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Battle Lines Surrounding Health Care Take Shape in Presidential Race

While all eyes were on the US Supreme Court last week during its historic 3-day debate on the Affordable Care Act, a new front in the ongoing partisan battle over health care was taking shape this week following the passage on March 29 of a fiscal-year 2013 budget by the Republican majority in the House of Representatives.

To become law, this budget would require passage by a supermajority in the Senate and a signature by the President—neither of which has a chance of occurring with the current personnel in place. It did, however, serve as a shot across the bow to Democrats and a signal to voters about where the Republican Party intends to go with health care policy if their candidates can capture the White House and create majorities in Congress in the fall elections.

Just days after the budget’s passage in the House, Wisconsin, which is represented in Congress by the architect of the Republican budget proposal, Rep Paul Ryan (R, Wisc), held its primary, the result of which may have finally solidified Gov Mitt Romney as the Republican challenger to President Barack Obama in the fall election. As one of his first acts after winning the Wisconsin primary, Romney aligned himself with Ryan’s budget proposal.

The Republican budget proposal stands in stark contrast to several of the President’s positions as embedded in the Affordable Care Act. For starters, Republicans would repeal the planned expansion of health insurance coverage to 32 million uninsured Americans. They would do this by removing the new entitlement in the Affordable Care Act that guarantees Medicaid coverage to all Americans younger than age 65 years with incomes up to 138% of the federal poverty level ($15,400 for an individual, $31,800 for family of 4) and by eliminating the federal subsidies that would help low-income Americans who do not qualify for Medicaid to purchase private coverage through a state health insurance exchange.

On top of this, Republicans would turn the current Medicaid entitlement program into a block grant to states. The rationale Republicans provide for block grants is that they offer states greater flexibility in how they could administer their programs, as well as greater certainty about the state’s annual contribution to the program. Although this might be true, it is hard to imagine how states could introduce enough efficiency into managing their Medicaid programs to overcome what are projected to be enormous cuts to the federal contribution. The Congressional Budget Office estimates that by 2023, the Ryan-House budget would cut projected federal spending on Medicaid from 3% to 1.25% of gross domestic product, and the spending differential between the President’s plan and the Ryan plan would diverge even more over time.

To reach these Medicaid spending targets, states would need to implement steep provider payment cuts that would exacerbate what are already recognized to be low Medicaid reimbursement rates in many states. Pediatricians, the physician specialty that has the highest rate of participation in the Medicaid program, would be particularly hard hit—and like other physicians, they would have a difficult time competing against powerful hospital and nursing home lobbies for a diminishing piece of Medicaid’s provider payment pie.

Contrasts between the President’s and the Republicans’ positions on Medicare are likely to get most of the media attention, in part because the program primarily serves older Americans who tend to vote in large numbers. The Republican budget’s biggest changes for Medicare are proposals to slow federal spending through an increase in the age of eligibility and an accompanying conversion of the program from a defined benefit (a defined set of benefits, no matter the cost) to a defined contribution (provide a “subsidy” toward the purchase of a private health insurance plan).

Specifically, beginning in 2023, the age at which a person becomes eligible for Medicare would increase by 2 months each year until 2034, when it reaches 67 years. Also beginning in 2023, Medicare would change from being an entitlement program of benefits to a subsidy (on average $7500, depending on an individual’s income) for purchasing private insurance coverage. Although the amount of the subsidy would be expected to increase over time, it would do so at a rate that would be lower than historical increases in Medicare spending, which would presumably slow diagnostic and treatment innovation, reignite debates about rationing, and put downward pressure on provider payments.

Perhaps at first glance, these Medicare policy transitions may sound gently incremental. However, I had a decidedly more negative reaction once I started doing the math: by being born 8 days too late (January 8, to be exact), my expectations for health insurance security through Medicare would be dramatically altered if the Republican plan were enacted. The long and short of it is that under the Republican House budget, anyone who turned 55 years or older in 2012 would continue to experience Medicare as we know it today, a program that receives overwhelmingly positive ratings by its beneficiaries and typically higher ratings than any other form of health insurance. However, those of us foolish enough to have been born on or after January 1, 1958, would get a decidedly watered-down version of the program that would start later and offer less financial protection against the historical rises in health care costs.

As a physician, I was pleased to read that the Republican House budget acknowledges the need to reform the way Medicare pays health care professionals using the sustainable growth rate (SGR) formula, but I was dismayed to learn that Republicans would require that the financial fix for this ongoing problem (now estimated to be $316 billion) come from offsetting savings in other parts of the Medicare program. As difficult as it has been to reform SGR in the current political climate, I would anticipate that it would be even more difficult for physicians to achieve a fully satisfactory outcome under the Republican House budget plan that constrains overall Medicare spending more than the President’s plan. For example, physicians will find themselves competing against the hospital industry, which agreed during the debate over the Affordable Care Act to accept lower Medicare payment rates based on the assumption that they would be caring for fewer uninsured patients, and would therefore have less need to cost-shift between their insured and uninsured patients. The Republican budget plan results in a double whammy for hospitals by eliminating the expansion of coverage yet not reversing the associated payment cuts.

As the Republican primary process to select a presidential candidate draws toward an apparent close, the battle lines of the general election are beginning to take shape. Whether and how health care emerges as a swing vote issue is still in flux. But the budget plan passed by a Republican majority in the US House of Representatives indicates that there are large differences between the 2 parties that have implications for the country and for the practice of medicine.

About the author: Andrew Bindman, MD, is Professor of Medicine, Health Policy, Epidemiology and Biostatistics at University of California San Francisco (UCSF). He is the founder and Director of the University of California Medicaid Research Institute, a multicampus research program that supports the translation of research into policy.
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