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2012 election to decide four critical health care questions

From the October ACP Internist, copyright © 2012 by the American College of Physicians

By Robert B. Doherty

In a few short weeks, voters will cast their ballots in an election that will chart the course of U.S. health care policy for a generation. It will validate or repudiate President Obama’s signature health reform law, the Affordable Care Act (ACA), or possibly render a mixed verdict if, for example, the president is reelected but Republicans gain a majority in the Senate.

But there is much more than the ACA at stake. This election could fundamentally change the direction of American government as it relates to health care. Starting with the “Great Society” programs of the mid-1960s and continuing through today, the government has taken on an ever-increasing role in funding, regulating and financing health care.

A reelected Obama/Biden administration will continue down this path, implementing the ACA’s policies to provide coverage to nearly all Americans. A Romney/Ryan administration will take a different path, greatly limiting the federal government’s involvement in health care. Rarely if ever has there been such a deep divide on how the candidates propose to answer four critical health care policy questions:

1) Will the federal government give the states more money to expand Medicaid, or give them less money but let them design their own ways to cover the poor?

Mr. Romney proposes to give each state a set amount of money to design its own programs to cover the poor, no strings attached. He argues that this approach, called Medicaid block grants, would save the federal government hundreds of billions each year without hurting the poor, because the states would be able to run the programs more efficiently with less fraud.

President Obama opposes block grants, believing that they would hurt access for the poor. Instead, he would continue the ACA’s policy of having the federal government pay the states to expand Medicaid to all residents with incomes at or below 133% of the federal poverty level, subject to federal rules on eligibility and benefits.

Last year, U.S. Rep. Paul Ryan, Mr. Romney’s running mate, developed a Medicaid block grant proposal that would save the federal government more than a trillion dollars but reduce the number of people covered by Medicaid by 14 million to 27 million by 2021, according to the nonpartisan Kaiser Family Foundation, mainly because the federal government’s payments to the states would not keep pace with rising costs. The Congressional Budget Office (CBO) estimates that the ACA will add up to 17 million currently uninsured poor persons to Medicaid, paid for almost entirely by the federal government.

2) Will Medicare be turned into a defined contribution program?

Mr. Romney proposes to keep Medicare as it is for now, but to later convert it to a defined contribution program (also called a premium support or voucher system) for people now 55 years old or younger when they reach Medicare age. The government would give them a capped amount of money to buy coverage from private health insurers sold through a federal marketplace, or they could use it to buy traditional Medicare. He argues that capping the federal contribution and allowing competition among health plans will lower costs and “preserve” Medicare for future generations.

President Obama says Medicare vouchers would “end Medicare as we know it” and shift costs to people who can’t afford it. He believes that Medicare should continue as a defined benefit program, meaning that by law the federal government must pay for all covered health benefits, with no upper limit on its financial contribution. To reduce Medicare’s costs, the president relies on the provisions in the ACA to reduce payments to nonphysician providers, conduct research on the comparative effectiveness of different treatments, and test new ways of paying doctors and hospitals. As a backup, an Independent Payment Advisory Board would make recommendations to Congress to reduce costs if spending exceeds a target growth rate.

3) Will the federal government continue its commitment to fund public health, medical research, graduate medical education and direct patient care to the underserved?

Mr. Romney states that his budget “will cut federal spending and bring much-needed reforms to entitlement programs. ... work toward balancing the budget, reducing the size and reach of the federal government, and returning power to states and the people.” He would lower taxes for wealthier Americans and corporations, increase defense spending, and put a “hard cap” on other spending. He doesn’t specify which programs will be cut, but funding for health care almost certainly would be among them.

The nonpartisan Center on Budget and Policy Priorities estimates that the spending targets outlined in Mr. Romney’s budget would cause “non-defense programs other than Social Security ... to be cut 29 percent in 2016 and 59 percent in 2022. ... Without the balanced budget requirement, the cuts would be smaller but still massive, reaching 40 percent in 2022.”

President Obama says his fiscal plan is “built around the idea that our country has always done best when everyone gets a fair shot, everyone does their fair share and everyone plays by the same rules.” He would require higher-income persons to pay more, reduce defense spending, make targeted reductions in other programs, and preserve funding for “essential” programs.

The Bipartisan Policy Center, a well-respected Washington think tank, estimates that the Romney budget would increase the public debt by $2.6 billion over 10 years, unless its reductions in tax revenue are offset by closing “tax loopholes,” which Mr. Romney has said he would do but without spelling out which ones. The same group concluded that President Obama’s budget would add $6.7 trillion in deficits over the next decade.

4) Will the federal government continue on the path of guaranteeing health insurance coverage to nearly all Americans?

Mr. Romney says he will repeal the ACA and replace it with a plan to allow consumers to buy insurance across state lines, promote health savings accounts, give states more authority to run their own programs, and reform malpractice laws. President Obama pledges to move forward on implementation of the ACA while seeking bipartisan improvements, such as by giving states more choices to design their own programs as long as they would cover as many people as the ACA.

The CBO estimates that the ACA will provide coverage to 92% of all U.S. residents, expanding coverage to 32 million uninsured persons, half through Medicaid and half through subsidized purchase of health insurance from state-run exchanges. Although it has not prepared estimates on Mr. Romney’s health plan, the CBO found that a similar GOP proposal would expand coverage to only about 3 million people.

There you have it: two presidential candidates’ starkly different views on the role of government in health care. Will voters decide they want the next president and Congress to convert Medicare to a voucher program and Medicaid to a block grant, cut most government spending (including on health care) and repeal the ACA’s promise of near-universal coverage? Or do they want a reelected President Obama and Congress to expand Medicaid, preserve funding for public health, medical research, and workforce programs (even if that means a bigger deficit), and ensure that everyone has access to affordable health coverage?

We’ll soon know.

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