Evan Soltas, the high-school aged (!!!) economics blogger headed to Princeton University, has a piece about Canada’s health care structure over at Bloomberg View’s The Ticker blog. While normally his stuff is a little (okay, mostly a lot) over my head this first post for Bloomberg is right up my alley. It will eventually lead to a point that’s been bouncing around my head for awhile. But first, Soltas:
The Canadian experience shows that block grants can improve the quality of government health benefits, so long as they are structured properly. Liberals laud Canadian Medicare (Canada’s health insurance program, not to be confused with the American program for seniors) for its single-payer structure and universal access, but they should note Canada’s health plan for all is actually run by provincial governments and funded through block grants, the mechanism Ryan now proposes for Medicaid.
Under its block-grant system, the federal government of Canada provides provincial and territorial governments with a single large sum every year to fund Medicare, and they administer the program according to a set of baseline requirements. Once they meet the federal baseline, however, they are free to innovate and get the most for their residents’ money.
By fixing the maximum federal contribution, block grants offer Canada’s provincial and territorial governments far better incentives to reduce the cost and improve the quality of the medical services they purchase. When costs rise, the provinces that run the programs are forced to pay 100 percent of the added costs at the margin, unlike in the U.S., where state governments pay an average of 43 cents at the margin for every dollar of added Medicaid expense.
Soltas then goes on to explain some of the aspects of Canada’s structure that helps make it (relatively) successful and what lessons can be taken away. It’s an all-around good piece. But…
Meanwhile, Romney and Paul Ryan want to slash spending on health care entitlements for the poor and the lower middle-class. They would repeal the health care law and all the insurance subsidies and Medicaid expansions that go along with it. And they would further slash Medicaid by linking the growth of future federal spending to inflation, not the actual increase in the cost of delivering care.
The above quote is via Josh Barro, who does make a convincing argument that this election isn’t so much about small versus large government, but old people versus everyone else.
Needless to say it’s clear such ideas are utterly lost on Ryan and others. That’s because the policies they formulate are not made with the same objective as our northern neighbors. The modern Republican party isn’t interested in achieving universal health coverage (even though I think they should). While they may be interested in making some aspects of health care cheaper – only for healthy individuals, of course – the primary objective of the GOP is to repeal the Affordable Care Act. Then it’s reducing the amount of money that the federal government spends on Medicaid. Then it’s reducing the amount of money that the federal government spends on Medicare. Then it’s reducing the amount of money that the federal government spends on SNAP. Then it’s…well, you get the picture.
It’s worth noting by the way, as Soltas mentions, that one contributing factor to the efficacy of those block grants in Canada actually lies outside that system vis a vie the Canadian government’s single payer monopsony purchasing power. Obviously that’s not a path that the GOP is interested in going down. In fact, this (pdf) is what the CBO projects as the result of Ryan’s specified changes to federal spending in Medicaid:
And such a policy would achieve those savings by, well, simply deciding to pay less for Medicaid:
Block grant funding amounts would fall further and further behind state needs each year. The annual increase in the block grant amounts would average more than 3.5 percentage points less than Medicaid’s currently projected growth rate over the next ten years, which accounts for factors like rising health care costs and an aging population. In 2022, we estimate that federal Medicaid funding would be about 34 percent less than states would receive under current law. And the cuts would keep growing after 2022. The Congressional Budget Office (CBO) expects that, under the Ryan plan, federal Medicaid (and CHIP) spending as a share of the economy would fall by half by 2040, compared to spending levels in 2011.
Yeah. That’s not a party interested in making block grants function like they do in Canada. And contra Barro’s age distinction the Ryan plan still adversely affects the elderly, as they depend on Medicaid for long term assistance care with instances of dual-eligibility with Medicare. For Republicans it isn’t about using policy as a means to best achieve a goal of covering people, it’s about using policy as a means to best achieve a goal of spending less money on low-income Americans.
It’s all right there in the latest budget from Ryan and Company. The ideological vision presented in that document is one where policies are designed to detach us from the “culture of dependency,” fighting the good fight to stop us from “losing the American legacy” and backstopping the “erosion of American character.” This is an argument not just in favor of shrinking the scope of federal involvement in society, which is more in line with traditional rhetoric about small government (or, in Barro’s case pitting ‘old versus young’), but in particular shrinking the amount of assistance to poor people. The “Roadmap Plan” even includes a scary graph for how “dependent” we’ll become in the future:
Never mind, of course, that much of that increase in dependence has to do with people losing their jobs, being on Unemployment Insurance, utilizing SNAP, and to a much lesser extent participating in various TANF programs. Furthermore, please ignore that those same programs have time limits (UI, TANF) or primarily benefit households with children (SNAP). Forgetting all that, then yes, dun dun dun…very scary.
Now you may think all of that is a grand idea. So be it. Convince your friends and family of that, or proselytize to perfect strangers. Donate time and money to a cause that’s important to you. Vote. But the point I want to make is you should at least acknowledge what you are trying to accomplish – that above all else you want the federal government out these areas – and that your presumptive nominee has a bullet-point (fantasy) plan to try and achieve your goals.