The ACP Advocate Blog

by Bob Doherty

Tuesday, August 14, 2012

The secret truth about health care vouchers

Which of the candidates for President proposes to give people a defined amount of federal money (call it a voucher) to buy coverage from competing qualified private insurers (under federal benefit mandates) offered through a health insurance marketplace run by government?

The answer: Mr. Romney, and his new running mate, Paul Ryan. And President Obama. 

How is that, you say?  Isn’t the Romney/Ryan vision of how to reform health care diametrically opposed to that of Obama?  Yes . . . and no.

Romney and Ryan both propose to convert Medicare from an open-ended, defined benefit program to a defined contribution, which means that the government would give seniors:
-- a defined amount of federal money (call it a voucher),
-- to buy coverage from competing private health insurers,
--all of which would be required to offer at least the current Medicare benefits,
--sold through a federally-run health care marketplace.

Democrats say that the proposal is a radical plan to “end Medicare as we know it.”

So Republicans are for vouchers and Democrats are against them, right?  Not so fast.

President Obama’s Affordable Care Act would extend health insurance coverage to about 16 million uninsured Americans (with incomes from 133 to 400% of the federal poverty level) through subsidized private insurance offered through exchanges.  This means that the government would give them:
--a defined amount of federal money (call it a voucher, or a subsidy),
--to buy coverage from competing private health insurers,
--all of which would be required to offer a federally-defined level of benefits,
--through a state (or federally-operated) health care marketplace (exchange).

(You might also recall that when Mitt Romney was governor of Massachusetts, he signed into law a program—considered by most to be the pre-cursor to Obamacare—that similarly gives vouchers to help uninsured people buy private health insurance through a state-run marketplace.)

Nevertheless, Republicans say that the Obama’s plan calls for a “radical . .. . health care take-over” by the government.

So let’s get this straight: when Republicans propose vouchers, it is a radical scheme to end a widely popular program (Medicare); when Democrats propose them, it is a radical and unpopular scheme by the government to take-over health care (except when the Republican nominee did it for his own state)!

Go figure.

That’s not the only place where the GOP and the Democrats may have more in common than either admits.  The Washington Post’s Ezra Klein points out the Paul Ryan’s budget plan would keep the ACA’s $700 billion in Medicare cuts that the Republicans say Obama is “stealing” from Medicare (although they have no plans to give the money back to seniors). The difference is that Ryan’s budget would use $700 billion for tax cuts and deficit reduction, Obama uses it to help fund coverage for the uninsured. The Ryan budget and President Obama’s budget both allow Medicare spending to grow by exactly the same amount: the gross domestic product plus O.5%!

This isn’t to say that there aren’t big differences between Romney/Ryan and Obama.  They disagree on  how to restrain future Medicare growth.  As Klein explains, “Democrats believe the best way to reform Medicare is to leave the program intact but vastly strengthen its ability to pay for quality. Republicans believe the best way to reform Medicare is to fracture the system between private plans and traditional Medicare and let competition do its work.  It’s worth saying there’s no particularly good evidence for either option.”

And there is a difference between proposing vouchers to limit how much the federal government spends on an existing health care entitlement (Medicare), as Romney/Ryan propose, and using vouchers to create a new health care entitlement program (ACA), as Obama advocates. One is a partial takeaway of existing benefit guarantees for tens of millions of seniors, the other is a partial expansion of health benefit guarantees to tens of millions uninsured persons.

On Medicare, Romney and Ryan would convert Medicaid to a block grant while cutting federal contributions, saving the federal government many trillions while resulting in 27 million more uninsured (low-income) persons.  Obama’s Affordable Care Act will add up to 17 million more persons to Medicaid, paid for almost entirely by the federal government.

The Ryan budget also would dramatically reduce federal spending on non-defense discretionary programs, with the liberal think tank Center on Budget and Policy Priorities estimating that it would essentially “end most of government except Social Security, Health Care and Defense by 2050.”  President Obama proposes much more modest budget reductions and in some cases, increased “investment” in programs that would get the axe under Ryan’s plan.

And, of course, Romney and Ryan both propose to repeal the ACA, lock-stock-and-barrel, while Obama would continue to implement it.

So yes, this is a big election, with big choices on taxes, Medicare, Medicaid, coverage for the uninsured, and the role of government in funding just about everything.  But the dirty little secret that neither party wants to talk about is that Republicans and Democrats alike have embraced the idea of giving people vouchers to buy health insurance coverage, even though each disparages the other for being so “radical” as to even suggest it!

Today’s questions: What do you think about Republicans and Democrats alike embracing health care vouchers on their own terms, while attacking the other side for proposing them?

6 Comments :

Blogger ryanjo said...

For physicians, and therefore for the ACP, this should elicit a mere shrug of the shoulders. This is not reform. The government creates another boon for the insurance industry (think Medicare Advantage), who will portion out a pittance to patients and providers with onerous preconditions & prerequisites. Much like the ACA, another bureaucracy-burdened quagmire.

Hardly a surprise that both sides of the aisle have their own version. The larger question is why many physicians, and our professional organizations particularly, continue to support such nonsense on the laughable excuse that it will improve quality or access to healthcare. I have posted this quote by George Washington before: "Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master."

August 16, 2012 at 7:56 PM  
Blogger John A. Lynch said...

There's a key distinction between these two "voucher" plans that you fail to mention. And it suggests the only thing they share is the term "voucher" - and in this case, a voucher is not a voucher is not a voucher.

The Obama "voucher" represents a net gain for those newly-insured, whereas Romney's vouchers for future Medicare recipients - if Medicare survives that long without the savings Obamacare imposes - represent potential net losses for those beneficiaries who choose them.

It's tempting to just let them bear that risk if they make that choice, but it's not that simple. First, these are older adults with diminished capacity to earn more income to pay for any cost increases they're forced to bear – and with diminished capacity longer-term to make highly complex health insurance decisions.

And those who opt to remain with traditional Medicare will also be at risk. That's because healthier seniors who are likely to choose vouchers for private insurance will leave traditional Medicare with older and sicker seniors. This then will drive up its costs and force these beneficiaries to pay more out-of-pocket because their costs will exceed the private plans with healthier patient mixes.

Then, of course, there's the fact that Obamacare will cut our uninsured by half or more, while Romney's plan will increase it by half or more.

These highly substantive differences seem a lot more important to me than the political semantics game you describe.

September 20, 2012 at 1:34 PM  
Blogger farnandas said...

One is a partial takeaway of existing benefit guarantees for tens of millions of seniors, the other is a partial expansion Online Pharmacy of health benefit guarantees to tens of millions uninsured persons.

October 6, 2012 at 3:22 AM  
Blogger farnandas said...

It's tempting to just let them bear that risk if they make that choice, but it's not that simple. First, these are older adults with diminished capacity to earn more income to pay Online Pharmacy for any cost increases they're forced to bear – and with diminished capacity longer-term to make highly complex health insurance decisions.

October 6, 2012 at 3:27 AM  
Blogger Billz Row said...

This then will drive up its costs and force these beneficiaries to pay more out-of-pocket because their costs.

Loxapine

October 8, 2012 at 9:25 AM  
Blogger Damon Tolles said...

This comment has been removed by a blog administrator.

December 13, 2012 at 3:39 AM  

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About the Author

Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

Email Bob Doherty: TheACPAdvocateblog@acponline.org.

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