The cost of social services has become the cockpit of the presidential contest
MUCH OF last night’s debate between vice-president Joe Biden and the Republican vice- presidential nominee Paul Ryan was expected to centre on the most intractable issues in US politics: the Affordable Care Act, known as Obamacare; Medicare insurance for the elderly; the Social Security pension system; and Medicaid for the poor and disabled.
The late speaker of the house Tip O’Neill first called social security the “third rail”, because politicians who touched it were electrocuted. But the term could be applied to all the “entitlements” that eat up such a large chunk of the federal budget.
AARP is a non-partisan lobby group for Americans age 50 and older, with more than 37 million members. It sponsored a festival yesterday at Centre College, where last night’s debate took place, to draw attention to anxiety about retirement security. In a survey conducted by AARP in August, 50 per cent of voters said they thought they would never be able to retire; 65 per cent said they feared they would not have a comfortable retirement, and 72 per cent of those 50 and older expected they’d be forced to delay retirement.
“Both parties recognise that changes must be made for these programmes to be viable in the future,” said AARP senior vice-president John Hishta. “But, in reality, they have not got into specific proposals about how they would reform them. There’s an enormous sense of cynicism among voters.”
Deceptive language is part of the problem. The National Republican Congressional Committee warned candidates not to use the words “entitlement reform” or “privatisation”. Shrinking social spending is a major Republican goal, but politicians have been told to describe it with words such as “strengthen”, “secure”, “save”, “preserve” and “protect”.
Paul Ryan has avoiding speaking of his entitlement- cutting fervour since he became Romney’s running mate. But Democrats remember Ryan wanted to privatise social security back in 2005. His budget plan originally advocated retirement at age 70 and Medicare insurance from age 69; Ryan subsequently lowered that to age 67.
Romney made Ryan’s plans even more vague, saying the retirement age should rise by one month each year and later be linked to life expectancy. Both Obama and Ryan would have cut $716 billion (€554 billion) from Medicare over a decade. In a move typical of the way Romney shifts policies to pander to public opinion, the Republican candidate now says he would not make those cuts to Medicare after all.
Romney long promised the total repeal of Obamacare, but recently modified that to say he would retain the law’s positive elements, for example allowing young people to stay on their parents’ insurance policies until age 26.
Much of the law will not take effect until 2014. At present, some 50 million people – 17 per cent of the US population – have no healthcare coverage. The US spends twice as much per insured person as Canada, and three times as much as Britain, said Michael Karpf, executive vice-president for health affairs at the University of Kentucky.
“We must decrease costs and increase coverage,” he said.
Obama has given priority to the moral imperative of covering more people. Romney says costs must be brought under control before coverage can be extended.
Up to 45 million additional people would be covered under Obamacare, mainly by expanding Medicaid – government insurance for the poor and disabled – to those with an income 138 per cent of the poverty level or less. Everyone over 138 per cent will be required to purchase healthcare insurance or pay a fine. It is this “individual mandate” – deemed a tax by the Supreme Court – that Republicans hate most about Obamacare.
Obamacare also attempts to control costs by paying healthcare providers less for services and by decreasing utilisation. One major concern, emphasised by Romney in his criticism of Obamacare, is that providers will refuse to treat Medicare and Medicaid patients if reimbursement is inadequate.
“The US system does many more MRIs, CAT scans and surgeries than other countries, because we have a fee-for-service reimbursement system that incentivises doctors and hospitals incentives to do more,” said Dr Karpf.
Europeans have a different attitude towards end-of-life care, Dr Karpf added. “They understand that death is not optional, whereas in the US the fee-for-service system drives continuing care. Europeans wouldn’t do heart surgery on a 92-year-old.”
Dr Karpf has a lifetime’s experience in oncology, internal medicine and public health. The only option for the future, he said, is to “minimise the amount of services provided but maximise outcomes”. This will be done, he predicted, through more efficient “bundling”, “longitudinal care” and “capitation” or grouped billing systems.
He cited the healthcare company Kaiser Permanente, which cares for four million people in California, as “the direction this country will go under Obamacare, and eventually under the Republicans.”
In the system Dr Karph envisages, companies such as Kaiser will receive set fees per patient each year, and will lose money if inefficient. Patients will be able to compare mortality and complications rates in competing systems, incentivising providers not to skimp on quality. “It requires a cultural change, and will take decades, not years,” he said.
Democrats want to maintain Medicare benefits, regardless of rising costs, while Republicans are determined to limit those costs to a defined level. Romney-Ryan would give Medicare patients the option of purchasing alternative, private plans with government vouchers. Vice-president Biden has labelled it “voucher care”. Because “voucher” has a negative connotation, Republicans have begun calling it “premium support” instead.
Far less attention has been paid to Medicaid – where policies are radically different – probably because the poor are a less vocal voting group than senior citizens. Ryan has proposed cutting $810 billion (€626 billion) from Medicaid over a decade, while Obamacare would increase the Medicaid budget by $642 billion (€497 billion) for the same period.
The Supreme Court’s ruling that states cannot be forced to expand Medicaid coverage is a serious threat to Obamacare. Some governors, such as Jerry Brown in California, say they’ll find a way regardless of their finances. “No way,” said Texas governor Rick Perry. More than a dozen talk of opting out.
