The Corner

Romney vs. Obama, Round 2

Given President Obama’s poor performance in the first debate, much commentary has been focused on what the president needs to do (and say) next time. But the president isn’t the only one who could raise his game. Impressive as he was in Denver, Mitt Romney still has much to say about the shortcomings of the president’s health-care law, the Affordable Care Act — and how his own reforms will improve health care and lower costs.

“Entitlement reform is health-care reform,” the Obama administration insists. But recent estimates from the Centers for Medicare and Medicaid Services indicate that the ACA, or Obamacare, doesn’t do enough to rein in federal health-care spending. Even its defenders concede that Obamacare is mostly a coverage expansion with weak cost controls at the margins. In the first debate, the president promised that Obamacare would save money when it’s fully implemented — seven years from now. This is faith-based health-care reform, and it doesn’t square with empirical analysis. The Congressional Budget Office has estimated that by 2019, Obamacare’s Medicaid and insurance subsidies will represent a netcost of nearly $160 billion.

Obamacare will make it much more difficult to grow the economy and reduce the deficit.  Leaving aside the double-counted Medicare savings, the ACA generates about $500 billion in taxes and fees and uses it for new health-care spending. That’s $500 billion that businesses won’t have to create new jobs, or $500 billion that Congress won’t have to help lower the deficit. The administration insists that as much as 30 percent of all health-care spending is wasted or inefficient.

Without question, America’s most serious health-care challenge is rising insurance costs, which are driving individuals and small businesses to drop coverage. So why didn’t Obama focus on lowering existing health-carespending before launching $2.6 trillion in new spending? And why isn’t the president addressing the rampant fraud in Medicare and Medicaid, which the GAO estimated at close to 10 percent — $89 billion in 2010? Worse yet, according to the CBO, Obamacare will increase insurance costs by up to 30 percent in the individual insurance market.

The president likes to refer to the “millions and millions” of people with pre-existing conditions today who don’t have insurance. Finding coverage for them is a real priority. But the number of them who will get coverage in Obamacare’s high-risk insurance pools is only in the tens of thousands (78,000), not “millions and millions.” A far better solution would be to level the playing field between private insurance and employer-based insurance, so that when people lose or change jobs, they don’t have to worry about losing their coverage.

Far too many voters believe that Republicans want to undo or roll back safety-net care for the poor and elderly. This couldn’t be farther from the truth. The reforms Romney is proposing will update America’s safety net to meet the challenges of the twentieth century, while improving care and lowering costs.

Premium support has a proven track record of success in holding down costs and offering high-quality care in programs that Democrats and seniors like. Medicare’s Part D prescription-drug program enjoys approval ratings over 90 percent and has held costs about 40 percent below initial spending projections. Premiums have been flat for the last three years. The lowest-cost plan in the program, offered by United Health, costs just $15 a month. The FEHBP, the health plan for federal employees, also operates on a premium- support model. If it’s good enough for seniors, Congress, and federal employees, why isn’t it good enough for ordinary Americans?

In a premium-support model, competition would force insurers to compete in an environment of high-quality, low-cost provider networks. Why doesn’t Medicare build its own networks today? Simple: Every congressional district has hospitals in it, so lobbyists fight hard to defend the dysfunctional status quo and to slow reforms through tiny “demonstration” projects that inevitably flounder. If we want Medicare reforms that put seniors first, we have to put seniors in charge of their own insurance decisions. Medicare can embrace similar reforms.  May the best networks win, as seniors vote with their feet.

Today, Medicaid’s safety net for the poor is unraveling, and Romney’s reforms will mend and strengthen it. Devolving Medicaid responsibility to the states is just common sense. Starting in 1996, block grants for welfare reform turned into an enormous bipartisan success story, moving millions of low-income women into the work force and out of poverty. The objection to those reforms — that it would lead states to cut spending on the poorest and most vulnerable citizens — turned out to be false then, and it’s false now.

We can design a similar program for Medicaid, with input from governors on both sides of the aisle. Today, the program simply isn’t working for the states or the federal government. Medicaid waste, fraud, and abuse are rampant. States have to wait months or years for even simple waivers from the federal government to improve care and control costs. Without block-grant reforms, Medicaid will continue to strangle state budgets and provide poor health-care access for millions of low-income Americans.

Romney’s message in the next debate should be consistent and strong: The president had the right diagnosis for our health-care ills, but he consistently applied the wrong treatment. It’s time for a change.  

 — Paul Howard, director of the Manhattan Institute’s Center for Medical Progress, is  a member of Mitt Romney’s Health Care Policy Advisory Group.


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