Last week, Kathleen Sebelius, the former Secretary of Health and Human Services (2009-2014), spoke to a group of Westfield women concerned about the direction of healthcare in this country. Sebelius, secretary when the Affordable Care Act (ACA) was passed and implemented, not surprisingly had a lot to say on the current efforts to overhaul the healthcare law, but she was equally concerned about proposed Medicaid cuts in the recently announced White House budget.

The Trump administration released its proposed budget just before her May 24 visit, putting $800 billion in Medicaid cuts on the table, for a program that covers 70 million children, low-income adults and disabled people. Sebelius shared some facts:

-40 percent of all U.S. births are paid for by Medicaid

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-40 percent of all kids in the U.S. are covered by Medicaid

-Medicaid is the largest single payer for nursing home care

-Women are disproportionately covered by Medicaid

-Medicaid covers a lot of the working poor and disabled

-You can’t cut fat out of Medicaid. It already pays doctors and other providers the lowest of any insurer. Medicaid’s overhead is only 2-3 percent, while private insurance overhead is double digits.

-Cutting federal Medicaid money will blow up state budgets, as they’ll be forced to cover the rest of the costs.

As a two-term Kansas governor (2003-2009), Sebelius understands the state’s responsibility in Medicaid funding and how a loss of federal money can devastate the state budget. She said that states like New Jersey need a strong governor to represent the state’s interests (she was in New Jersey stumping for Phil Murphy). Under the proposed budget, federal Medicaid funding to New Jersey will drop 20.6 percent per person, which is higher than any other state in the country. The proposal will cost New Jersey an estimated $30 billion in federal funding over the next decade.

In terms of the ACA, Sebelius acknowledged that it’s not perfect and needs tweaking, but it does not need repealing. Sebelius said the ACA marketplace is having some problems, however a lot of them are due to the Trump administration’s failure to follow the current law. She cited three ways the administration is sabotaging the marketplace:

  1. In January, 2017 during the last 10 days of the enrollment period, the Trump administration pulled pre-paid federal advertisements for marketplace insurance sign-ups. Without those continued ads, fewer Americans signed up, and enrollment flatlined. The number of sign-ups, especially of those who are younger and healthier, drives up rates.
  2. Congress/Trump still haven’t decided whether to reimburse insurance companies for healthcare subsidies. Households on the exchange that are 100 percent-400 percent of the federal poverty level are eligible for federal healthcare insurance subsidies. Insurance companies front the money for the subsidies, and can’t determine rates for next year unless they know if they’ll be reimbursed for these subsidies. Sebelius said that 60 percent of the 12 million people on the exchange receive subsidies.  
  3. The White House instructed the IRS not to enforce penalties for the individual mandate, the penalty for not obtaining health insurance. This means that many healthy and younger Americans forgo health insurance, affecting the insurance pool.

These three items, which are already part of the legally-enacted ACA, affect the stability of the healthcare exchange. The current administration is destabilizing the healthcare market by not following the law. In spite of concerns over insurance companies pulling out of the marketplace, Sebelius said that last week, the five largest healthcare insurance companies posted their first quarter earnings, showing a $4.5 billion net profit.

Sebelius recommended we call our congressional members to ask them to demand that the administration enforce the individual mandate penalties and also pay the subsidies. The marketplace may collapse otherwise, and that will not be the fault of the ACA, but rather the current administration, which is undercutting health insurance for this country’s citizens. Sebelius also recommended that we closely watch and speak out against Medicaid cuts, which affect our country’s most vulnerable, as well as the state budget.

Deborah Abrams Kaplan is a Westfield resident and journalist. She writes about healthcare policy and utilization for Sage Business Research, UBM Medica, Elsevier, Fierce Health Payer, Modern Healthcare and others.