Devastation for Medicaid, Opportunity for Fightback
The massive cuts to Medicaid in Trump’s budget package promise devastation, not only to the 13 million people who will be stripped of eligibility, but to hospitals and clinics in rural and other underserved communities that rely on Medicaid funds to remain solvent. Many will close or be taken over by private investors who specialize in buying public entities and "downsizing" them, maintaining only those services that turn a profit. Public hospitals everywhere will tighten their belts, laying off workers and stonewalling in contract talks with their unions. People who have been cut off Medicaid will have nowhere else to go for care but already overburdened emergency rooms.
Sooner or later, most seniors and people with disabilities requiring long-term care wind up relying on Medicaid to pay for it, because it can wipe out your savings in a hurry. As of July 2024, Medicaid is the primary payer for 63% of nursing home residents; the cuts will put them in an impossible situation. In the Black community, maternal mortality rates are already shockingly high; the cuts will push them even higher.
Congressional Republicans claim they are saving money by stripping away eligibility from illegal immigrants and the people who don't meet work requirements (what were known in Victorian England as "the undeserving poor"). But nearly two-thirds of those on Medicaid actually do hold jobs, and most of the rest are either ill, disabled, or serving as primary caregivers for someone else. As for the undocumented, federal spending on their health care is already against the law. In states where all residents are eligible, regardless of citizenship or immigration status, the state picks up the tab for their care.
Far more people will be affected by the cuts than the GOP is letting on. Rep. David Valadao represents Bakersfield, California, and the surrounding area. Nearly two-thirds of his constituents are on MediCal, California's version of Medicaid. Valadao promised to oppose any cuts to Medicaid, but when it came time to vote on the House budget bill, he caved and voted yes. There are others in Congress like him. If only one of them had voted no, the bill would not have cleared the House.
But the Republicans are right about one thing: soaring health care costs are making both Medicaid and Medicare unsustainable. There is an enormous amount of waste built into both programs, and continuing down the current path is fiscally irresponsible.
Problems due to subsidies of private capital
This isn't because the wrong people are getting coverage. It's because, over the years, every move by the federal government to extend health care access has been accomplished with massive subsidies of private capital. Many people were helped by the Affordable Care Act, but the private insurance industry benefited from it to the tune of $10 billion of our federal tax dollars. A majority of people on Medicare now get it from private Medicare Advantage plans, paid for out of the Medicare trust fund. These are a gold mine for corporations like United Health, bilking the system even further by claiming patients are sicker than they actually are, while denying costly claims for those who are truly sick.
As for Medicaid, East Bay DSA member Michael Lighty, who chairs the statewide Healthy California Now coalition, points out that “90 to 95 percent of the benefits nationwide through Medicaid are administered by for-profit managed care organizations. That’s where the waste is, that’s where the fraud is.”
In some parts of the country, Republicans counter Democratic charges of throwing the poor under the bus by pointing out the Democratic Party’s ties with corporate hospital chains. And private for-profit hospitals do, in fact, make a killing off federal programs, often at the expense of patient care.
The threatened cuts to federal health care spending are symptoms of a crisis that neither party has shown a willingness to confront, despite efforts by a minority of Congressional Democrats to promote a single payer solution. Each party uses the health care system's failures to attack the other, but only independent political organizing can defend the millions of people whose lives and well-being are at stake.
This applies not only to electoral politics but to unions. Maintaining health benefits in the face of steadily rising costs has long been a millstone around the neck of organized labor. Union negotiators are forced to sacrifice much of their leverage at the bargaining table not to win better coverage, but just to keep what they have. When contract talks break down, health coverage is usually the cause.
Unions need to do more than pass convention resolutions
Organized labor is arguably the only institution with the resources and infrastructure to counter the influence of the health care industry. Union leaders who have had to bargain over health benefits know all too well the stiff price of a system of private, employer-based health coverage. Many will readily acknowledge that a universal, publicly funded health care system would be far better for workers. But union political behavior is notoriously risk-averse, and telling your members that they can no longer count on the union to win decent coverage is an admission of defeat that few union officials are willing to make. For them to do more than simply pass single payer resolutions at conventions, their members will have to demand it.
The appalling cruelty of the Medicaid cuts has emerged, quite properly, as a major talking point for Democratic politicians. But it falls to us to point out that real solutions require a willingness to attack the source of the problem: the looting of public health care dollars by private capital. Until that happens, every effort to extend access to care will be held hostage in the face of exploding costs and the states’ fiscal crisis.
Perhaps necessarily, health care reform has been a lower priority in recent years for many in labor and the left. But the federal budget has pushed it onto the front burner, whether we like it or not. In the wake of the 2016 Bernie Sanders campaign, single payer was at the top of DSA’s agenda. It's time for us to take it up again in earnest.
No shortage of opportunities to engage
The impact of the cuts is so sweeping that there will be no shortage of opportunities to engage. Something like 70 percent of the money spent on health care in California ultimately comes from our tax dollars. Massive cuts at the federal level–which include premium subsidies under the Affordable Care Act as well as Medicare and Medicaid–will be felt across the board:
Insurance companies can be expected to try to make up for lost federal revenue by jacking their premiums, making it that much harder for unions to bargain over health benefits. We need to pay close attention to union contract struggles and not simply lend our support, but be prepared to talk about why it will take more than tough bargaining and militant picket lines to protect those benefits. We need to persuade our unions to not just pass resolutions, but to actually invest resources and political capital in the fight for single payer.
Community hospitals and clinics that serve MediCal patients were already under growing pressure to economize by cutting back on care, struggling just to stay open. The federal cuts will drastically worsen the situation. Community members most directly affected will need organized support, and local officials will need to have their feet held to the flames to make sure everything possible is done to keep those facilities running and adequately funded.
Two years ago, after years of struggle, California became the first state in the country to extend Medicaid eligibility to all qualified residents, regardless of age or immigration status. But even before the federal budget was passed, Gov. Newsom and the state legislature were walking back on the commitment—there will be no new enrollees among the undocumented starting next year, and those already enrolled will be required to pay a $30 monthly premium (thankfully, the legislature scaled back Gov. Newsom’s original proposal of $100). With the state facing a budget deficit, there will be enormous pressure to further undermine a victory that immigrant rights forces fought long and hard to achieve.
When you or a loved one is denied needed care, or can't get it without financial hardship or ruin, it's the most natural response in the world to think, "This is just wrong," and react with anger. It's highly personal, and all too real. But once the conversation turns to economics, how health care is to be financed and what its cost drivers are, you've moving beyond direct experience and into the realm of public policy. All too often, this involves a dive into the weeds that not everyone is prepared to make.
Here is where a socialist perspective becomes indispensable: everything about our health care system that involves the taking of profits drives costs upward, and those costs have soared beyond the point where the system can continue to absorb them. During the debate over the Affordable Care Act, one of Obama’s policy wonks remarked that health care reform was complicated because the system has so many moving parts. But all of the machine’s components have a single power source, and it’s on us to name it. There is a reason why the world’s most market-driven health care system is also far and away the most expensive.
Naming the system is not enough; you need an effective strategy to defeat it. Here again, DSA is equipped to bring something to the table that is badly needed: an analysis of the different forces that can be won over, an understanding of how and when their interests intersect and what it might take to “unite all who can be united” and get them working together. The catastrophic cuts to the federal health care budget are an opportunity as well as a crisis. Let’s not squander it.