Health Care in the 2012 Presidential Election: How the Obama and Romney Plans Stack Up

October 2, 2012

Authors: Sara R. Collins, Ph.D., Stuart Guterman, M.A., Rachel Nuzum, M.P.H., Mark A. Zezza, Ph.D., Tracy Garber, M.P.H., and Jennie Smith
Contact: Sara R. Collins, Ph.D., Vice President, Affordable Health Insurance, The Commonwealth Fund, src@cmwf.org

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Candidate Health Plan Comparision

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Will the candidates’ plans increase the number of Americans with health insurance?

Methods. To evaluate the effects of the candidates’ proposals for health insurance coverage, Jonathan Gruber, an economist at the Massachusetts Institute of Technology, modeled three policy scenarios:

  1. The baseline, or what insurance coverage would be if the Affordable Care Act had not been implemented.
  2. The Affordable Care Act fully implemented, with all states participating in the Medicaid expansion.
  3. Romney’s proposals to:
    • Provide federal block grants to states for their Medicaid programs
    • Provide the same tax advantages to people who buy coverage on their own as those available to people insured through an employer.

Because the Romney campaign has not yet fleshed out the details of these two proposals, this report makes a set of assumptions for each to assess their potential effects. For the Medicaid block grant proposal, the following assumptions are made:

  • Block grants to states will grow at the rate of population growth plus 1 percent.
  • States will match this lower federal rate of spending growth in their share of Medicaid spending.
  • States will meet these new limits through a 50–50 combination of cuts in Medicaid costs, such as lower payments to health care providers or reduced benefits, and through reduced eligibility for the program.
  • States will maintain existing Medicaid eligibility for the elderly and people with disabilities, so that any eligibility cuts needed to meet spending targets will come from the reduced eligibility of people who are under age 65 and not disabled.

To evaluate the Romney proposal to give tax advantages to individually purchased plans, a scenario was modeled in which people who purchased health insurance in the individual market could deduct premiums from their income on an “above-the-line” basis—that is, a deduction available to all, not just those who itemize their taxes.

Results. When fully implemented, the Affordable Care Act is projected to substantially reduce the number and share of adults and children who are uninsured in every state, in every income group, and in every age group. In the absence of the Affordable Care Act—the baseline scenario mentioned above—60 million people are projected to be uninsured by 2022. The health reform law will reduce the number of uninsured people by an estimated 32.9 million, leaving 27.1 million people uninsured.

In contrast, the analysis projects that Romney’s proposals will increase the number and share of people who are uninsured in every state and demographic group, even compared with the baseline scenario. Nationally, Romney’s proposals are estimated to increase the number of uninsured people by 12 million compared with the baseline (no Affordable Care Act), leaving 72 million people uninsured in 2022. More than 80 percent of the increase in the uninsured population (10.3 million people) stems from cuts in Medicaid eligibility resulting from state block grants. An estimated 1.9 million people would lose coverage under an income tax deduction for individually purchased coverage, since some employers may stop offering health insurance if their employees have an alternative. A similar dynamic is expected to occur as a result of the insurance provisions of the Affordable Care Act.

People with incomes below 250 percent of the federal poverty level ($27,925 for individuals and $57,625 for a family of four) would be particularly hard hit by Romney’s proposals to repeal the Affordable Care Act and replace it with Medicaid block grants and private insurance incentives. While the health reform law’s substantial expansion of Medicaid is projected to decrease the uninsured rate among people with incomes under 138 percent of the poverty level ($15,415 for an individual and $31,809 for a family of four) from a projected 38.6 percent to 19.4 percent, or 34.2 million uninsured people to 17.2 million, Romney’s proposals are projected to increase the uninsured rate in this income range to 43.7 percent, or 38.7 million people. Similarly, while the subsidized private plans that will be available under the law through the new state insurance exchanges are projected to decrease the share of uninsured people with moderate incomes (up to $57,625 for a family of four) from 28.3 percent to 6.9 percent, or 13.8 million uninsured people to 3.3 million, the Romney plan would raise the uninsured rate in this income range to 36.4 percent, or 17.7 million people.

Depending on how states respond to Medicaid block grants, coverage of children might be particularly affected under Romney’s proposals. With expanded eligibility for Medicaid and income-based subsidies available for private coverage purchased through the exchanges, the percentage of uninsured children falls from 12.1 percent to 7.2 percent under the Affordable Care Act, or from an estimated 10 million uninsured children to 6 million. In contrast, Romney’s proposals to repeal the health reform law and replace it with Medicaid block grants and tax incentives to purchase individual market plans increase the percentage of uninsured children, from 12.1 percent to 21.6 percent, or 10 million uninsured children to 17.9 million.