Health Care in the 2012 Presidential Election THE COMMONWEALTH FUND Health Care in the 2012 Presidential Election Sara R. Collins, Ph.D. Vice President, Affordable Health Insurance The Commonwealth Fund Media Teleconference October 1, 2012

Exhibit 1. Comparison of Obama and Romney Health Care Plans President Obama and Affordable Care Act Governor Romney Affordable Care Act Full implementation Repeal and replace with more targeted policies Aims to cover all Americans Yes No Maintains existing private insurance markets Tighter regulations to ensure choice of health plans including bans on preexisting condition exclusions Federal tax credits for individuals and small businesses Health insurance exchanges for individuals and small businesses Individual requirement; shared responsibility penalties for employers with 50+ employees Looser regulations to ensure choice of health plans No preexisting exclusions for people continuously insured Equalize tax treatment of health insurance Allow insurance carriers to sell across state lines Pay premiums with HSAs Encourage small businesses to form purchasing pools Medicaid Eligibility substantially expanded with 100% federal financing to 2016, 90% by 2020 Federal financing of existing program converted to block grants, growth capped at population growth+1% Medicare Benefit improvements including phase-out of Rx drug doughnut-hole Spending reductions including lower payments for non-physician provider services Revenue increases including new taxes on high income earners Extends solvency of Medicare Trust fund to 2024 Repeal of reform law’s Medicare provisions Curtails solvency of Medicare Trust fund to 2016 Competition between private and traditional Medicare aimed at lowering costs Premium support to beneficiaries by 2023 If competition fails to reduce costs, spending growth capped at GDP + 0.5 % Payment and system reforms Primary care and medical home incentives Bundled payments for episodes of care Value-based purchasing Lower payments for preventable readmissions Accountable care organizations Facilitate health IT interoperability Promote alternatives to fee-for-service payment Cap noneconomic medical malpractice damages Innovation grants for nonlitigation options in dispute resolution Sources: Commonwealth Fund Health Reform Resource Center, available at http://www.commonwealthfund.org/Health-Reform/Health-Reform-Resource.aspx; and Governor Mitt Romney’s plan, available at http://www.mittromney.com/.

Exhibit 2. Study Methodology and Assumptions Microsimulation analysis by Jonathan Gruber, MIT Three Policy Scenarios Baseline, no Affordable Care Act. Full implementation of Affordable Care Act, all states participate in Medicaid. Governor Romney’s proposals: repeal law; Federal block grants for Medicaid; equalize tax treatment of health insurance. Medicaid Block Grant Assumptions Block grants grow at rate of population + 1%. States will match the lower federal spending in their share. States will meet the lower limits with 50-50 cut in Medicaid per enrollee costs and cuts in eligibility. Eligibility cuts are only for under-65, non disabled. Equalize Tax Treatment of Health Insurance Assumptions Premiums for individual market insurance can be deducted from income on an “above the line” basis; i.e, a deduction available to all, not just those who itemize taxes.

Exhibit 3. Summary of Main Findings Number of Uninsured Falls Under Affordable Care Act, Climbs Under Romney Baseline: 60 m people ages 0-64 are projected to be uninsured by 2022. ACA: Uninsured falls by 32.9 million, 27.1 million uninsured in 2022 Romney: Uninsured climbs by 12 million, 72 million uninsured in 2022 Uninsured Rates Fall In All Age Groups Under ACA, Increase Under Romney Uninsured children 0-18: 10m baseline, 6m under ACA, 17.9m under Romney Uninsured young adults, 19-29 : 17.4m baseline, 7.2m ACA, 18.6m Romney Uninsured boomers 50-64: 10.8m baseline, 4.9m ACA; 11.8m Romney Low, Middle Income Families Gain Coverage Under ACA, Losses under Romney Uninsured <$32,000 family of four: 34m baseline, 17.2m ACA, 38.7m Romney Uninsured $32,000-$58,000: 13.8m baseline, 3.3m ACA, 17.7m Romney Improvement in Medicare Benefits, Trust Fund Solvency are Lost if ACA Repealed ACA closes Rx doughnut hole, adds free preventive care services, wellness visit ACA extends solvency of Medicare Hospital Insurance Trust Fund to 2024 Repeal of ACA eliminates new benefits and curtails solvency of Trust Fund to 2016 Consumer, Small Businesses Protections Under ACA are Lost Under a Repeal ACA bans insurers from denials, benefit limits, or high prices due to prex conditions Premiums and out-of-pocket costs as share of income for nongroup coverage falls from 18 percent to 9 percent under ACA, 14 percent under Romney

Exhibit 4. Numbers of Uninsured Under the Affordable Care Act and Governor Romney’s Plan Millions of uninsured, ages 0–64 Romney Baseline Affordable Care Act Notes: Baseline scenario is if the Affordable Care Act had not been enacted in 2010; Affordable Care Act is full implementation of the law; Romney plan includes full repeal of the Affordable Care Act and replacement with state block grants for the Medicaid program and equalization of the tax treatment of individually purchased health plans and employer plans. Sources: Income, Poverty, and Health Insurance Coverage in the United States: 2011, U.S. Census Bureau, Sept. 2012; estimates by Jonathan Gruber and Sean Sall of MIT using the Gruber Microsimulation Model for The Commonwealth Fund.

Exhibit 5. Source of Insurance Coverage Under the Affordable Care Act and Governor Romney’s Plan Compared with Baseline, 2022 Among 276.6 million people ages 0–64 13.7 million 5% 60 million 22% 161 million 58% 41.9 million 15% 27.1 million 10% 157.2 million 57% 32.1 million 12% 60.3 million 22% 17.0 million 6% 72.0 million 26% 158.8 million 57% 28.8 million 10% Note: Baseline scenario is if the Affordable Care Act had not been enacted in 2010; Affordable Care Act is full implementation of the law; Romney plan includes full repeal of the Affordable Care Act and replacement with state block grants for the Medicaid program and equalization of the tax treatment of individually purchased health plans and employer plans. Source: Estimates by Jonathan Gruber and Sean Sall of MIT using the Gruber Microsimulation Model for The Commonwealth Fund.

Exhibit 6. Percent of Population Uninsured Under the Affordable Care Act and Governor Romney’s Plan Compared with Baseline by Age Group, 2022 Percent of nonelderly age group uninsured in 2022 Note: Baseline scenario is if the Affordable Care Act had not been enacted in 2010; Affordable Care Act is full implementation of the law; Romney plan includes full repeal of the Affordable Care Act and replacement with state block grants for the Medicaid program and equalization of the tax treatment of individually purchased health plans and employer plans. Source: Estimates by Jonathan Gruber and Sean Sall of MIT using the Gruber Microsimulation Model for The Commonwealth Fund.

Exhibit 7. Percent of Population Uninsured Under the Affordable Care Act and Governor Romney’s Plan Compared with Baseline by Poverty, 2022 Percent of nonelderly poverty group uninsured in 2022 Note: Baseline scenario is if the Affordable Care Act had not been enacted in 2010; Affordable Care Act is full implementation of the law; Romney plan includes full repeal of the Affordable Care Act and replacement with state block grants for the Medicaid program and equalization of the tax treatment of individually purchased health plans and employer plans. FPL refers to federal poverty level. Source: Estimates by Jonathan Gruber and Sean Sall of MIT using the Gruber Microsimulation Model for The Commonwealth Fund.

22% of nonelderly uninsured 10% of nonelderly uninsured Exhibit 8. Uninsured Nonelderly Under Baseline and the Affordable Care Act in 2022, by State Baseline Affordable Care Act VT NH WA ME WA VT NH MT ND ME MT ND MN OR WI NY MA MN ID SD OR NY ID WI MA WY MI RI SD PA NJ CT WY MI RI IA IA PA NE OH NJ CT NV IL IN DE NE OH WV MD NV IN DE UT CO VA IL DC UT WV MD CA KS MO KY CO VA CA KS MO KY DC NC TN NC TN AZ OK SC NM AR OK SC MS AL GA AZ NM AR GA MS AL TX LA TX LA FL FL AK 4%–<10% 20%–<25% AK HI 10%–<15% 25%–<30% HI 15%–<20% 30%–<35% 22% of nonelderly uninsured 10% of nonelderly uninsured Note: Baseline scenario is if the Affordable Care Act had not been enacted in 2010; Affordable Care Act is full implementation of the law; Romney plan includes full repeal of the Affordable Care Act and replacement with state block grants for the Medicaid program and equalization of the tax treatment of individually purchased health plans and employer plans. Source: Estimates by Jonathan Gruber and Sean Sall of MIT using the Gruber Microsimulation Model for The Commonwealth Fund.

10% of nonelderly uninsured 26% of nonelderly uninsured Exhibit 9. Uninsured Nonelderly Under the Affordable Care Act and Governor Romney’s Plan in 2022, by State Affordable Care Act Romney NH WA VT VT NH ME WA ME MT ND MT ND MN OR NY MN NY ID SD WI MA OR ID WI MA WY MI RI SD MI RI IA PA NJ CT WY IA PA NJ CT NE OH IN DE NE OH NV IL DE UT WV VA MD NV IL IN CO UT WV VA MD CA KS MO KY DC CO CA KS MO KY DC NC NC TN TN OK AZ AR SC NM AZ OK AR SC AL GA NM MS AL GA MS TX LA TX LA FL FL AK 4%–<10% 20%–<25% AK HI HI 10%–<15% 25%–<30% 15%–<20% 30%–<35% 10% of nonelderly uninsured 26% of nonelderly uninsured Note: Baseline scenario is if the Affordable Care Act had not been enacted in 2010; Affordable Care Act is full implementation of the law; Romney plan includes full repeal of the Affordable Care Act and replacement with state block grants for the Medicaid program and equalization of the tax treatment of individually purchased health plans and employer plans. Source: Estimates by Jonathan Gruber and Sean Sall of MIT using the Gruber Microsimulation Model for The Commonwealth Fund.

Exhibit 10. Average Percent of Income Spent on Health Care in the Nongroup Market Under the Affordable Care Act and Governor Romney’s Plan Compared with Baseline, 2016 Average percent of income nonelderly spent on health care in nongroup market Note: Baseline scenario is if the Affordable Care Act had not been enacted in 2010; Affordable Care Act is full implementation of the law; Romney plan includes full repeal of the Affordable Care Act and replacement with state block grants for the Medicaid program and equalization of the tax treatment of individually purchased health plans and employer plans. Source: Estimates by Jonathan Gruber and Sean Sall of MIT using the Gruber Microsimulation Model for The Commonwealth Fund.

Exhibit 11. System Improvement Provisions of the Affordable Care Act Supporting primary care, prevention, and wellness Primary care 10% bonus for five years; Medicaid payment rates to primary care physicians no less than 100% of Medicare rates in 2013 and 2014; annual wellness visit and/or health risk assessment for Medicare beneficiaries; preventive services without cost-sharing; local and employer wellness programs; medical home initiatives Payment reforms to encourage and support improved system performance Value-based purchasing programs; reduced payment for hospital- acquired conditions and potentially preventable readmissions; bundled payment for acute and postacute care Accountable care organizations Accountable care organizations to share savings in Medicare Controlling health spending Independent Payment Advisory Board recommendations to meet Medicare expenditure target as well as total system spending nonbinding recommendations; productivity improvement update factor Resources to promote system improvement Center for Medicare and Medicaid Innovation; Patient-Centered Outcomes Research Institute; Medicare–Medicaid Coordination Office Quality improvement and public reporting Directs the U.S. Department of Health and Human Services to develop national quality strategy, public reporting Accelerating the adoption of health information technology Incentives to providers that encourage them to adopt and meaningfully use health information technology Medicare private plan competition Levels the playing field between Medicare Advantage and traditional Medicare fee-for-service plans Source: Commonwealth Fund analysis. 12

Congressional Budget Office estimate Exhibit 12. Estimated Budgetary Effects of Repealing the Affordable Care Act, 2013-2022 Dollars in billions July 2012 Congressional Budget Office estimate Net change from coverage provisions -$1,171 Coverage provisions -$1,677 Revenues and wage effects $506 Net change from payment and system reforms $711 Reductions in annual updates to Medicare provider payment rates $415 Medicare Advantage reform $156 Provider payment changes and other provisions $140 Net change in non-coverage revenues $569 Manufacturer and insurer fees -$165 New Medicare taxes on high-income earners -$318 Other provisions -$87 Total net impact on federal deficit, 2013-2022 $109 Notes: Totals do not reflect net impact on deficit because of rounding. Source: D. Elmendorf, “Letter to the Honorable John Boehner” (Washington, D.C.: Congressional Budget Office, July 24, 2012).

Exhibit 13. Conclusion Number of Uninsured Falls Under Affordable Care Act, Climbs Under Romney Number uninsured ages 0-64 falls from 60 m to 27.1 m in 2022 under reform law. Climbs to 72 m with repeal, Medicaid block grants, tax incentive for individual plans. Improvement in Medicare Benefits, Trust Fund Solvency are Lost if ACA Repealed ACA improves benefits, extends solvency of Medicare HI Trust Fund to 2024. Repeal of ACA eliminates new benefits and curtails solvency of Trust Fund to 2016. Cost of Nongroup Plans as Share of Income Falls Under Affordable Care Act Premiums, out-of-pocket costs as share of income in nongroup falls from 18% to 9% under reform law; 14% with policy to equalize tax incentives for group/nongroup Consumer Protections Under ACA are Lost If ACA is Repealed “Patient Bill of Rights” including bans on rescissions, lifetime benefit limits in effect. 2014 bans on insurer denials, service exclusions, high prices due to prex conditions. Small Businesses Lose Subsidies, Rating Protection, Plan Options With Repeal Premium tax credits in effect, increase in 2014. 2014 exchanges expand plan options; bans insurer denials, exclusions,health rating. Delivery and Payment System Reforms under ACA Lost Under a Repeal New demonstrations and provider incentives in effect to improve quality, reduce errors, coordinate patient care across providers, address underlying sources of cost growth.