Gov Romney’s Sunday Health Reform Ruffle

Gov. Romney said on Meet the Press yesterday that he would keep some of the popular parts of Obamacare. This set twitter ablaze with discussion of his replace plans. There are many angles that could be taken: flip flopper; see, a moderate; base will be angry; independents may be relieved; Romney has a secret plan, etc.

The bottom line of all of the dust up seems to be no change in his replace plan (or lack thereof), but mostly an attempt to get a change in Monday morning headlines that said “Gov. Romney wouldn’t get rid of the popular parts of Obamacare.” And the Governor succeeded on that front, at least in my local paper.

What about his replace plan? In June Avik Roy described the Governor’s replace plan, and highlights expanding tax preferences to individually purchased health insurance policies, and the notion that block granting Medicaid will provide flexibility with which states will expand insurance coverage. A few thoughts.

Block granting that is designed to save the federal government money cannot also be a means of expanding insurance coverage; instead it will set up a “tag your it” situation in which states will then have to make tradeoffs between acute care insurance for the young poor and long term care costs for the the older dual eligibles and long term disabled. As I said in June:

If you block grant Medicaid and grow the block granted amount slower than health care inflation, it will be very hard (impossible) to provide similar services to the existing beneficiaries. With block granting, you either can’t expand coverage or you have to cut benefits and services, and most of the cuts will have to fall on the elderly and disabled. Most folks forget that Medicaid is at least 3 programs.

Block granting Medicaid is not a strategy to expand insurance coverage, unless it is combined with a plan to severely reduce long term care spending paid for by Medicaid for the elderly and disabled, or you are planning to spend more money via a block granted approach than is currently projected for Medicaid.

On pre-existing conditions, it seems that Gov. Romney was simply stating what has been in law since 1996 via HIPPA; if you have continuous group coverage you cannot be denied in another group plan. And if you have continuous individual coverage, you cannot be denied an individual plan BUT there is no limit to what premium can be charged. So, you either need forced risk pooling (like an individual mandate) and/or subsidies to purchase health insurance to make such coverage affordable. Obamacare has both and the Governors replace plans appear to have neither.*

The most obviously new part of Gov. Romney’s replace plan is expanding tax preferenced spending on health insurance by allowing individual purchasers to deduct premiums from taxable income. I would assume this would expand insurance coverage somewhat, but don’t know how much. We would need the details to figure it out. However, this goes directly opposite his tax reform credo of broaden the base and lower the rates (his plan here is similarly vague).

All in all, I still think that if Gov. Romney wins and Republicans clean sweep, they will repeal Obamacare, but I don’t expect them to replace it with anything.

update: more from Sarah Kliff this morning.

*I say appear because it is all so vague.

About Don Taylor
Professor of Public Policy (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute), and Chair of the Academic Council at Duke University . I am one of the founding faculty of the Margolis Center for Health Policy. My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

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