Cut, Cap and Bullshit, Part 3

Today I continue a review of Mitt Romney's spending proposals, which center on the idea of Cut, Cap and Balance, which seeks to limit federal spending to 20% of GDP, despite the continuing explosion in medical costs, the current federal share of which will approach 20% all by itself in the lifetime of at least some who are reading this post (source).

We have already discussed the implications of the Republican plan to replace Medicare with a voucher system. On Romney's website, he says one of his goals will be to "[p]ass the House Republican Budget proposal, rolling back President Obama’s government expansion by capping non-security discretionary spending below 2008 levels". The House Republican Budget proposal includes the Ryan voucher plan.

Additionally, Romney's website outlines his plan to "reform" Medicaid. Now, Medicaid is often portrayed as free health care for lazy people. But 37% of all pregnancies are supported with Medicaid funds. Fully 60% of current nursing home residents are on Medicaid. Given increasing lifespans and longer dying processes of modern medicine, it seems likely that most of us will wind up depending on Medicaid.

Under the current Medicaid system, states run Medicaid programs which get most of their funding from the federal government. There are various federal rules to which these programs must conform; my experiences with the West Virginia and Ohio programs have therefore been more or less the same.

Romney's plan includes having the federal government give a chunk of money to each state to do with pretty much as they please, instead of the current system of regulations and matching funds. The theory goes that each state will be more free to design a plan that fits the needs of their state, as well as to provide 50 opportunities for experimentation. This is, actually, kind of a good idea, assuming that there are protections to keep Oklahoma and Texas from telling their elderly, children and disabled to fuck off.

The problem comes with Romney's proposal for how much money each state gets. The plan, similar to Ryan's Medicare plan, is to limit the growth of the program to the overall inflation rate, as measured by the Consumer Price Index (CPI), plus one percent. What would this mean for long-term future of Medicaid and, more importantly, for its beneficiaries?

Romney assumes, based on nothing I'm aware of, that states will be able to continue to provide the same benefits to citizens even with much less funding. But what if they don't? Passing these funding limitations will likely lead to massive cuts in these programs, unless the magical state government competence fairy shows up.

Rather than putting these massive cuts in place and just hoping that states are able to create savings, it makes more sense to give states increased flexibility while maintaining funding at current rates, along with financial incentives for states to innovate and save costs. Then, if states are able to find the savings Romney hopes for, we could work on decreasing funding.

So why doesn't Romney do it that way? It's because the real goal is to force huge cuts in these programs and the rest of government (except, of course, for the military). If he were to be honest about the true results of his policies, he'd be laughed out of the race. But by hiding these results, he hopes to sneak into office without voters really knowing what they're voting for.