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Making Sense of the Candidates’ Positions on Health Care, and What it All Means for St. Luke’s

By Dr. David C. Pate, News and Community
October 8, 2012

I heard from lots of people that it was helpful for me to share my thoughts on the U.S. Supreme Court’s deliberations and subsequent ruling on the Patient Protection and Affordable Care Act, and wanted to take time this week to consider the first presidential debate. Here’s what I'm thinking. 

We have President Barack Obama’s signature health care reform law, termed “Obamacare” and upheld in June by the Supreme Court. Gov. Mitt Romney has indicated that he does not intend to have the Massachusetts Plan he enacted serve as the model for national health care reform, and has indicated that his plan is not the same as the “Ryan Plan” proposed by his vice presidential running mate.

While we have far fewer specifics as to what a “Romney Plan” will entail, it is coming into sharper focus. 

Here are the plans compared:

 

Reform Element Obama Romney
Basic philosophy Government-sponsored Private market reforms
Approach Patient Protection and Affordable Care Act “Repeal and Replace”
Attempt at near universal coverage Yes Left up to individual states
Individual mandate Yes Left up to individual states
Health insurance exchanges Required No requirement
Medicaid Federal funding for state expansion Block funding with state flexibility around design
Tax treatment Penalty on individuals for not purchasing and on large employers for not providing health insurance Credit for purchasing individual plan
Future plans for Medicare for those now younger than age 55 Affordable Care Act Premium support
Remedy for impending physician fee schedule cuts No No
 

Obama has instituted federal government-based reforms, with little state flexibility, that were highly partisan and enacted with a lengthy statute and massive amounts of regulation, and many remain to be issued. Romney promises a bipartisan effort to enact market-based reforms that give flexibility to each state and that will be accompanied by far less regulation.

Key elements of Obama’s reform are:

  • the individual mandate to purchase health insurance unless the individual is eligible for Medicaid;
  • subsidies for low-income individuals who are above 133 percent, but below 400 percent, of the federal poverty level; and
  • a penalty upon the roughly 8 million individuals who do not qualify for Medicaid and are not insured by an employer if they do not obtain insurance.
Romney proposes to encourage more people to purchase insurance by providing tax incentives similar to the tax treatment afforded to employer-sponsored health benefits.

To promote increased coverage of the nearly 48 million uninsured, Obama’s plan relies heavily on the individual mandate and associated tax penalty, and an expansion of state Medicaid programs to cover those with an income below 133 percent of the federal poverty level. The federal government would provide full funding of the expansion for three years and gradually reduce its cost share to 90 percent over the following seven years. 

At the end of the 10-year period, the federal cost-sharing percentage would be higher than it is for the current Medicaid program and enrollees, but states would have to pick up 10 percent of the cost for this expansion population.

Romney would instead convert the current federal matching funds for state Medicaid programs to a block grant, meaning a fixed dollar amount with an escalator for the consumer price index plus an additional 1 percent, which is predicted to result in fewer individuals covered by Medicaid.

The most popular features of Obama’s health care reform law are the insurance reforms, including a requirement to cover certain preventive services without any cost-sharing on the part of the insured; differential premiums based on health status, gender, and other factors; the removal of annual and lifetime limits of coverage; a ban on rescissions, terminations of coverage after it is in place except under extremely limited circumstances; the addition of adult children up to age 26 to a parent’s policy; and the prohibition against denial of coverage based on pre-existing conditions.

Romney has indicated that his plan would prohibit denials of coverage based upon pre-existing conditions for those who have maintained continuous insurance coverage.

The Patient Protection and Affordable Care Act is law and being implemented, while Romney’s reforms depend upon repeal of the law and replacement with a new law. This presupposes Romney wins the presidency and that the Republicans retain control of the House of Representatives and gain control of the Senate. 

What does it all mean for St. Luke’s? We are focused on being able to provide accountable care for people in our region through meeting the Triple Aim of better health, better care, and lower cost, and we are developing our plans consistent with the Affordable Care Act, which is the law of the land, but we believe we can make headway regardless of who is in office. We would be negatively impacted, however, if the law changed regarding the Medicare Shared Savings Program, a voluntary initiative established under the Affordable Care Act that we have applied to take part in beginning this January.  

According to a recent Commonwealth Fund study, 350,000 Idaho residents, or 24.6 percent of our population of 1,420,000, are uninsured. In 2022, under the Affordable Care Act, the projection is that there would be 110,000 uninsured Idahoans, or 7.7 percent of the population. 

In 2022, under Romney’s plan as currently understood, there would be 400,000 Idahoans uninsured, or 28.2 percent of the population.

This is an important point. A greater number of uninsured people means more avoidable illness, loss of productivity, and deaths. A greater number of uninsured also means more cost-shifting by health care providers to business and those who are insured. A greater number of uninsured people will mitigate our success in bringing down health care costs for everyone.

I hope that if Obama is re-elected, he will incorporate features to drive down health care costs. It looks like the Affordable Care Act will extend the solvency of the Medicare Trust Fund for eight years, but that is a far cry from making Medicare sustainable for the future.

I hope that if Romney is elected, he will build onto the Affordable Care Act instead of repealing it. The law is not perfect and leaves much to be desired. But its insurance reforms are significant, well-received by the American public, and will result in a far greater number of insured than Romney’s plan. Rather than starting over, it would be far better to enact amendments to the law to incorporate greater value and cost reductions. 

For St. Luke’s, sustainability will be accomplished by a clinical model transformation that focuses on health, wellness, risk factor mitigation, and disease prevention, and a business model transformation that promotes pay for value, instead of fee for service. These are efforts we are making now; as I have consistently said, we can’t wait for Washington, D.C., to fix health care. We must do it right here in our region. And we have made a start.

About The Author

David C. Pate, M.D., J.D., is president and CEO of St. Luke's Health System, based in Boise, Idaho. Dr. Pate joined the System in 2009. He received his medical degree from Baylor College of Medicine in Houston and his law degree from the University of Houston Law Center.