personal safety net that could last a lifetime.

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By ending federal matching funds and shifting managerial responsibility to the states, Republicans propose to modernize Medicaid’s funding and give local authorities greater flexibility to design program innovations that are more specific to each state’s needs. The reason Medicaid costs less than private insurance is because it provides less. Medicaid provides “comprehensive coverage,” but coverage isn’t care. It is easy to write down a long list of services that are covered. Think of it as having a coupon for free health care—a coupon that is difficult, sometimes impossible, to redeem. Per capita allotments or block grants may result in reduced federal spending, but their primary purpose is to bring about reform of Medicaid.

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The demise of the American Health Care Act (AHCA) was ultimately precipitated by factional opposition to different provisions of the bill. Moderate and conservative members of the Republican conference did not agree on much, except they shared an animus towards the ill-fated legislation.

The future of health-care reform is now highly uncertain. Forging a legislative consensus will continue to be a challenge due to the inherent trade-offs between broad-based coverage and personal freedom, to say nothing of competing views about the respective roles of the market and the state (including different levels of government).

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Now that House Republicans have squandered their shot at reordering Medicaid, governors who want conservative changes in the health program for ­low-income Americans must get special permission from the Trump administration.

Near the front of the line is Wisconsin Gov. Scott Walker, a Republican who not only supports work requirements and premium payments but also a new additional condition: to make applicants undergo a drug test if they’re suspected of substance abuse.

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The full dimensions of the GOP’s self-defeat on health care will emerge over time, but one immediate consequence is giving up block grants for Medicaid. This transformation would have put the program on a budget for the first time since it was created in 1965, and the bill’s opponents ought to be held accountable for the rising spending that they could have prevented.

The members of the House Freedom Caucus who killed ObamaCare’s repeal and replacement claim to be fiscal hawks. Most of them support a balanced budget amendment. Yet they gave zero credit to a reform that would have restored Medicaid—a safety net originally intended for poor women, children and the disabled—to its original, more limited purposes.

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