Romney, Obama, and the future of Medicaid

An interesting piece, “The Health Policy Election,” found in the latest Journal of the American Medical Association (JAMA), highlights the differences between the Romney and Obama visions for health policy spending for the next two decades in a simple chart. Its authors assert that “voters have a real choice in November” regarding health policy.

I’ll assume for a moment that the provisions of the Affordable Care Act are well known:  insurance reforms, coverage expansion, premium assistance, and Medicaid expansion. The authors state:

Romney's proposals generally favor spending reductions, withdrawing federal support for private insurance expansion, drastically reducing Medicaid spending, eliminating Medicare coverage for 65- and 66-year-olds, and restructuring Medicare into a defined contribution program for those currently younger than 55 years. These are major differences and will have enormous effects on all facets of the health system and the number of uninsured, as well as federal costs.

In light of figures demonstrating that health-related spending has become a major driver of federal spending, Romney’s plan would maintain Medicare spending at a level comparable to that envisioned under the Administration’s projections (rising from about 3.25 to 3.75 percent of GDP by 2023) but fix the federal share of beneficiary support and shift the management of rising costs to the private market, leaving beneficiaries to spend their federal premium support among competing private insurance programs.

What’s of greater concern to community behavioral health providers in the Romney plan is its objective of reducing projected Medicaid spending from a current 2% of GDP to a projected 1.5% of GDP by 2023. This would be accomplished by cancelling the Medicaid expansion entirely and holding Medicaid spending to, essentially, 2009 levels.  The Romney plan would block grant the funds to states and lift most Medicaid regulations, leaving states to develop, fund, and create their own cost-saving innovations.

Not a pretty picture for community health and behavioral health advocates, is it?  But then, you already know that.

The big problem:  Costs are shifted, not saved

The big problem with all of Romney’s proposed Medicaid savings—and with any other plan that proposes such “savings”— is that they would only accelerate the current problem of “cost shifting” by hospitals for the rising costs of indigent care.

A 1986 federal law (the Emergency Medical Treatment and Active Labor Act, or EMTALA) requires many hospitals to provide emergency care to the uninsured and indigent. But Bruce Bartlett, a former Reagan and Bush (41) policymaker, asserts in a New York Times piece that EMTALA is hardly a substitute for healthcare reforms and expanded health insurance. He states that, with EMTALA, “all that is happening is a shifting of the cost of caring for such people. To a large extent, they end up being paid by the insured through higher medical bills and insurance premiums.” He says that, in New York, there is a 9 percent surcharge on all hospital bills to cover the cost of caring for indigents.  

But the cost of “cost shifting” is hardly limited to New York, says Joel White, executive director of HealthITNow.org, a bipartisan group of 65 organizations advocating the adoption of health information technology to improve care and reduce costs. He said that cost-shifting, combined with huge inefficiencies within the healthcare system (a huge overhead in paperwork/documentation, for example),are two huge reasons why 1) health information technology is desperately needed across the healthcare spectrum, and 2) the average family is paying dramatically more for health insurance that it did just a decade ago.  

How much more?  In a recent presentation to behavioral health leaders at the Open Minds Technology and Informatics Institute, White—who first excused himself for being a Republican in a room he presumed to be filled with opponents—compared the rise in health insurance premiums to the rate of inflation over the past decade.  He stated that if health insurance premiums had grown “at the rate of inflation over the past decade,” the average family would have been spared $32,000 in additional healthcare premium costs.

Which brings me back to the Romney/Ryan healthcare plan:  It’s a vision that would do plenty to restrain federal spending and presumably federal taxes. (Note: federal receipts are already at their lowest levels of GDP since the 1950s.) But would only do so by shifting or ignoring the real costs of care, specifically for the Medicaid program.  Choices are limited:  If spending is to be essentially held at 2009 levels, Medicaid benefits (or beneficiaries) would be dramatically squeezed at the state level, private health insurance premiums would continue their dramatic rise for families, and state taxes would likely continue their rise.  Hmm . . .

Post-election priorities

If you’re reading all this as a critique of Romney/Ryan, that’s not quite what I’m intending. Think of it as a bit of “equal time” for his healthcare proposals in light of the vast coverage of Obama’s ACA.  In fact, it’s probable that this scary vision of “Romneycare” probably has very little to do with what will actually happen when either President Romney (or Obama) are inaugurated on January 20.

Long before then—in the “lame duck” session of Congress, huge deals will have to be made to avoid the prospect of sequestration—large, automatic budget cuts that, in the absence of Congressional agreement on a new federal budget—will kick in automatically on January 1.  The coming sequestration battle and its implications for defense spending, defense-related employment, Medicare (and physician reimbursements), and a host of other federal programs make it unlikely indeed that Romney’s promise to “repeal and replace” the ACA will happen on "day one" of his would-be administration, if at all.

Far more likely, say experts, are changes to the Affordable Care Act.  If Obama wins, Joel White says that ACA supporters will propose up a hefty “technical corrections” bill to address the perceived shortcomings of the ACA. 

Should Romney win, White predicts that much larger changes to the ACA would be proposed. Republicans, led by a likely majority in the House of Representatives, would attempt to reverse the priorities of the nation’s healthcare reform effort. This, he asserts, would involve moving away from the administration’s approach in the ACA, which favors coverage expansion first and cost containment/payment reforms down the road to an approach that would require significant work on cost containment mechanisms prior to coverage expansion.  How far such thinking might proceeds depends largely on the makeup of the Senate, which many predict is likely to remain, though narrowly, in Democratic hands.