As I’ve said before, the domestic policy area where the candidates truly differ in both their positions and their actions is clearly on Medicaid. Barack Obama signed a signature law that expands Medicaid to 16 million additional beneficiaries from current law; Mitt Romney would turn Medicaid into a block grant, eliminating the ability for the program to increase based on need, and resulting in over 1/3 less spending (as much as $1.7 trillion in raw dollars), and in all likelihood millions LESS beneficiaries, perhaps up to 37.5 million, from current law. This is a major, perhaps the major, swing point in the election.

Incredibly, despite the starkness of the difference this rarely comes up as an issue. The Obama campaign ran one ad on Medicaid, but that was a while ago. In the context of the Presidential debates, the biggest highlight for Medicaid came up last night, unprompted, from Mitt Romney. In the context of balancing the budget, Romney explained his plans for Medicaid, and his policy rationale:

Number two, we take some programs that we are doing to keep, like Medicaid, which is a program for the poor; we’ll take that healthcare program for the poor and we give it to the states to run because states run these programs more efficiently.

As a governor, I thought please, give me this program. I can run this more efficiently than the federal government and states, by the way, are proving it. States like Arizona, Rhode Island have taken these — these Medicaid dollars; have shown they can run these programs more cost-effectively. I want to do those two things and get this — get this to a balanced budget with eight — eight to 10 years.

Medicaid is already a pretty efficient program. To the extent that Arizona and Rhode Island have run the program more cost-effectively, they did so through the additional use of federal dollars. They submitted reforms that the federal government approved, to be sure, but they operate in a financing structure that requires the current level of spending at the very least. Slashing spending by 1/3 would force those states to make major changes to the law, and they would almost have to come from enrollment.

In fact, when Mitt Romney was Governor, he was given the Medicaid program, of a fashion. He used it, and all the current level of spending, to incorporate into Romneycare, and if he changed the system into a block grant and slashed the spending, he would imperil his own signature health care law.

We already know how states like Arizona would react to less federal spending on Medicaid; under the current rules, they have raised co-pays and frozen enrollment.

Romney is just peddling nonsense here. Arizona and Rhode Island aren’t really saving money on their Medicaid programs, and in order to do so at the scale necessary to incorporate Romney’s Medicaid cuts, they would have to start throwing people off the rolls. That will have a direct impact on nursing home coverage for the elderly poor, easily the biggest expenditure in Medicaid. But it would impact the lives of tens of millions of poor people of any age.

David Dayen

David Dayen