The New Republic

For a campaign that was supposed to be all about the economy, we’ve spent a lot of time talking about health care. As you might guess, I think that’s entirely appropriate. The election’s impact on who gets medical care, and how much that health care costs, is likely to be enormous. On no single issue may the contrast between President Obama and Mitt Romney’s plans be so stark. 

But with just days left before the election, conversation about health care remains unfortunately, if understandably, fragmented. We’ve argued over what Romney has in mind for Medicare—and how his plan from Medicaid, taken straight for Paul Ryan, will play out. We’ve spent all kinds of time debating the impact of the Affordable Care Act—on individuals, businesses, and taxpayers. But we’ve almost always had these conversations separately, as if the issues were distinct from one another. They’re not.

The health care system is one big ecosystem, full of intertwined policies. If you’re a senior citizen, will you have a harder time getting care because of cuts to Medicare? It depends, in part, on what’s happening to Medicaid. If you have a job and it provides insurance, how would you react if you lost that coverage? That really depends on what alternative insurance options exist.

And it’s only when you look at all the policies together that the significance of what each man is proposing becomes clear. Obama wants our health care system to keep evolving in the way it has for nearly a century, so that people have greater financial protection from medical bills. Romney seems to have the opposite impulse. The policies he favors would leave more people exposed to crippling medical bills, either because they don’t have insurance or the coverage they have is inadequate. Romney likes to describe Obamacare as radical, but the changes Romney envisions are arguably more sweeping—and, for anybody facing the prospect of serious illness, a lot more threatening. The health care system would actually start to look more like it did in the early 20th Century, before modern insurance even existed.

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IF YOU GOT SICK back then, you paid out of your own pocket—or hoped some charity provider would take care of you. Lots of people lost possessions or homes, trying to pay off medical bills. Lots of people just didn't get the care they needed, because it was too expensive. But this turned out to be a bad deal for the hospitals, as well as the patients, since they needed paying patients in order to keep their doors open. Eventually the hospitals came up with the idea of offering insurance to groups of workers, a model that became the basis for the Blue Cross plans and eventually the American insurance system. 

Abetted by a pair of policy decisions (wage and price controls during World War II, plus the decision to exempt group insurance premiums from income taxes) that made it attractive for employers to offer coverage as a fringe benefit, job-based insurance grew quickly. In the 1960s, government stepped in to provide coverage for two groups disconnected from the workplace—offering Medicare to senior citizens and Medicaid for the poor. That produced the multi-tiered system we have today.

But that system still leaves out lots of people. While the elderly have relatively good insurance, because Medicare is both comprehensive and available to everybody over 65, tens of millions of non-elderly Americans lack that kind of security. They can’t get insurance because they can’t afford it or because they have to buy it on their own, without an employer, and have pre-existing medical conditions that make insurers wary. Millions more have insurance with gaps, leaving them exposed to debilitating medical bills.

A primary goal of Obamacare, which takes full effect in 2014, is to make sure everybody has the same guarantee that seniors and people with good employer coverage already have. All low-income people, not just certain subsets, will be eligible for Medicaid. Working-age people who can’t get insurance from employers will have access to regulated, subsidized policies available through new, primarily state-run marketplaces. And all insurance policies will include a set of basic, reasonably comprehensive benefits, as defined by the government. It won't be a perfect system and it certainly won't be seamless. But it will mean most people have access to insurance that, in most cases, will cover the services they need.

Romney has pledged to stop Obamacare before it takes effect, even though the model for it was the system Romney created while he was governor of Massachusetts. His basic argument is that it worked for Massachusetts but might not work for, say, Alabama. States, he says, should craft policies on their own. But this position would make a lot more sense if he wasn’t simultaneously proposing an agenda that would, in all likelihood, force dramatic health insurance changes to people of all income groups—and in all states.

I use the word “agenda” loosely because his plans are vague, even when it comes to big, fundamental decisions like whether to offer people tax deductions or tax credits. (Credits provide a lot more financial assistance, but, as a result, make much larger claims on the federal treasury.) But he’s said enough to give us a pretty good idea of what he wants to do. 

Working-age people would lose the promises of coverage and comprehensive benefits that Obamacare is supposed to provide. In addition, the tax changes Romney has recommended could make employers less likely to offer insurance. If so, more people would end up buying coverage on their own—and those with pre-existing conditions would have the same, familiar difficulty finding decent benefits. Their only recourse, under Romney's agenda, would be special “high-risk pools” that, if the past is any guide, would offer only substandard policies with limited availability or coverage.

The changes for Medicare would be even more profound, as you’ve doubtless heard by now. Here, too, Romney has been cagey about what he’d propose and what he’d tolerate. But, less than a year ago, he was praising Ryan’s original Medicare proposal, which would have eliminated the traditional government program for people anybody retiring after 2021 and left typical seniors paying far more money out of pocket. Today, Romney endorses a less extreme plan, but one that, in the opinion of many experts, would not provide the same guarantee of benefits that Medicare presently does.

The one policy for which Romney has offered specifics in Medicaid. And those specifics are eye-popping. He’d hand the program over to the states, with very few strings attached and far less money, leaving them relatively free to decide who gets the program and what it covers. Independent estimates suggest tens of millions of people could lose coverage, depending on how efficient the states can be and how, exactly, they decide to distribute the cuts.

Notice a theme here? For every program and for every group of people, Romney seeks to ratchet back the protection that exists. Seniors wouldn’t have the guarantee of benefits Medicare now provides. The poor wouldn’t be sure they’d have access to Medicaid as they do now. Working people couldn’t depend on the same level or availability of private insurance. Relative to what most people experience today, let alone relative to what most people will experience tomorrow under Obamacare, they’d have less protection from medical bills—and, as a result, less access to care. As Ed Kilgore aptly put it a few months ago, it's "repeal and reverse."

BUT TO FULLY APPRECIATE the magnitude of what Romney proposes, you also have to look at the dollars. Romney has repeatedly attacked Obama for cutting Medicare spending by $716 billion over the next ten years, in order to pay for Obamacare. As a result of these cuts, Romney says, seniors will lose benefits and have a harder time finding medical care, as providers—struggling to make money—become less willing to see Medicare patients.

Forget, for the moment, that Ryan proposed the exact same cuts in his own budget. And forget, for the moment, that many of Obama cuts are reduced payments to health insurers that, according to multiple independent estimates, were effectively overcharging the government to provide coverage to seniors. Won’t those cuts take money out of Medicare?

Yes, they will. But this is where the interplay of the different Obama and Romney initiatives comes into play. While Obamacare’s Medicare cuts take money out of the health care system, its expansion of Medicaid and subsidies for private insurance put most of that money back into the heatlh care system. In other words, the net reduction in government health care spending is actually small small.

By contrast, the money Romney has promised to restore to Medicare would be less than the money he'd take out of Medicaid. Once you consider other changes Romney has proposed, including a pledge to cap federal spending, it appears that Romney would take more federal money out of the health care spending—and probably a lot more. (The graph at right, by economists Aaron Carroll and Austin Frakt from an article in the Journal of the American Medical Association, offers an illustration of how this might work out in practice, depending on what assumptions you make about Romney's spending plans.)

This is very much by design. A major goal of Obamacare is to reduce government spending on health care gradually, in order to make it more rational (so that everybody has financial protection) and to apply slow, steady pressure on the health system to become more efficient. The hope is that, nudged carefully in this direction, providers like doctors and hospitals will respond with changes that improve the quality of patient care—and reduce costs for everybody—without sacrificing anybody’s individual financial security.

It’s not a surefire strategy. It’s entirely possible that, a few years from now, we’ll be back to figuring out new ways of making medical care less expensive. But the early signs are promising and many experts, including some conservatives, believe these sorts of reforms are a sensible and realistic approach to what's been an intractable problem.

Romney’s plan, if you take it seriously, is more akin to shock treatment. It would suck more money government money out of the system, with far little guidance for how those cuts take effect. The taxpayers, in theory, would save more money than they would under Obamacare. But the health care sector would take a serious financial hit. At the same time, individuals would be a lot more exposed to high medical bills.

Conservatives believe this exposure will lead people to shop for health care more intelligently, reducing costs throughout the system, but there is good reason to doubt that will happen—at least to the extent conservatives would like us to believe. Most likely, some people would simply forgo care, while others would go into financial crisis trying to pay for it. If that sounds familiar, that’s because it is. It was precisely this problem that, in the 1920s and 1930s, led to the first attempts at health insurance in this country. It's not an era most of us would want to revisit.

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