Two Distinct Paths: Health Care in the 2012 Presidential Election

With President Obama and Governor Romney offering fundamentally different visions for the nation's health system, this fall's presidential election provides a stark choice for U.S. voters. To inform public discussion about health care in the election and beyond, The Commonwealth Fund issued a report, Health Care in the 2012 Presidential Election: How the Obama and Romney Plans Stack Up, that contrasts the potential impact of implementing the Affordable Care Act in full, as Obama has pledged to do, with the potential effects of Romney's proposal to repeal the law and replace it with his own vision for the U.S. health system.

The report examines the following issues under each candidate's plan: health insurance expansions, insurance affordability, consumer protections and choice, help for small businesses, Medicare solvency, health care quality improvement, and control of health spending growth. It concludes that, in each area, the Affordable Care Act, when fully implemented, would likely outperform Romney's proposals.

On October 4, more than 200 congressional and administration staff, journalists, and other Washington, D.C., policy stakeholders convened for a briefing that highlighted the fundamental differences between President Obama's and Governor Romney's approach to health reform.

The briefing featured The Commonwealth Fund's Sara Collins, lead author of the report, and Jonathan Gruber, a professor of economics at the Massachusetts Institute of Technology. Gruber performed the microsimulation analysis of the candidates' health reform proposals. Dean Rosen of Mehlman Vogel Castagnetti, former chief health care advisor to Senate Majority Leader William H. Frist, and Chris Jennings of Jennings Policy Strategies, former senior health care advisor to President Bill Clinton, offered their perspectives on the report and the candidates' plans. The briefing was moderated by Commonwealth Fund president Karen Davis.

Sara Collins opened the discussion with a review of the report's major findings. The analysis found that, by 2022, full implementation of the Affordable Care Act would reduce the total number of uninsured to 27.1 million; without the law, there would be 60 million uninsured. Romney's proposal to repeal the reform law and replace it with provisions such as federal block grants for Medicaid would increase the number of uninsured to 72 million, with the uninsured population growing across all age groups, income levels, and in all states. The report also cited a July 2012 Congressional Budget Office estimate that found that repealing the Affordable Care Act would increase the federal budget deficit by $109 billion from 2013–22.¹

Jonathan Gruber explained the methodology behind his microsimulation modeling. He noted that it's easier to project the potential effects of a law than of a campaign platform because the latter is generally less detailed. In his model, he made several assumptions about the details of Romney's reform policies and the reaction of states to Medicaid block grants. Among Romney's proposals, Gruber modeled: repealing the Affordable Care Act, moving to a block-grant program for Medicaid, and equalizing the tax treatment of employer-based and individual market health insurance. Other proposals that Romney has put forth, such as allowing insurance carriers to sell policies across state lines and encouraging employers to form purchasing pools, did not have sufficient detail to be modeled.

Key Assumptions for Modeling Governor Romney's Health Reform Proposals:

• Medicaid block-grant proposal
  • states would match the lower level of federal funding, which Romney has proposed would grow at a rate of consumer price inflation plus 1 percent, with the same level of funding;
  • states would meet the new spending limits through equal (50-50) cost reductions in 1) per enrollee Medicaid cuts, such as lower reimbursement rates or reduced benefits, and 2) reduced eligibility for the program; and
  • states would reduce eligibility only for the nonelderly and non-disabled populations.
• Equalizing the tax treatment of employer and individual market insurance
  • To predict the effects of Romney's proposal to give the same tax advantages to individually purchased plans that now exist for employer-based plans, Gruber modeled an "above-the-line" tax deduction for premiums for individually purchased insurance. This would be a deduction available to all, not just those who itemize their taxes.

Dean Rosen questioned whether all 50 states would react in a uniform way to the proposed health reforms, an assumption made in the analysis. Rosen also pointed out that candidates' plans evolve throughout a campaign and may change once he or she takes office. As an example, he noted that, in 2008, then-Senator Obama was reluctant to embrace the individual mandate, though it eventually became a cornerstone of his health care reform law. Rosen asserted that the law's implementation might not go as smoothly as the model assumed, noting that states are already delaying the selection of an essential health benefits benchmark and creation of insurance exchanges.

Chris Jennings reminded the audience that the candidates' health reform policies would have major implications for tens of millions of Americans. He noted that the Affordable Care Act aims to go beyond coverage expansion to improve the performance of the U.S. health system. For example, key provisions of the Affordable Care Act provide new protections to consumers and improve the functioning of the individual and small-group markets. Policies prohibiting health insurers from rescinding or terminating insurance coverage due to illness, denying coverage due to a preexisting condition, or charging higher premiums based on health status or gender will encourage insurers to compete on cost and quality, instead of avoiding risk. Jennings emphasized that having more people covered by insurance creates leverage needed to make the system work better and helps to avoid cost shifting.

The briefing concluded with a robust question-and-answer session exploring the possible outcomes of the presidential and congressional elections and their effects on health reform. The panelists agreed that there was more work to be done to improve the health care system and that reform will continue to evolve, no matter the result of the election. In response to questions about controlling costs, the panelists agreed that health care purchasing needs to be more efficient and provider incentives need to reward the provision of well-coordinated, high-quality care and positive outcomes. Gruber added that cost control is hard to do, both politically and in practice, and thus necessitates policies that leave room for evolution. Several of the panelists agreed that the Affordable Care Act, while not perfect, represents the best chance the country has had in some time to expand access to high-quality, affordable care while also taking steps to slow the growth in health care costs.

Listen to the audio and review the slides from the Oct. 4 briefing by watching the e-forum.