JAMA Forum: The Stark Choices Ahead on the Future of Health Care

Larry Levitt, MPP

Larry Levitt, MPP

The economy might trump health care in the minds of most Americans as they enter voting booths this November, but there are far-reaching implications for the future of the health system that turn on who wins control of the Presidency, Congress, and state houses across the country. In fact, policy decisions made over the next few years may be among the most consequential for health policy than in any other period since the creation of Medicare and Medicaid in 1965.

Election campaigns are about as predictable as the NCAA college basketball tournament going on right now. Although we may not be able to anticipate all the twists and turns that could emerge between now and November, we do know that Democrats and Republicans are sharply split on health care issues, offering clear and competing visions on a range of policy questions.

Here are some of the big issues at stake.
Implementation of the Affordable Care Act

The future of the Affordable Care Act (ACA) is not the only health policy issue on the agenda right now, but it is a big one. The changes embodied in the ACA are enormous: expansion of Medicaid to all residents in or near poverty; guaranteed access to private health insurance irrespective of preexisting health conditions; creation of health insurance purchasing exchanges; tax credits to make health insurance more affordable; and significant cost-savings in Medicare, including creation of the Independent Payment Advisory Board (IPAB) to formulate additional savings proposals if Medicare costs exceed targeted levels.

President Obama and Democrats in Congress are clearly committed to implementation of the ACA while Republicans are just as committed to repealing it.

Repeal would have clear policy implications, halting the coverage expansions and insurance market reforms due to be implemented in 2014 (as well as the unpopular individual mandate), and also rolling back changes that have already gone into effect (eg, allowing young adults to stay on a parent’s insurance plan until age 26, requiring plans to cover preventive services with no patient cost-sharing, and limiting the share of premium revenues insurers can spend on administrative expenses and profits). It would also have significant political implications, with health reform likely becoming a third rail of American politics, forestalling any attempt at a major federal effort for many years to come (although individual states might still move ahead).
The Federal Budget

Congress is likely to be closely divided in the years ahead regardless of which party holds the majority, but there are good reasons to believe that there will be a major debate on reducing the federal budget deficit after November’s election.

There is bipartisan support for tackling the deficit, as evidenced by the creation last year of the so-called Super Committee—which failed to reach consensus on a deficit reduction plan—and the $1.2 trillion in automatic spending cuts that were subsequently triggered and are set to take effect in January 2013. Medicaid is shielded from the automatic cuts and Medicare is partially shielded, but that may not be the case if Congress reconsiders the cuts or aims for further deficit reduction.

Also, the Bush-era tax cuts are due to expire at the end of 2012, potentially setting the stage for a major debate over how much (if any) of those tax reductions should be extended and how to address the resulting lost revenue.

Further complicating the budget landscape, a temporary fix in the Sustainable Growth Rate formula that determines Medicare payments to physicians also expires at the end of 2012, meaning an estimated 27% cut in physician fees if the formula isn’t fixed again or scrapped altogether and replaced with an alternative.

For Medicare and Medicaid—which together account for more than one-third of the federal budget—the stakes are large in any effort to trim the deficit. Democrats and Republicans have been far apart on the issue of how to balance reductions in spending and increases in revenue, and there’s no reason to think that will change anytime soon.
Medicare

Should major changes in Medicare be considered—most likely in the context of a deficit reduction debate—Republicans and Democrats will come to the table with drastically different visions for the program’s future.

The idea of “premium support” has emerged as the primary Republican approach to Medicare, promoted by House Budget Committee Chair Paul Ryan and endorsed by presidential candidates Rick Santorum and Mitt Romney. At the core of premium support is a shift to a defined contribution, where beneficiaries pay the difference between a government-provided voucher and the plan they choose (whether that’s traditional fee-for-service Medicare or a private insurance plan). Budget savings are realized over time to the extent the value of the voucher rises more slowly than the cost of traditional Medicare.

Democrats have almost uniformly rejected premium support. In his fiscal year 2013 budget proposal, for example, President Obama instead supports continued implementation of the Medicare savings embedded in the ACA, strengthening the IPAB, and further means-testing the premiums that beneficiaries pay.
Medicaid

The choices on Medicaid are similarly stark. Democrats support continued implementation of the ACA’s expansion of Medicaid and simplification of the enrollment process. This would preserve Medicaid as an entitlement and create a more uniform program across states. Republicans—including Romney , Santorum, and Ryan —would instead transform Medicaid into a block grant, with the federal government providing a fixed payment to states and giving them greater flexibility to alter the program.

Although issues in health care, even the major ones, have not historically been defining factors in US elections, surprises are possible. For example, a Supreme Court decision this summer—either for or against the ACA—could galvanize supporters or opponents of health reform. But more likely, the economy, jobs, and perceptions of the candidates themselves will drive the results.

Those results, though, will in turn drive changes in health care. Who wins the Presidency and majorities in the House and Senate will have consequences for how issues get framed and decided. This is true at the state level, too, where governors and legislatures will have significant roles in implementing the ACA (or not) and in how Medicaid programs are operated.

For those who care about health care, whatever their point of view, the choices ahead are stark, and as with most everything in our current political system, there does not appear to be much middle ground.

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About the author: Larry Levitt, MPP, is Senior Vice President for Special Initiatives at the Kaiser Family Foundation and Senior Advisor to the President of the Foundation. Among other duties, he is Co-Executive Director of the Kaiser Initiative on Health Reform and Private Insurance.

About The JAMA Forum: To provide ongoing coverage throughout this election year, JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide insight about the political aspects of health care. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.



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