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Mitt Romney's Fatal Prescription for Health Care

June 21, 2012

Whatever ruling the nation's highest court hands down on President Obama's Affordable Care Act, Republican challenger Mitt Romney's prescription for health care is unchanged. "Now if I'm able to repeal it--or if the Supreme Court is able to get that job done for us," he announced last week, "We want to replace it." But what Romney wants to replace the ACA with - "states with responsibility" to "make sure that every American has access to good health care" - is simply impossible. His plan to gut Medicaid spending and vague proposals for tax deductions to purchase coverage wouldn't merely leave millions of Americans without health insurance, including hundreds of thousands in his home state of Massachusetts. And as the sad history shows, without help from Washington universal coverage at the state level has a proven track record of failure.

The Washington Post's Ezra Klein noted that the Romney campaign's 330 word description doesn't offer many details on his scheme to "replace Obamacare." As Klein explained:

Those words are enough to lay out a basic vision. Romney would turn Medicaid over to the states and -- though this appears in a separate policy paper -- cap its growth at inflation plus 1 percent, which would mean deep cuts to the program. He would allow private insurance to be sold across state lines, meaning that if health-care insurers find the rules in California too onerous, they can locate in South Dakota instead. This is basically how credit cards work today. He would cap non-economic damages in medical malpractice lawsuits and encourage "Consumer Reports-type" ratings of health plans. The broad idea, his campaign says, is to make the market for health insurance look more like the market for things that aren't health insurance.
But the key to his plan comes in these nine words: "End tax discrimination against the individual purchase of insurance." The problem is, there aren't any words after that.

But as Romney ally Ramesh Ponnuru fretted last month, the Republican's proposal to offer tax deductions for individuals to purchase health insurance in the private market is little different than George W. Bush's 2007 plan. While the Affordable Care Act will enable coverage for 30 million people, previous estimates suggested the Bush framework would add 9 million at most.
Sadly, that's just the beginning of President Romney's health care body count.
Like his new GOP twin in Congress Paul Ryan, Mitt Romney has proposed steep cuts to Medicaid spending and pledged to hand-over the shrunken pool of funds as block grants to the states. And it is precisely that formula that would smother his once-beloved Romneycare in its cradle. As the Boston Globe recently documented, President Romney "would probably cripple the Massachusetts health care law":

"It would have been impossible for Massachusetts to do what it did without increased federal Medicaid support,'' said John McDonough, a major architect of the state's health care overhaul law and now director of Harvard University's Center for Public Health Leadership. "What he's proposing is in direct opposition to what he did as governor,'' said Amy Whitcomb Slemmer, executive director of Health Care for All in Massachusetts, citing the Bay State's 98 percent coverage rate, the highest in the nation. "That kind of expansion would not have been possible under a block grant program,'' as Romney has proposed. Block grants give states more flexibility in spending federal money, but restrict funding increases.

As ThinkProgress explained, Romney in the past had been very up front about the crucial role federal funding - and flexibility - played in making his signature achievement possible:

"[F]rom the beginning the plan was a 50/50 deal between the federal government and the state government. The Feds fund half of it, they have from the very beginning." The Boston Globe notes that "approximately 56 percent of the gain in coverage was related to increased federal Medicaid support" in Massachusetts, and of the newly insured, "18 percent gained coverage through Medicaid, and another 38 percent gained coverage through Commonwealth Care, a program that federal Medicaid dollars pay half of."

But like the new insurance coverage for 30 million Americans nationwide under the Affordable Care Act, the gains in Massachusetts would be a thing of the past under a Romney administration in Washington. Projections from the Congressional Budget Office suggest that 48 million more people would be uninsured under Paul Ryan's House GOP budget, a scheme similar to Romney's. That figure would include hundreds of thousands in the state Romney once governed.
Keep in mind that Massachusetts was a national leader in health care even before the 2006 passage of Governor Romney's reforms. While the state's individual mandate and subsidies have lowered the uninsured rate to two percent, roughly 90 percent of Bay State residents already had coverage when the law took effect. With 50 million people uninsured, the national rate is roughly 16%. And in states like Mississippi and Texas, the ranks of the uninsured top 25 percent.

Ironically, as this chart from the Commonwealth Fund shows, health care performance is worst in those states where Republicans poll best.

Nevertheless, in keeping with GOP orthodoxy Mitt Romney declared last week that states can do it all:

What I would do is keep--as we have today--state responsibility for those that are uninsured...And states will learn from each other, and some will have good experiences and others will not. That's happening even today and states are learning and trying new ways to care for the uninsured. It's important for us in my view to make sure that every American has access to good health care.

Unfortunately, recent history shows that even relatively more affluent states have failed to deliver universal coverage when they try on their own. As Ezra Klein's Washington Post colleague Sarah Kliff pointed out this week, Washington State's 1990's mandate-less reforms led to skyrocketing premiums and insurers fleeing the state. Writing for the Washington Monthly back in 2007 ("Over Stated"), Klein looked at the grim fates of efforts in California, Hawaii, Washington, Oregon, Tennessee and Illinois. Thanks to their small markets, limited resources, unique populations and unsustainability in the face of recession-induced budget cuts, susceptibility to recessions, he concluded "the laboratories of democracy' can't achieve universal health care":

Letting states continue to take the lead would be disastrous, for one very simple reason: providing health care for all citizens is one of those tasks, like national defense, that the states are simply unequipped to manage on their own. The history of state health reform initiatives (and there's quite a history) is a tale of false hopes and great disappointments. The deck is stacked from the start, and the house--in this case the insurers, the providers, and other agents of the status quo--always wins....Over the years, states have tried programs of many different ideological and economic persuasions. All of them failed, and not because the programs were insufficiently inventive, but because states are structurally incapable of sustaining them.

Yet, that is precisely what Mitt Romney wants to do:

You see I believe in the 10th Amendment. I believe the states have responsibility to care for their people in the way they feel best. But to help states care for their own uninsured, I would take the Medicaid dollars that comes with all sorts of strings attached today, send them back to the states along with something known as the DSH money, and let states care for their own people in the way they think best. That--in my view--is the best way to care for the uninsured.

But Romney's prescription - slashing federal Medicaid spending over the next decade and turning what remains over to the states - is a toxic one.

Currently, the $300 billion Medicaid program serves roughly 60 million Americans. On average, the federal government picks up 57% of the tab, with poorer states like Mississippi and Alabama getting 75% of the funding from Washington. Averaging 21.8% of states' spending, Medicaid is now the largest budget item for most. Medicaid not only pays for a third of nursing home care in the United States; it covers a third of all childbirths. (In Texas, the figure is one-half.) As with Medicare, Medicaid provides insurance for substantially less than private insurers (27% less for children, 20% for adults.)
With the passage of the Ryan 2012 budget proposal, Republicans voted to slash Medicaid funding by $1 trillion over 10 years while sending the remaining dollars as block grants to the states. As the Center on Budget Policy and Priorities documented, Romney's plan is even more draconian. As it turns out, that gambit would not only gut the 2010 Affordable Care Act law, but guarantee than millions of low income Americans are deprived of health care. As Jonathan Cohn explained:

If the law changes and Medicaid becomes a block grant, then every year the federal government would simply give the states a lump sum, set by a fixed formula, and let the states make the most of it. Conservatives claim block grants would give states the flexibility they need to make their programs more efficient. But, as Harold Pollack has noted in these pages, states already have some flexibility. And because demand for Medicaid tends to peak during economic downturns, when state tax revenues fall, the likely impact of a block grant scheme would be to make Medicaid even less affordable at the time it is most necessary.
That's not to say plenty of governors wouldn't take advantage of block grant status to change their Medicaid programs in ways they cannot now. They surely would--by capping enrollment, thinning benefits, increasing co-payments, and so on.

Which is exactly what they are already doing now. Ezra Klein summed up the findings from a recent study by Kaiser Family Foundation and the Bipartisan Policy Center:

Twenty states implemented benefit restrictions in the past year. In fiscal year 2010, 39 states implemented Medicaid provider rate cuts or freezes (up from 33 in fiscal year 2009), and 37 states have provider rate restrictions planned for the next fiscal year.

For Medicaid block grant supporters like Mitt Romney and Haley Barbour, America's future is Mississippi's present:

Mississippi provides some of the lowest Medicaid benefits to working adults in the nation. A parent who isn't working can qualify only if annual family income is less than 24 percent of the poverty line. Working parents qualify only if they make no more than 44 percent of the federal poverty level. Seniors and people with disabilities are eligible with income at 80 percent of the poverty line...
Translated from the federal poverty guidelines, that means a working Mississippi couple with one child could earn no more than $8,150 a year and still qualify for Medicaid, seniors and people with disabilities could earn no more than $8,700, and a pregnant woman could earn no more than $20,000 a year.

That's a far cry from what's happening today in Mitt Romney's home state of Massachusetts. By most measures, Romney's signature 2006 health care law has been a tremendous success. Enjoying the consistent support of Bay State residents by a 2 to 1 margin, the bill Governor Mitt Romney signed into law lowered the uninsured rate from about 10 percent to a national low of two percent. In March, a study by the National Bureau of Economic Research (NBER) showed that universal coverage in Massachusetts is indeed making people there healthier. Meanwhile, the rate of growth for business and individual insurance premiums has slowed dramatically, a trend state regulators recently announced will result in only a 1.2% increase.
Unfortunately, what Governor Romney giveth, President Romney will taketh away.


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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