Case Study-When Politics Influences Policy: Liberal Health Wonks from Mass

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This afternoon FamiliesUSA released a report from a trifecta of liberal health policy wonks– Jon Gruber, Stuart Altman and John McDonough. I joined the press call to listen to the discussion.

Just to say upfront, I know all of these authors and consider them friends or good acquaintances. However, as you will see below we don’t always see eye-to-eye.

The goal of the new report was to compare RomneryCare vs ObamaCare vs RomneyCandidateCare.

Not surprisingly, Obamacare comes out smelling like roses, and RomneyCandidateCare will push Americans into the deep uninsured abyss.

Avik Roy over at rightfully takes issue with a number of assumptions being made in the modeling of Governor Romney’s plan for the nation.

One in particular is worth mentioning:

Tellingly, the report does not disclose Gruber’s analysis of the impact that Obamacare would have on insurance premiums, in comparison to the Romney plan. This is key, because as I noted above, Gruber’s work has shown that Obamacare would dramatically increase insurance premiums relative to prior law, due to its regulations and mandates that would not be part of Romney’s plan. It’s unclear whether or not the Families USA report accounts for the difference that each plan would have on premiums, prior to the distribution of subsidies.

I have written on this point before on the Pioneer blog, as numerous  state reports written by Jon have predicted 19-30% increases in premiums under the federal law.

To add to Avik’s list, it’s unclear how Gruber models Medicaid block granting in his analysis of RomneyCandidateCare. Jon said he assumes states will match any federal cuts, and still find a way to “save” an additional 25% of the cost of the program by further cutting reimbursement rates to try to keep some folks in the program. This, of course, would assume liberal states will not keep more individuals on the program with state dollars. It also presumes that states will not be able to find additional savings through innovative program reforms. Jon’s rationale sounds very similar to the dire predictions when welfare reform was being debated.

Gruber also seemed to imply that he used past House GOP proposals in his model as a proxy for Governor Romney’s plans. I believe the Romney campaign might take issue with that fact, as Governor Romney’s own proposals differ.

That said, I wanted to focus for a moment on one portion of the call that confused me. Jon once again tried to brush off any difference between the Massachusetts and federal laws. He said the only difference worth noting was the generosity of the subsidy levels and at what income level those subsidies are available. This statement comes with some surprise, as Jon sits on the Connector Board in Massachusetts, and has sat through a few different PPTs detailing the many steps needed to put the Connector on the path of federal conformity. Just as an example, the most recent meeting highlighted 124 different steps for the Connector.

Massachusetts has received or requested $99 million from the Feds to help move the Connector into compliance with the federal law, and they have yet to put in a Level 2 grant (often the largest) to the federal government. I wrote about it on the Pioneer Blog recently. This all seems like a ballooning price tag for two laws that are the same, don’t you think?

Jon uses his model to deflect criticism, by pointing to his own report, suggesting parallel outcomes between a national implementation of RomneyCare and ObamaCare.

One problem– the model doesn’t account for meaningful differences in the laws, and assumes everyone across the country will react in the same manner as those in Massachusetts. Safe assumption?

Can we honestly suppose New Mexico– with 20+% uninsured, no guarantee issue in their individual market, employer sponsored insurance rates of 48.6 percent, lower income levels, lower education level, low-medical infrastructure, and a geographically spread out state– to see the exact same results as the Commonwealth? Contrast New Mexico with pre-reform stats in the Commonwealth and it looks like two different healthcare planets.

For discussion purposes, it is important to remember:

  1. In Massachusetts, if you are offered employer based insurance (ESI), you cannot access the exchange. The only loophole is if your employer drops your coverage and employees remain uninsured for 6 months. The federal standard is different and makes it much easier for employers to dump (affordability threshold of 9.5% of household income or a plan being offered with an actuarial value below 60) However, Jon and friends have pointed to Mass employer behavior as predictive of future national behavior. A silly argument in my mind given the policy difference. On the call, there was no mention of the difference.
  2. Gruber mentioned that both ObamaCare and RomneyCare reform the individual market. I guess the definition of “reform” can be quite wide. The Massachusetts law partially deregulated the individual market, the federal law will be layering on more regulations in most states (modified community rating, guaranteed issues, MLR, etc, etc).
  3. Jon also mentioned that he did not include any proposals from the Romney campaign if they had not been spelled out. Understandable perhaps, but it does call into question the finality of his modeling results.
  4. Gruber said that he relied heavily on CBO modeling, which is unable to include the impact of competition, and therefore will score ObamaCare as more generous and Romney/Ryan’s proposals as more stringent.
  5. And finally, there are many unanswered questions about Jon’s assumptions and his model in general. For example, did Gruber assume all states will expand all categories of Medicaid under the ACA? In light of the Supreme Court decision, this assumption alone would sway your results significantly.

Find me on twitter: @josharchambault