Wednesday, August 15, 2012

Medicaid: The Most Fiscally And Economically Destructive Part of Romney-Ryan

Admittedly this has become hard to say now that there are at least three, if not four, such versions.  There were at least two Ryan budget plans, if not three, with the earlier one(s) more radical than the one passed by the House this year, and there is the much vaguer Romney plan, which is now supposedly ruling in the case of Medicare: do nothing for ten years (including repeal the Medicare savings part of ACA, which the Ryan plans agree with), and then, maybe, go to some sort of Ryanesque voucher/premium support plan. 

Of course, they both support tax cuts for the rich and tax increases of some sort for the poorer, although things are fuzzier on details in the Romney version than in the Ryan versions.  However, they are also both stunningly vague on the tax expenditure savings or loophole/deductions that they intend to remove that are supposed to magically raise revenues somewhere down the road (along with, of course, in typical supply-side fantasyland, all that extra growth the tax cuts for the rich are supposed to generate).

However, the part of the Ryan plans that is most potentially destructive both fiscally and economically, which I do not see repudiated by the Romney version, even if it is less clearly stated, is neither of the above, is what it/they do to Medicaid.  This is to fix the amount sent to the states and then send it to the states as a block grant.  While the voucher version of Medicare sticks extra costs directly on elderly recipients, this sticks the rising cost of medical care for the poor on the states.  We have already seen such rising costs for the state shares rising dramatically over past years and wreaking havoc on state budgets around the country.  This will make it worse, and as seen by the response of many states led by GOP governors, they are unwilling to extend Medicaid as asked for in the ACA, arguably the largest source of expansion of coverage for health care of uninsured Americans of any part of the ACA.

Furthermore, in terms of the overall economic impact, during the last two years the hardest hit sector of the US economy in terms of employment loss has been state and local governments, still laying off people at a rate of 9,000 workers per month as of the latest report.  Throwing the responsibility for covering Medicaid  even more fully onto the states is simply going to aggravate this already severe problem.  It is fiscal/economic lunacy.

As it is, the federal government should be assuming full responsibility for Medicaid, rather than shoving it more heavily onto the overburdened state and local governments.  Obama is not supporting this, which should be done simply without any conditions to even the playing floor across states.  As it is, there have been some rumbles by a few in Congress about a possible trade: feds take over Medicaid while states take over transportation and education, which almost balance out currently.  I am not in favor of that either, but it would be superior to either the status quo, and certainly far superior to the nonsense that one finds on Romney-Ryan, or at least some versions of it.


run75441 said...

Good Morning Rosser:

Besides the overall savings accrued by the implementation of the ACA, the Gov picks 100% of the expansion of Medicaid 2014 through 2016. The percentage will gradually decrease to 90% by 2020 which should be offset by the savings determined with the ACA and the slowing of the overall healthcare cost provided of course Congress does not supercede any of the ACA provisons. State costs should be offset by state savings. A question I might have and will ask those who know more than I do on the topic: "What about present Medicaid costs before expansion?."

Does the ACA cover this cost at 100% also and wind down to 90% over the same period 2014 to 2020? If the ACA picks up the cost of today's Medicaid, this would be direct relief for the states as revenue could be applied elsewhere. It would also partially achieve the goal of taking it over completely.

Over at the CBPP, Matt does a pretty nice job of detailing what the ACA does,does not do, and far better than I could detail. To combat Romney, who conflates the transfer of costs for the Advantage program to seniors as a cut in overall government Medicare benefits, what is needed is to refute his claims is more discussion of what the ACA does and does not do.

ProGrowthLiberal said...

The numerical importance of this is right there in the document Ryan instructed CBO to produce. CBO predicts by 2050 under the current system that Federal spending for Medicaid and CHIP will be 4.25% of GDP. Ryan's budget would reduce this to 1% of GDP. Will the states pick up the 3.25% of GDP difference? If so, it would have to be with increases in what are traditionally regressive taxes. If not, there are going to be a lot of poor people with virtually no insurance. All so high income people can have even lower tax rates! said...


PGL pretty much lays it out. The sign is already there, if a bit exaggerated, in the refusal of many state governors to implement the expansion of Medicaid mandated by ACA. Mostly this is anti-Obama politics, but it also highlights that the poor are vulnerable. They do not have the votes that Medicare does. If you really want to cut one of the big ticket items from fed spending, Medicaid is almost certainly the easiest, particularly for GOPsters, much easier than interest on the national debt, defense, Social Security, or Medicare (which Romney is now declaring he will restore the ACA cuts to).

Part of the fraud here is that indeed this is a giant cost shifting. Fed politicians get to claim "responsibility" by reducing the federal deficit, but they are doing so at the expense of the beleaguered states.

run75441 said...


You are right, the Walker, Snyder, and the other knuckleheads will not care as it is strictly Norquist and ALEC sponsored opposition to anything by Obama.

I do believe you may be missing my point on the ACA (Obamacare), the 100% financing of the expansion of Medicaid may alleviate much of the cost states will have to take on over the next two years. My question and I will get an answer shortly from others who write on this issue and have more knowledge on the topic than I as to whether the ACA also covers current Medicaid at 100%. This would be a relief to states if so. The former is under the ACA or Obamacare and "not" the current system. I believe PGL is discussing without the ACA.

If you have not seen it, I would go to the S&P Indices to review how Medicare before and now under the ACA auspices has been growing in comparison to commercial healthcare cost 2.5% (moving avergae) as compared to 8.5%.

PGL is discussing under the current system without the ACA and I believe a retraction of the ACA. Medicare has made progess before the ACA in restricting cost icreases before and moreso afterwords. PGL uses the same % for both Medicaid and Medicare (later post) which I believe may be in error (apology if I am wrong.

This has the makings of a good post over at Angry Bear along with booting the $700 billion Romnsy claim into the mud too. Thank you for your response.

run75441 said...


One other comment which I believe is pertinent as to whether Medicaid will go by the wayside or not.

It is little known amongst the general population, most people after 6 months of Medicare paying for nursing home care end up on Medicaid footing the bill. Like Social Security, the first move to eliminate nursing home care, the person who does such will be touching the 3rd rail.

Also Medicare has the same cost predictions as SS; LC, IC, and HC. The CBO may be using a HC scenario while SS/Medicare is utilizing a IC scenario. The Medicare TF is safe to 2024-2029. This too is fixable by incremental increases in the Medicare tax rate.