EPISODE 316

Tim Layton is a professor of public policy & economics at the University of Virginia. He analyzes Medicaid policy and its impact on real people. Professor Layton disagrees with some progressive arguments about health coverage, but agrees that taking medical insurance away from people is generally a bad idea. And that’s exactly what Trump’s “Big Beautiful” (Or Big Ugly) bill does. Prof. Layton also has some interesting angles on how to improve Medicaid — including letting nurse practitioners see patients without doctors’ supervision. Give this lively discussion a listen! Read Prof. Layton’s white paper, “An Abundance Agenda for Medicaid” at  https://www.economicstrategygroup.org/publication/garthwaite-layton-medicaid/

TRANSCRIPT:

ANNOUNCER: It’s You Earned This, the Social Security and Medicare podcast, brought to you by the National Committee to Preserve Social Security and Medicare. And now, your host, Walter Gottlieb. 

WALTER: Hey there! Well, on this podcast, we talk to an awful lot of advocates, other organizations, and individuals like us who are fighting hard for policies on Social Security, Medicare, Medicaid, and anything else that affects seniors, who are our core constituency here at the National Committee. But today, we’re going to talk to an actual policy analyst who looks at hard numbers and data to draw conclusions and conduct analyses of Medicaid.

Medicaid, of course, has been in the news because Trump’s Big, Ugly Bill cut almost a trillion dollars out of Medicaid — which is forecast to deprive 15 million people of insurance over the next ten years. Our guest is Dr. Timothy Layton, an associate professor of public policy and economics at the University of Virginia in Charlottesville. He recently wrote a paper about Medicaid policy, which we’re going to get into now. 

We didn’t agree on everything during this discussion you’re about to hear — and that’s OK —because it’s good to get other perspectives. But we’re basically on the same page that cutting Medicaid and not extending the Affordable Care Act (ACA) credits is not a good idea because it leaves people uninsured. So, let’s get on with the interview with Professor Tim Layton. 

And Tim Layton joins us right now from his office in Charlottesville, Virginia. Tim, how are you doing? 

LAYTON: Great. How are you, Walter? 

WALTER: I’m good… what’s the sports team, the Cavaliers? 

LAYTON: I think so *laughs*.  

WALTER: Then I won’t ask you how they’re doing this season! 

1. LAYTON: You know, I spent ten years at Harvard before coming here, and at Harvard, I don’t think anybody ever really knew anything about sports. And so, it’s been a bit of a shift to come somewhere where people care about that. 

WALTER: Yes, it may not even be that relevant at Harvard, given their teams. No, sorry. 

1. LAYTON: That’s not offensive. I don’t think anyone at Harvard would take offense to that… they’re proud of it! 

WALTER: Yeah, they’re not Big Ten. Anyway, let’s get serious now. Does it make any sense not to extend these tax credits, given that millions of people will lose insurance if they aren’t extended? 

1. LAYTON: That’s a good question. I think it’s like most things that happen in politics and government — it’s a question of priorities. The thing I want to point out first is that the discussion and debate are about expanding subsidies, not about extending the original Obamacare subsidies. Basically, the Biden administration expanded the subsidies to make them more generous than before. Some might argue that the subsidies were adequate.

When they passed the bill, they were adequate enough to get all the Democrats to vote for them, and people were generally happy with them for a while. They became significantly more generous later. And really, the thing that I want to emphasize is we are talking about expanded subsidies, not for the poorest of the poor, but for middle-income folks. And so, there can be a range of views about the extent to which we want to extend government support for purchasing health insurance up the income distribution. 

Personally, I think it’s reasonable to extend them. But I also understand why people might not want to do that, mostly related to the fact that it costs a lot of money per additional person that’s enrolled. 

WALTER: Well, I’m not arguing with you, but I do want to point out that the Trump tax cuts were originally temporary, and Congress had no problem making those permanent. And those are even more expensive, to the tune of $3 or $4 trillion. But anyway, the ACA has managed to insure millions of people who didn’t otherwise have coverage. And projections are that if these tax credits are not extended, people will lose coverage. So, don’t everyone’s health insurance costs go up if more people are uninsured and using the emergency room for care? 

1. LAYTON: That’s a good question. Generally, the research suggests that when we give people insurance, they actually use the emergency room more than when they’re uninsured. And so, the evidence doesn’t necessarily support the idea that costs are higher when we don’t give people insurance. That doesn’t mean we shouldn’t give people insurance. The idea that we should give people insurance in order to lower costs does not really hold water. Instead, we want to motivate people to get insurance because we feel they should have access to health care. And to me, those are the more reasonable reasons to do this, not the idea that we need to give them insurance so that they don’t end up in the ER, because it turns out that they actually go to the ER less when they don’t have insurance.

WALTER: You know, it’s interesting, and I like this because we normally have guests who are completely in sync with our positions. And I think it’s cool to have some push-back from time to time. 

So, we can have an honest discussion. I mean, our own experts do not share that view, but with your credentials, we need to take seriously what you say. So, thank you. 

1. LAYTON: I mean, I’d say there’s been a lot of research on this, and it was kind of back and forth for a long time.  The thing that cemented it for me was the Oregon Health Insurance Experiment, where we essentially randomly assigned people to Medicaid.

A lot of people thought that when we gave people Medicaid, they would use the emergency room less. It turned out that when we randomly gave people Medicaid, the people we gave Medicaid to used the emergency room more than the people who didn’t have it. 

I don’t think it’s crazy to understand why that might be. On the one hand, you know, in the absence of Medicaid, the only place they can go is the emergency room. And so, they may substitute there instead of going to primary care and other places. But on the other hand, when you give someone insurance, you make the emergency room free. And that makes people more likely to go there for care, generally.

WALTER: But somebody is paying for the emergency room. If I’m uninsured, I’m going to get the care at the emergency room. It’s just that the hospital absorbs the costs, and those costs can get passed on to us. Anyway, let’s talk about what we call the Big, Ugly Bill. It was officially the One Big, Beautiful Bill. 

So, that had nearly $1 trillion in cuts to Medicaid. Medicaid is one of your specialties… Medicaid policy. Those cuts will not go into effect until 2027. But apparently, they may already be having an impact. Some clinics and hospitals around the country seem to be closing in anticipation of the cuts. We were talking to a congresswoman from Florida who’s already seeing it in her district in South Florida.

1. LAYTON: Yeah, the bill includes a lot of provisions related to Medicaid. It’s useful to be explicit about what those provisions are, like where the cuts come from. And I’d say there are two big buckets. One of the buckets involves making it harder for people to be enrolled in Medicaid. And there are a couple of ways that they do that. One is by implementing a work requirement. And the other is by requiring people to recertify their eligibility more frequently — every six months instead of every year.

And yes, we anticipate that will lead to quite a few people losing coverage. The other bucket involves restrictions on mechanisms states use to fund their Medicaid programs, largely via a set colloquially known as “shenanigans.”

WALTER: Shenanigans? 

1. LAYTON: Maybe that’s the technical term. But there’s a set of mechanisms that states use to extract more federal dollars than was originally intended, basically. This has been going on for decades.

And the CMS, Medicare, and Medicaid know about this and have been well aware and have placed restrictions on them in the past. H.R. 1 imposed additional restrictions on those flows of dollars. And so, those are the biggest buckets. So, you want to think about the first ones, the restrictions on enrollment, as leading to more people being uninsured, which, as we talked about before, is not a great thing, and is probably bad for the providers.

I do want to emphasize that things like more frequent eligibility — redeterminations and stuff — it’s unclear how much those will impact the providers, because if somebody comes in uninsured and is eligible for Medicaid, if they come to the hospital. They’ve been kicked off Medicaid because they didn’t recertify their eligibility. The hospital will surely help them get reenrolled, and then they will have coverage again. So I think that is a little less impactful for the hospitals and providers.

The work requirement is likely to be quite impactful, particularly in rural areas, where fulfilling it is not as easy because labor markets are tight. There aren’t many jobs. And so, it may be difficult for people to fulfill that work requirement in those places.

WALTER: Tim, you published a white paper where you critiqued work requirements in Medicaid. Why are they unproductive, or harmful, or both, in your opinion? 

1. LAYTON: In the white paper, we discuss the evidence and where it is right now. That evidence indicates — from what we know so far — that in the places where we have used work requirements before, mostly in the SNAP program, those work requirements lead people to disenroll from the program with very limited, if any, impact on work participation.

WALTER: In other words, it doesn’t help get more people into the workforce, ironically. 

1. LAYTON: Yeah, that’s the conclusion of the current research. Now, there’s more work to be done to understand it a little better. But that’s not shocking, partially because it seems like a lot of people don’t really understand that there is a work requirement in these programs that’s likely going to apply in Medicaid, as it does in SNAP, where people don’t really fully understand that they need to work to remain enrolled, and how much they need to work to remain enrolled.

Additionally, in Medicaid — relative to SNAP — the reporting requirements seem more stringent than in SNAP. And so, this could easily lead to many people who are actually fulfilling the work requirement getting disenrolled just because they don’t go through the reporting process.

WALTER: Also, I must add that certain states, mostly in red areas or down south, have already experimented with Medicaid work requirements — and they ain’t working. They are not improving the employment picture. They are simply putting up new hurdles for people to try to get coverage. 

I want to ask you about this: Trump and his party claimed that they were simply making sure “illegals,” in quotes, do not receive Medicaid, but it’s already against federal law for undocumented workers to receive Medicaid. So, what are your thoughts about that? 

1. LAYTON: Yeah, I mean, that’s true. You can’t use federal dollars to pay for insurance for undocumented immigrants. The thing I will say there is that it does not mean that states having access to more federal dollars does not lead them to provide coverage for undocumented immigrants. So, those things are distinct in that the states are using money from somewhere. Some states provide coverage to undocumented immigrants. They can do that, right? They’re states, they can decide to do that. They can’t use federal dollars to do that.

And, you know, it could be the case that some of those states, if the federal government stopped subsidizing the Medicaid program so much and the state was more strapped for cash, would stop doing that. So they can’t use federal dollars to do that. But at the same time, dollars are fungible at the state level, and there are ways to use state dollars that may have to be allocated elsewhere if the federal dollars disappear. So on the one hand, yeah, totally the case that it’s illegal to do that.

On the other hand, there is a link between states receiving more federal funding and choosing to do so.

WALTER: But let’s put it this way. When we think in terms of a safety net and what are the right policies for most of our population, there is not $800 billion worth of Medicaid money going to “illegals,” quote unquote. So I think that’s a spurious argument. 

1. LAYTON: Definitely. And I would say the arguments that I heard most from the Republicans about Medicaid were not that $800 billion was going to undocumented immigrants, but instead that $800 billion was going to “waste, fraud, and abuse.” 

WALTER: Okay. So if the $800 billion in cuts were aimed only at waste, fraud, and abuse, you wouldn’t have 15 million people projected to lose coverage over 10 years. In other words, there aren’t 15 million people getting coverage due to waste, fraud, and abuse.

And this kind of reminds us of the hunt for waste, fraud, and abuse in the Social Security Administration (SSA), which has been used to justify enormous cutbacks there, when in fact, waste, fraud, and abuse are statistically small.

1. LAYTON: I would not count the coverage restrictions as less waste, fraud, and abuse. They may argue differently, using the argument that they think that some of these folks should not be on Medicaid, and thus cutting them is getting rid of waste, fraud, and abuse. I don’t really agree with that, but that’s probably the argument they would make. 

WALTER: It’s just interesting how this same waste, fraud, and abuse standard or any sense of proportionality is applied to anything besides social safety net programs, where if you get it wrong, you’re going to hurt people. Do you think that when folks who depend on Medicaid realize the destructive power of the bill that cuts nearly $1 trillion from the program, there will be any mass pushback against it? And a related question: now that these cuts have been made, is there any way to reverse them in the future?

It seems easier in our politics to cut benefits than to increase spending. 

1. LAYTON: Yeah, it’s a good question. I’m not a political scientist, so I can’t really predict what the backlash will look like. Even in red states, they’re quite concerned about what this is going to do to hospitals and different providers, especially in red states that expanded Medicaid under the ACA. One thing to note is that, basically, all these cuts are set up to bite much harder in states that expanded Medicaid than in states that did not, because all of these restrictions apply exclusively to the Medicaid expansion population. Meaning if you’re one of the red states that have not expanded Medicaid, you’re held harmless by this bill to some extent.

And so, the states that you’re referring to that you might hope would have a negative reaction to this. I’m not sure they’re going to have that negative of a reaction because they’re hurt far less than the other states.

But that said, quite a few red states have expanded Medicaid. And yes, those states are already seeing the damage that this is going to cause, preparing for it to the extent that they can, and probably, you know, initiating some backlash.

WALTER: Thank you for that. I mentioned your white paper about Medicaid reform. In it, you propose some new ideas for increasing the “supply of care,” you call it, the supply of care in the program. These included letting more foreign-trained doctors practice, allowing nurse practitioners and physician assistants to do more, and using AI tools to support providers, all of which our healthcare experts think are pretty good ideas. What is the thinking behind your reforms? 

1. LAYTON: Mostly, we’re coming from this observation, this recognition, that all of the discussion that we’ve been having since we started talking today, and all of the discussion going on in D.C., and all the discussion that is always going on in D.C. is about: Who’s going to pay for health insurance? Who’s going to pay for people’s coverage? Who’s going to pay for their health insurance?

And it’s not about why it costs so much, right? So, the reason health insurance is unaffordable isn’t that the government isn’t paying for it for me. It’s because healthcare is very expensive, right?

And so, the types of reforms that we’re talking about are trying to take a different tack on the discussion of healthcare reform, which is not about the demand side, which is not about getting people covered, but instead making healthcare cheaper. And in the case of Medicaid, it’s not about making healthcare cheaper, but about getting a set of providers willing to accept the low payment rates Medicaid pays.

WALTER: Ah, okay. 

1. LAYTON: I think it’s quite important to understand that Medicaid pays very low rates to doctors and hospitals when you get treated, and Medicaid covers you. They pay much less than Medicare does in many cases. And, you should also understand that Medicare pays less than half of what private insurers pay. So, Medicaid is paying very little relative to what these providers get paid by private payers and by Medicare.

And so, the question in Medicaid is: OK, how do we find more providers willing to accept those payment rates? Because what we’ve done in Medicaid is cover a ton of people, which is great, right? Providing people with health insurance coverage. But as we put in the title of the white paper, “Coverage is not Care.”

1. LAYTON: And we’ve given people coverage on paper. But in reality, it’s difficult for people with Medicaid to find doctors who will treat them. So, the ideas we put forward are ways to boost the supply of health care providers willing to take Medicaid. And the place we’re starting is the providers who are willing to take Medicaid: those who provide care at a lower unit cost, right?

WALTER: Right.

1. LAYTON: And, a set of providers who don’t have the same kind of outside opportunities, the same opportunity costs, such that if I treat a Medicaid patient, then I’m giving up a commercial patient for which I get paid four times as much.

And so, the types of providers that we think of in that case are international medical graduates, right? Their alternative is not to be in this country and to be practicing in a different country, and kind of lower-level providers, nurses, physicians, assistants, etc. And the idea there is that what we ask ourselves, “what is keeping these providers from providing care to Medicaid patients?”

With international medical graduates, it’s that we don’t give them visas and make it hard for them to get licensed. With the nurses, it’s that we require that they practice under physicians, and the physicians, you know, have other things, better things to do.

And so, the idea would be to relax those requirements explicitly for when they’re treating Medicaid patients, right?  Not necessarily for everybody, but when they’re treating Medicaid patients, nurses don’t have to be supervised by a physician.

WALTER: That’s your proposal?

1. LAYTON: That’s our proposal. Yes. 

WALTER: Right. 

1. LAYTON: Or like international medical graduates, they get a visa as long as they promise that they will always have at least 80 percent of their panel be Medicaid patients, etc. And that would hopefully, we think, expand the set of providers willing to treat Medicaid patients. I also think today, you know, with the advances in AI… the way I think about AI is less replacing labor but instead enhancing labor. 

And in healthcare, we actually have a set of jobs that require very little training but help people develop the skills they need to treat acute crises. These are ambulance drivers and EMS folks, and they only require 6 to 12 months of training. And if you pair one of them with an AI tool trained by the best specialists in the world, their ability to triage and do the job of a primary care doc is greatly enhanced.

WALTER: Right. 

1. LAYTON: And so that’s basically the idea, is that we look for types of providers that provide care at a lower cost. We also find ways to use AI to enhance the quality of care that those lower-level, you know, less-skilled, less well-trained providers can do. And the government, you know, the Medicaid program can subsidize the purchase of these types of tools. 

WALTER: This is not a knock against doctors, but I’ve had some very good experiences with nurse practitioners and physicians assistants, especially with things that are not that critical and certainly not life-threatening. But wouldn’t we get pushback from the AMA for your ideas? 

1. LAYTON: Oh yeah *laughs*. The AMA hates this, right? This is why we have licensing rules like this — because it helps the AMA, right? It helps doctors. Of course they want rules that say that nurses have to be supervised by a physician because that ensures that the physicians maintain their market position. So yes, the AMA has fought against these types of rules for a long time. And I think your point is a good one that a lot of people have really good experiences with nurse practitioners and physicians assistants. And one of the reasons for that is because the opportunity cost of their time is so much lower than for a physician that they can stay with you. 

WALTER: So they don’t have to rush you. 

1. LAYTON: Exactly. They can stay and listen to you. And many people want that from their health care providers. And the way that our system is structured right now is that MDs can’t really provide that or don’t want to. And so why not empower the folks who are actually providing the type of care people want?

WALTER: Yeah, no, I think we agree with you on that. I read in your bio, Tim, that you’re into mountain biking, hiking, and trail running. Do these activities help you get your mind off policy for a while and then recharge your focus afterward?

1. LAYTON: Oh, yeah. I mean, I have two things that do that. One is being a dad…

WALTER: Oh, yeah. 

1. LAYTON: To three rambunctious boys. And two is spending as much time as I can running by myself in the mountains, which this morning I spent like three or four hours up on the Appalachian Trail in the snow. And that’s how I have the bandwidth to be able to come down and deal with all these complicated policies. 

WALTER: Goodness gracious. The Appalachians in the snow in December. Meanwhile, I’m busy hiking the “mountains” of Silver Spring, Maryland, which are about 10 feet in elevation. 

1. LAYTON: Oh, you know, the type of snow we get here, I still see as like child’s play compared to what I had in Boston for the last 15 years. So, you know, everybody here is hunkered down at home and I’m running through the mountains. 

WALTER: I read in your bio that you’re from New England also. So that’s cool, too. 

All right, Tim. Well, thanks for spending this time with us. It’s been a vigorous and interesting discussion. I hope people will get something out of it.  I appreciate your being with us. 

1. LAYTON: Yeah, I’m happy to have this discussion and keep at it. Thank you. 

WALTER: And if you’d like to read some of Tim’s work, it is available online, but it’s an awfully long URL. So, we will put it in the notes for this show on all your favorite podcasting platforms. We thank you all for listening every week. We’re enjoying a good number of downloads from our audience, and we love that. So, thanks to all of you for listening. Please follow and review us on Apple Podcasts or wherever you listen. 

You can find out more about us at ncpssm.org. That’s ncpssm.org. We also have a new website for the podcast and that’s youearnedthis.org… youearnedthis.org. 

Special thanks to our engineer Shahab Shokouhi, props to our story editor Donna Lack and to our editor Steve Lack. They might be related. Who knows? Well, I’m Walter Gottlieb saying: “You Earned This!”