As Democrats Bicker Over Massive Spending Plan, Here’s What’s at Stake for Medicaid

Hours after the Supreme Court in 2012 narrowly upheld the Affordable Care Act but rejected making Medicaid expansion mandatory for states, Obama administration officials laughed when asked whether that would pose a problem.

In a White House briefing, top advisers to President Barack Obama told reporters states would be foolish to turn away billions in federal funding to help residents lacking the security of health insurance.

Flash-forward nearly a decade, and it’s clear to see the consequences of that ruling.

Today, 12 Republican-controlled states have yet to adopt the Medicaid expansion, leaving 2.2 million low-income adult residents uninsured.

Tired of waiting for Republican state lawmakers, congressional Democrats are moving to close the Medicaid coverage gap as they forge a package of new domestic spending that could run as high as $3.5 trillion over 10 years and would significantly enhance other federal health programs. But the cost is raising concerns within the party, and the competition to get initiatives in the package is fierce.

With Democrats controlling both chambers of Congress and the White House, health experts say this could be the only time such a fix to the “Medicaid gap” will be possible for many years.

“This is a last best chance to do this,” said Judith Solomon, a senior fellow with the left-leaning Center on Budget and Policy Priorities.

Here are six things to know about what’s at stake for Medicaid.

1. Who would be helped?

The adults caught in the coverage gap have incomes that are too high for them to qualify under their states’ tight eligibility rules that predated the 2010 health law but are below the federal poverty level ($12,880 a year for an individual). When setting up the ACA, Congress expected that people making less than the poverty guideline would be covered by Medicaid, so the law provides no subsidies for coverage on the ACA marketplaces.

About 59% of adults in the coverage gap are people of color, according to a KFF analysis. Nearly two-thirds live in a household with at least one worker.

The states that have not expanded Medicaid are Alabama, Florida, Georgia, Kansas, Mississippi, North and South Carolina, South Dakota, Tennessee, Texas, Wisconsin and Wyoming.

About three-quarters of those in the coverage gap live in four states: Texas (35%), Florida (19%), Georgia (12%) and North Carolina (10%).

2. Why haven’t states expanded?

Republicans in these states have listed a litany of reasons. They assert that Medicaid, a state-federal program launched in 1966 that today covers 1 in 4 Americans, is a broken system that doesn’t improve health, despite dozens of studies to the contrary. Or they say working adults don’t deserve government help with health insurance. They also complain it’s too expensive for states to put up their 10% share (the federal government pays the rest), and they don’t trust Congress will keep up its funding promises for expansion states.

Each time Medicaid expansion has made it onto a ballot in a Republican-majority state, it has passed — most recently in 2020 in Oklahoma and Missouri.

3. How would the Democrats’ plan work?

The House plan has two phases. Under the bill passed by the Energy and Commerce Committee, starting in 2022, people in the coverage gap with incomes up to 138% of the federal poverty level (about $17,774 for an individual) would be eligible for subsidies to buy coverage on the marketplace.

Enrollees wouldn’t pay a monthly premium because the tax credits would be enough to cover the full cost, according to an analysis by Solomon. There would be no deductibles to meet and only minimal copays, like most state Medicaid programs.

Help not typically available under the ACA would be offered. For example, Solomon’s analysis notes, low-paid workers wouldn’t be barred from enrolling in marketplace plans because they have an offer of employer coverage. In addition, people could enroll at any time during the year, not just during open enrollment season in late fall/early winter.

Phase two would begin in 2025. That’s when people in the coverage gap would transition to a federally operated Medicaid program run by managed-care plans and third-party administrators.

Enrollees would not pay any cost sharing in the federal Medicaid plan.

4. Would the coverage be as good as if the states adopted expansion?

It would be very close, Solomon said. The new plan would include coverage for all services defined by the law as “essential” health benefits, such as hospital services and prescription drugs.

One difference is coverage for nonemergency transportation services would not start until 2024. In addition, during those early years of the plan, some long-term services for medically frail people typically covered under Medicaid would not be included and some screening and treatment services for 19- and 20-year-olds would not be offered.

The first phase would also not provide retroactive coverage for the three months prior to application. Medicaid today covers medical expenses incurred in the three months before an individual applies if the person is found to have been eligible during those months.

One potential benefit of using the marketplace plans is they could have broader networks of doctors than those associated with Medicaid programs.

5. How much would it cost?

The Congressional Budget Office has not yet revealed estimates, although the price tag would likely be in the billions of dollars.

The federal cost for covering people by helping them buy marketplace plans is higher than it would be if the states had expanded Medicaid. That’s because marketplace plans generally pay higher fees to doctors and hospitals, making them more costly, Solomon explained.

6. Could states that have already expanded Medicaid rescind that policy and require residents to get coverage under the new setup?

The bill offers incentives for states to keep their current Medicaid options. If a state opts to stop spending funds on the Medicaid expansion, it may have to pay a penalty based on the number of enrollees that move to the federal program, potentially amounting to millions of dollars.


An Ad’s Charge That Price Haggling Would ‘Swipe $500 Billion From Medicare’ Is Incorrect

The advertisement opens with a doctor sitting across from his patient and holding a prescription drug pill bottle. “You want to continue with this medication?” the doctor asks while an older patient nods.

The doctor then explains that he can no longer provide the medicine to her because insurance companies and Washington bureaucrats “are working together to swipe $500 billion from Medicare to pay for [House Speaker Nancy] Pelosi and [Senate Majority Leader Chuck] Schumer’s out-of-control spending spree.”

“They’re calling it Medicare negotiation, but, really, it’s just a way to cut your benefits and no longer pay for lifesaving medicines,” the doctor says.

Medicare negotiation refers to the federal government bargaining directly with pharmaceutical companies on the price of prescription drugs. Currently, Medicare is prohibited from using its vast market-share muscle to set prices. But supporters of Medicare drug negotiations eye the Democratic-backed budget reconciliation bill now being discussed in Congress as a means to reverse the policy.

This ad, seen on television and online, is part of a multiplatform campaign by the 60 Plus American Association of Senior Citizens, a conservative group that lobbies on senior issues and brands itself as the “right alternative to AARP.” It’s one example of a swath of ads that have popped up in the past month about Medicare drug price negotiations.

Since drug pricing is a hot topic and a critical piece of the broad, politically charged debate in Congress, we thought it was important to dig into the ad’s messages.

The $500 Billion Number

First, the ad claims that Medicare drug price negotiation will take “$500 billion from Medicare.”

All five of the Medicare and drug pricing experts we consulted said that was a misleading way to frame this policy.

The reference to $500 billion most likely comes from a Congressional Budget Office estimate of a provision in H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act. It’s an estimate of how much the government would save over 10 years if drug price negotiations were enacted.

That is, the government would be paying pharmaceutical companies $500 billion less for prescription drugs.

And, in that bill, $300 billion to $400 billion of the savings were to be used to expand benefits to include dental, hearing and vision coverage, said Juliette Cubanski, deputy director of the program on Medicare policy at KFF. Right now, Medicare doesn’t provide that coverage to seniors.

If this policy were to make it into the pending budget reconciliation, some of the savings would also likely address other Democratic health care priorities, such as permanently closing the Medicaid coverage gap and improving Affordable Care Act coverage and subsidies.

So the ad’s charged language — that Pelosi and Schumer are planning to “swipe” this money from Medicare — is incorrect. That $500 billion in savings would be slated for reinvestment in the program. And some experts said the changes to drug pricing could also translate into lower premiums and out-of-pocket costs for seniors.

The point of negotiations is “to spend less on the drugs we’re already buying and put the money back into the health system,” said Rachel Sachs, a law professor and expert on drug policy at Washington University in St. Louis.

But what about the ad’s other main point — that Medicare negotiation will result in seniors no longer being able to get their medications?

Since 60 Plus did not return requests for comment, it’s hard to know exactly what it is asserting will come between seniors and their medication.

It’s possible the ad is implying that drugmakers may walk away from the negotiating table if they don’t like the prices the government promotes. But experts said it’s likely a financial penalty would be in place to motivate the companies to work with the government. H.R. 3 proposed an escalating excise tax.

The U.S. has the world’s largest prescription market, so it seems unlikely companies would stop selling drugs here completely, said Stacie Dusetzina, an associate professor of health policy at Vanderbilt University.

And the number of drugs subject to negotiation would probably be a small subset of all drugs on the market, based on the negotiation method that was proposed in H.R. 3.

In real life, the scenario shown in the ad is unlikely to happen, said Joseph Antos, senior fellow in health care policy at the American Enterprise Institute.

“The question of whether a drug would be taken off the market — it’s always a little hard to say and, clearly, that is a possibility,” said Antos. “But it’s much more plausible to say this is the kind of policy that would lead to some new drugs not coming out to the market.”

That’s an argument often wielded by the pharmaceutical industry.

Evidence suggests there’s a grain of truth in the assessment that lower industry profits results in less research and development, said Paul Van de Water, a senior fellow in health care policy at the Center on Budget and Policy Priorities. But only a grain. For the most part, the drug industry overstates the effect of lost profits.

“A lot of these drugs are what’s known as ‘me-too’ medicines, which means the drugmakers are making small innovations on existing drugs,” said Van de Water. “The loss to Medicare beneficiaries of those types of drugs would be relatively small.”

In a separate analysis, the CBO examined to what extent negotiated drug prices could squeeze the pharmaceutical industry’s R&D capacity. The agency, using a 30-year window, estimated that 59 drugs wouldn’t come to market. That’s against a baseline of about 900 drugs being released per year, said Sachs, which means it would stymie only a tiny fraction of otherwise expected drugs.

Still, some experts say the CBO report can’t precisely predict the future and a loss in profits would have a larger effect on smaller, start-up pharmaceutical companies.

“At the small operations, a scientist thinks they have an insight into some biological process and they attract venture capitalists to develop a drug,” said Antos. “But drug development is a complicated business, and the drug might not make it to market. With less funds for that type of research, that is the part of the drug business most directly affected by the drug pricing policy.”

Why It Matters

The political stakes surrounding the Medicare drug price negotiations are high.

Currently, the idea is seen as a way to help pay for the Democratic-backed health initiatives being discussed as part of the reconciliation bill.

And, a recent poll from KFF shows that almost 90% of the public supports the government’s ability to negotiate for lower drug prices.

But allowing Medicare to bargain on drugs is controversial, even among Democrats, some of whom say they don’t want to stifle drug companies’ innovation, especially if it’s a big industry in the area of the country they represent.

Meanwhile, PhRMA, the powerful pharmaceutical industry trade group, announced Sept. 15 it would be launching a seven-figure ad campaign against the drug pricing proposals, according to The Hill.

Our Rating

The 60 Plus Association ran an advertisement that claimed Medicare drug price negotiations were “swiping” $500 billion from Medicare and going to be used as a way to “cut benefits and no longer pay for lifesaving medicines.”

While the $500 billion number is based on facts, everything else this ad says is misleading.

If Congress approves a plan to let Medicare negotiate drug prices, Democrats are calling for most of the savings to be funneled directly back into the Medicare program to provide vision, dental and hearing benefits. So, it’s not true that the plan for the money is to steal from Medicare. Experts also agreed it is specious to say seniors could no longer get the medications they’re currently taking.

We rate this claim False.


60 Plus American Association of Senior Citizens, “Our Mission,” accessed Sept. 22, 2021

60 Plus American Association of Senior Citizens, “Protecting Medicare,” accessed Sept. 22, 2021

Center on Budget and Policy Priorities, Build Back Better Legislation Would Close the Medicaid Coverage Gap, Sept. 13, 2021

Congressional Budget Office, CBO’s Simulation Model of New Drug Development, August 2021

Congressional Budget Office, H.R. 3, Elijah E. Cummings Lower Drug Costs Now Act Cost Estimate, Dec. 10, 2019, H.R.3 — Elijah E. Cummings Lower Drug Costs Now Act — 116th Congress (2019-2020), accessed Sept. 22, 2021

Email interview with Stacie Dusetzina, associate professor of health policy at Vanderbilt University, Sept. 21, 2021

Fierce Pharma, “Advocates Roll Pricey Ad Campaigns as Biden, Congress Push for Medicare Drug Negotiations,” Aug. 17, 2021

The Hill, “PhRMA Launches 7-Figure Ad Campaign Against Democrats’ Drug Pricing Measures,” Sept. 15, 2021

KFF, What’s the Latest on Medicare Drug Price Negotiations?, July 23, 2021

KFF, Public Opinion on Prescription Drugs and Their Prices, June 15, 2021

KHN/PolitiFact, “Pharma’s Take on the Pelosi Drug-Pricing Bill: Fair Warning or Fearmongering?” Dec. 5, 2019

KHN/PolitiFact, “Biden Promise Tracker — Promise: Lower Cost of Prescription Drugs,” updated July 15, 2021

Open Secrets, “Pharmaceutical Industry Backs Democratic Holdouts on Drug Pricing Plan,” Sept. 17, 2021

Politico, “House Leadership Looks to Jam Holdouts on Drug Pricing,” Sept. 21, 2021

Phone interview with Juliette Cubanski, deputy director of the program on Medicare policy at KFF, Sept. 21, 2021

Phone interview with Joseph Antos, senior fellow and Wilson H. Taylor Scholar in health care and retirement policy at the American Enterprise Institute, Sept. 21, 2021

Phone interview with Paul N. Van de Water, senior fellow at the Center on Budget and Policy Priorities, Sept. 21, 2021

Phone interview with Rachel Sachs, Treiman professor of law at Washington University in St. Louis School of Law, Sept. 21, 2021

The Washington Post, “Three Democrats Say They’ll Oppose Party’s Drug-Price Plan, Creating Roadblock for Larger Package,” Sept. 14, 2021

YouTube, 60 Plus Association Official Account, “Doctor’s Visit,” Sept. 10, 2021


Organ Centers to Transplant Patients: Get a Covid Shot or Move Down on Waitlist

A Colorado kidney transplant candidate who was bumped to inactive status for failing to get a covid-19 vaccine has become the most public example of an argument roiling the nation’s more than 250 organ transplant centers.

Across the country, growing numbers of transplant programs have chosen to either bar patients who refuse to take the widely available covid vaccines from receiving transplants, or give them lower priority on crowded organ waitlists. Other programs, however, say they plan no such restrictions — for now.

At issue is whether transplant patients who refuse the shots are not only putting themselves at greater risk for serious illness and death from a covid infection, but also squandering scarce organs that could benefit others. The argument echoes the demands that smokers quit cigarettes for six months before receiving lung transplants or that addicts refrain from alcohol and drugs before receiving new livers.

“It is a matter of active debate,” said Dr. Deepali Kumar, an expert in transplant infectious diseases at the University of Toronto and president-elect of the American Society of Transplantation. “It’s really an individual program decision. In many programs, it’s in flux.”

Leilani Lutali, 56, a late-stage kidney disease patient from Colorado Springs, Colorado, learned in a Sept. 28 letter from UCHealth in Denver that if she didn’t begin a covid vaccine series within 30 days, she would lose her spot on the transplant waiting list. Both she and her living donor, Jaimee Fougner, 45, of Peyton, Colorado, refused to get vaccinated, citing religious objections and uncertainty about the safety and effectiveness of the vaccines.

Kidney patient Leilani Lutali (left) of Colorado Springs, Colorado, was placed on inactive status on a kidney transplant waiting list at UCHealth in Denver for refusing to get vaccinated against covid-19. Lutali and her would-be living donor, Jaimee Fougner, of Peyton, Colorado, are asking Texas transplant centers to consider performing the operations. (Jaimee Fougner)

“I have too many questions that remain unanswered at this point. I feel like I’m being coerced into not being able to wait and see and that I have to take the shot if I want this lifesaving transplant,” Lutali said.

She said she offered to be tested for covid before the surgery or to sign a waiver absolving the hospital of legal risk for her refusal of the vaccine. “At what point do you no longer become a partner in your own care regardless of your own concerns?” she said.

Lutali now hopes to take her transplant quest to Texas, where several hospitals, including Houston Methodist and Baylor University Medical Center in Dallas, said they don’t require covid vaccinations to approve active candidates for the national waiting list.

The difference between policies in Denver and Dallas — and elsewhere — underscore a tense national divide. As of late April, fewer than 7% of transplant programs nationwide reported inactivating patients who were unvaccinated or partially vaccinated against covid, according to research by Dr. Krista Lentine, a nephrologist at the Saint Louis University School of Medicine.

But that was just a snapshot in late spring, and like all covid-related practices, it’s “rapidly changing,” Lentine said.

UCHealth in Denver began requiring covid vaccinations for transplant patients in late August, citing the American Society of Transplantation’s August recommendation that “all solid organ transplant recipients should be vaccinated against SARS-CoV-2.”

Patients who undergo transplant surgery have their immune systems artificially suppressed during recovery, to keep their bodies from rejecting the new organ. That leaves unvaccinated transplant patients at “extreme risk” of severe illness if they are infected by covid, with mortality rates estimated at 20% to 30%, depending on the study, Dan Weaver, a spokesperson for UCHealth said. For the same reason, transplant patients who receive covid vaccines after surgery may fail to mount a strong immune response, research shows.

UW Medicine in Seattle began mandating covid vaccines this summer, said Dr. Ajit Limaye, director of the solid organ transplant infectious diseases program. Patients were already required to meet other stringent criteria to be considered for transplantation, including receiving inoculations against several illnesses, such as hepatitis B and influenza.

“For anyone who does not have a medical contraindication, basically, we’re requiring it,” he said. “There’s a very strong sense to make it a requirement, like all the other hoops, straight up.”

By contrast, Northwestern Medicine in Chicago, where doctors performed the first double-lung transplant on a covid patient in June 2020, is encouraging — but not requiring — vaccination against the pandemic disease.

“We don’t decline care of transplant based on vaccine status,” said Jenny Nowatzke, Northwestern’s manager of national media relations. “The patient also doesn’t get any lower scores.”

The lack of consistent practice across programs sends a mixed message to the public, said Dr. Kapilkumar Patel, director of the lung transplant program at Tampa General Hospital in Florida, where covid vaccines are not required.

“We mandate hepatitis and influenza vaccines, and nobody has an issue with that,” he said. “And now we have this one vaccination that can save lives and make an impact on the post-transplant recovery phase. And we have this huge uproar from the public.”

Nearly 107,000 candidates are waiting for organs in the U.S.; dozens die each day still waiting. Transplant centers evaluate which patients are allowed to be placed on the national list, taking into account medical criteria and other factors like financial means and social support to ensure that donor organs won’t fail.

“We really make all kinds of selective value judgments,” said Dr. David Weill, former director of Stanford University Medical Center’s lung and heart-lung transplant program who now works as a consultant. “When we’re selecting in the committee room, I hear the most subjective, value-based judgments about people’s lives. This is just another thing.”

The centers can choose to place candidates on inactive status for a variety of reasons, including medical noncompliance, according to data from the United Network for Organ Sharing, which oversees transplants. As of Sept. 30, that category accounted for 738 of more than 47,000 registrants waiting in inactive status, though it’s not clear how many are tied to vaccination status.

A particularly thorny question involves unvaccinated people who need transplants specifically because covid infections destroyed their organs. As of late September, more than 200 lungs, as well as at least six hearts and two heart-lung combinations, had been transplanted for covid-related reasons in the U.S., according to UNOS data.

Many of those organs were transplanted earlier in the pandemic, before any covid vaccine was widely available. That’s no longer the case, Weill said. “If you’re just now getting vaccinated, you’ve done it at gunpoint, actually,” he said. “It’s not just a personal choice; they’re making some kind of a statement.”

Such patients are usually younger and healthier than other transplant candidates, aside from the covid-related damage, and they’re often acutely ill enough to go to the top of any transplant list. “The sick covid patient might go ahead of the stable cystic fibrosis patient,” Weill said.

Tampa General’s Patel said he performed a lung transplant on a patient who was transferred to Florida after being delisted at another center because he wasn’t vaccinated for covid. “I mandated with him basically on a handshake that he will get his vaccine post-transplant,” Patel said. “But his family? They haven’t agreed.”

Eventually, Patel said, he thinks nearly all transplant programs will mandate covid vaccination, largely because transplant centers are evaluated on the longer-term survival of their patients.

“I think it’s going to spread like wildfire across the country,” he said. “If you start losing patients in a year due to covid, it will be mandated sooner rather than later.