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Romney, Obama, and the future of Medicaid

October 24, 2012
by Dennis Grantham, Editor-in-Chief
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Thoughts on "a real choice" for voters, the costs of "cost shifting," and on what's going to happen on "day one"

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.  

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Thanks again Dennis for the right information at the right time. Many of us have been asking ourselves the very questions you addressed in this article. Sometimes it's hard to get the answers you need when the campaigns are so broad with their messages.

Thanks Tim—appreciate your taking a moment to offer the opinion.

I thought it was significant to see the Journal of the American Medical Association (cited in above piece) give time to the future of healthcare spending. And seeing the cost comparison laid out in that article is certainly relevant politically. Not because it would necessarily happen as written, but only to show how much the candidates agree on Medicare, and how incredibly far apart they are on Medicaid.

We’re all waiting to see what will happen with the Medicaid expansion—26 states are reportedly "in," many have developed groundwork to get in (but haven't gone ahead), and some have done nothing at all (Ohio, for one--my home state.)

It's not difficult to think what might happen to those states that haven't opted in yet:

The betting is that some significant number of those 24 holdouts will pull the trigger on expansion sometime soon if Obama is reelected. If governors/state reps in those states don’t act on expansion by the time of their own reelection bids in 2014, then opponents will have plenty of ammo about how foolish—fiscally speaking—they are. Or, state leaders will somehow gain support for the idea that it is great that their state has rejected the expansion and that the status quo on Medicaid is fine.

Rejecting the expansion would produce a "donut hole" of people above current Medicaid limits, but below 138% of poverty (the threshold for insurance exchanges) that just won't get any help at all.

So, it's my theory that if the 2012 presidential/congressional races don't get states to move, the 2014 elections will provide a “do or die” moment that should be one more incentive for the anti-expansion folks to either get on board or come up with an argument for rejecting it that is better and more defensible than any heard so far. (I'm all ears if there are better arguments!)

Regarding the presidential vote: If Obama wins and the Dems hold the Senate, a big "technical corrections" bill for the ACA will likely occur--but only after all of the fiscal cliff stuff gets sorted out in the lame duck session.

If Romney wins, everything with the ACA and the Medicaid expansion depends on the makeup of the US Senate. If the Senate stays Democratic (as currently projected), the ACA will stay, but funding will likely get hobbled by House Republicans, who are likely to continue there as the majority party.

If Republicans win the presidency and the Senate, then there would (after resolution of fiscal cliff issues) likely be major trouble for the ACA—with key provisions tossed out or rewritten.

It is hard to do anything except basically wait until post-election to see what the 24 holdout states will do with Medicaid expansion. In our coverage of this issue, we've found that everybody is awaiting the election outcome. We couldn’t get anyone within the holdout states to say anything—they felt they could not speak out as their superiors-governors and legislators-wait to see which way the political winds are blowing.

Here in Cleveland(Cuyahoga County)--one of four big urban Ohio counties that are key to the state's vote (others are Columbus/Franklin Co., Cincinnati/Hamilton Co. and Toledo/Lucas Co.)--the atmosphere around the election is just intense. The narrow, but prevailing wisdom so far is that Obama will hang on to win here. But things are so close enough that you really can't take anything--polls or statements--at face value. There's a partisan feel to everything. Surreal.

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Dennis Grantham

Dennis Grantham

@BH_dgrantham

www.behavioral.net