Gov Romney’s 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. It was later walked back.

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, making it an inconsequential reform for expanding coverage.

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 could expand insurance coverage somewhat, but don’t know how much. I expect that it would have a small impact, but 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.

cross posted at freeforall; added link to front page of Raleigh (N.C.) News and Observer via @barrmsarah

Author: Don Taylor

Don Taylor is an Associate Professor of Public Policy at Duke University, where his teaching and research focuses on health policy, with a focus on Medicare generally, and on hospice and palliative care, specifically. He increasingly works at the intersection of health policy and the federal budget. Past research topics have included health workforce and the economics of smoking. He began blogging in June 2009 and wrote columns on health reform for the Raleigh, (N.C.) News and Observer. He blogged at The Incidental Economist from March 2011 to March 2012. He is the author of a book, Balancing the Budget is a Progressive Priority that will be published by Springer in May 2012.

4 thoughts on “Gov Romney’s Health Reform Ruffle”

  1. So you’re assuming that if the Republicans sweep, they’ll then invoke the “nuclear option” to break a fillibuster against their repeal bill? They certainly won’t have 60 votes in the Senate. Or do you think they’ll somehow manage to squeeze their repeal bill through the budget reconciliation keyhole? That seems impossible without throwing the reconciliation process, as it has been understood, out of a high window.

    Of course, the Republicans are not going to sweep. They may take the Senate, but there’s no way they’ll take the Presidency.

    1. Of course they can squeeze repeal through reconciliation — it will change the deficit numbers by more than half a trillion dollars. (That’s assuming that they don’t simply amend the senate’s rules to eliminate the filibuster for the current term and put it back if democrats re-attain a majority.)

      Meanwhile, though, it’s not clear that allowing individuals to deduct health insurance spending would even expand coverage. Self-employed people can already do this, so you’re talking about expanding the tax rules to people who don’t have coverage through work. Which would be fine if it had no effect on the number of employers offering coverage. If employers who currently offer coverage decide to hand that money over to employees to purchase individual policies, you’re going to get a lot fewer covered people. That might be counterbalanced by the wage-earners currently without employment-based coverage, but for most of those people deductibility won’t matter so much because they don’t pay a enough of a marginal rate to make it worthwhile.

      And that, of course, is assuming that the GOP would even bother to pass such a morals-destroying subsidy for non-job-creators.

      1. “Of course they can squeeze repeal through reconciliation — it will change the deficit numbers by more than half a trillion dollars.”

        I’m not saying you’re wrong, but as I understand the reconciliation rules, reconciliation can be used only for matters affecting revenues and expenditures (originally only for measures that lowered deficits, but that’s another story). The ACA includes a zillion provisions that have no effect on revenues or expenditures (the individual mandate, for example) that didn’t go through reconciliation the first time around and couldn’t go through reconciliation this time without radically reworking the reconciliation rules. Of course the rules could be changed, more easily without the inconvenience of Robert Byrd, but still, it’s not straightforward.

        But again, Romney is not going to win the election. I don’t think it’s even going to be close. This won’t be a replay of 2004, it will be 1996. And given the loser at the top of the Republican ticket, I doubt the Senate will flip anyway.

    2. Herschel
      yes, I think they will take the key spending and tax parts out via reconciliation if they clean sweep….can definitely get rid of taxes and medicare cuts plus subsidies and the like. I also think POTUS will win FWIW

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