Like many Americans, I believe Donald Trump poses a threat to our democracy. At the same time, the Democratic strategy of simply attacking him and his policies, fails to address the underlying reasons that allowed him to be reelected in the first place.
For the last three election cycles, Democrats have been defending the status quo— telling Americans that our public institutions are all working just fine—a message that does not line up with the day to day reality of millions of people who simply can’t work hard enough to get ahead. Neither the economy nor the government is working for them, and the Democratic message to the contrary is a central reason why the 2024 election turned out the way it did.
While fighting back against the Trump “slash and burn” approach to the cost of public programs, Democrats need responsible alternatives to make these programs work better. The current debate over Medicaid is a case in point. The House Budget Resolution, passed earlier this month, instructs the House Committee on Energy and Commerce to propose some $880 billion in budget reductions over the next 10 years, much of which is expected to come from Medicaid.
The “No cuts to Medicaid…Period” response, adopted by Democrats has allowed this debate to be framed as a choice between deep budget cuts and defending the status quo. This is a false choice, and does nothing to ensure the long-term viability of Medicaid which, like the rest of the US health care system, is on a financially unsustainable trajectory.
Furthermore, the status quo is not something that anyone, particularly Democrats, should be defending. It is a system that every year siphons billions of dollars away from affordable medical care, to enrich private equity investors and the shareholders of giant pharmaceutical and insurance companies. These profits are underwritten with public debt in a system that produces some of the worst health outcomes among OECD nations.
Think of our public institutions as a house that was built decades ago, and think of Americans as the family who has lived in that house for generations. The way the house was designed made sense when it was built. But over time the family, its needs and the way it lives have changed, but the structure of the house hasn’t.
There are too many rooms, they’re not the right size, there’s no insulation, the windows are drafty and the roof needs to be replaced. The cost of maintaining the house is more than the family can afford. And at some point, the house must be redesigned so that it is affordable and meets the evolving needs of the family.
That’s where we are right now. The basic structure of Medicaid (and the rest of the US health care system, including Medicare and commercial insurance) was put in place over 60 years ago, and has not materially changed since then. The two major expansion in coverage, the Children’s Health Insurance Program in 1995 and the Affordable Care Act in 2010— both of which I strongly support—use public subsidies to make health care more affordable for individuals, which is not the same as reducing the total cost of care. And while CHIP and the ACA give more people access to health care, it is access to the current inefficient and hyper-inflationary system.
For the past decade, Oregon has pursued a “middle path,” which should inform this debate. Since 2012, under an 1115 waiver, Oregon Medicaid has been provided through new Coordinated Care Organizations (CCOs)— community-based organizations charged with providing quality medical care, while focusing also on community health. They operate on a global budget indexed to a per member per year a growth rate that is lower than medical inflation. CCOs are also required to maintain enrollment and benefits, while meeting rigorous metrics around quality, outcomes and patient satisfaction.
During the first 5-year waiver period, Oregon enrolled an additional 384,000 people and operated within the per member per year growth rate. All CCOs met the required quality and outcome metrics, and realized a net cumulative savings of $1.1 billion. The net cumulative savings between 2011-2021 was approximately $3.7 billion. We can view the $3.7 billion as a “cut” to Medicaid, or as the result of making the program more efficient and effective to better serve the needs of those who depend on it.
While defending the need for public institutions, Democrats should not be defending the way they are currently structured. We need institutions that work, in this case, a Medicaid program that is financially sustainable because it reduces medical inflation—not by going further into debt, but by putting pressure on the delivery system to reduce the total cost of care.
By realigning financial incentives with health outcomes, Oregon has significantly reduced the cost of Medicaid—without cutting enrollment or benefits, without sacrificing quality, and without stigmatizing and marginalizing those members of our community who depend on this program for access to health care. Democrats should be working to extend the key elements of this model across Medicaid … and across the rest of our health care system as well.
Defending the status quo is neither a long-term winning strategy for Medicaid, nor is it a winning political strategy for Democrats, because it fails to address the legitimate frustration millions of American have with their government. The current debate over Medicaid, gives Democrats an opportunity to do both. By offering a responsible alternative to the Trump meat axe approach to the cost of public programs—we can ensure vital Medicaid services are financially sustainable, while also beginning to restore confidence in our important public institutions.
