Yesterday, in an interview with ThinkProgress’ Scott Keyes, Republican presidential aspirant Rick Santorum reiterated his support for Rep. Paul Ryan’s (R-WI) plan to end traditional Medicare, even calling for the measure to be implemented “sooner than what he’s suggesting.” During an event in Iowa City, Iowa on Monday, Santorum clarified his position further, calling Ryan’s plan “timid” and suggesting that the government has to cap how much it pays out to seniors:

SANTORUM: The idea of saying to seniors, here are your benefits, use as much as you want, consume as much as you want, is not a good idea. And so what we need to do is to put some sort of, to say, ‘here seniors, here is our compact with you. You get into the system, you’re going to get a very nice and generous benefit. But it’s not an unlimited benefit. Here is how much money we have, we’ll give that to you, you go out and buy the policy that makes sense for you. And you have different policies… Seniors will get, in my opinion, better care. Will they pay more? Sure! If they want more health care. Will they pay less if they take a cheaper policy? Yes, they’ll pay less.

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For somebody who’s advocating expanding Ryan’s reforms to today’s seniors, it’s telling that Santorum doesn’t understand why many seniors would have to pay more for their benefits packages. It’s not that they will pay more because they “want more health care” (although if they want more, they will obviously pay more); they’ll pay more because Ryan’s “premium support” does not keep up with health care costs and private plans charge more for the same benefits.

So-called dual eligibles — seniors who are of low-income and also receive a Medicaid subsidy — would also see significant increases because of Ryan’s plan. He would eliminate the Medicaid support and replace it with a $7,800 medical savings account. That amount would grow with inflation every year and would “fall short of what is needed to cover their expenses.” As the Center for Budget and Policy Priorities has concluded, “The savings account amount would cover only 62 percent of the typical 65-year-old’s out-of-pocket expenses in 2022; this beneficiary would still have to pay an additional $4,700 in health care expenses…This would consume 34 percent of the income of a Medicare beneficiary living at the poverty line (an estimated $13,620 for an individual in 2022).”

Austin Frakt takes a good bite out of the GOP’s argument that people who spend more of their own dollars on health care tend to be more cost conscious than those who receive greater government support. Does having more “skin in the game” help lower federal health care spending? Frakt argues that the available data suggests that it does not:

Take employer-sponsored plans. They receive the equivalent of nearly a 40% tax subsidy, on average. Contrast that with Medicare, which covers about three-quarters of the premiums for Part’s B and D and the entirety of what would otherwise be a Part A premium. That is, even participants in the most government-subsidized part of the commercial market receive a much lower subsidy than do Medicare beneficiaries. Participants in the non-group market get even lower subsidies.

With that lower subsidization in the commercial market, we might expect — based on theory alone — more cost consciousness and a lower rate of increase in health care costs. Is that what we find? Not according the figures from the Kaiser Family Foundation.

Look:

The other problem with shifting more of the cost of coverage to the individual is that it could discourage preventive care utilization and create some serious cost-related access problems, forcing patients to skip expensive medications, avoid needed specialists, a recommended test treatment or follow-up, or not go to the doctor altogether. This kind of approach only fuels the growth in health care spending and actually misses the forest for the trees because it does very little to control the costs of the very sickest Americans who make up some 80 percent of health care costs. Giving people with multiple chronic conditions “more skin in the game” just won’t go very far in controlling spending.

Yesterday, Congressional Republicans unveiled a bill that would allow states to cut their Medicaid rolls without losing any additional funds from the federal government. Under the Affordable Care Act, states that change their Medicaid eligibility rules also forgo federal funding for the program. The provision has placed many governors in a tough fiscal conundrum and has led some to seek leeway in the law. Sen. Orrin Hatch (R-UT) is leading the effort to eliminate the so-called “maintenance of effort” requirement:

“With a $175 billion budget shortfall – the worst state budget crisis since the Great Depression – states are seeking real solutions from Washington that will effectively lower entitlement spending and ensure the solvency of safety-net programs, like Medicaid,” said Hatch, who has led the charge against the expansion of Medicaid in the new health law. [...]

“By rolling back these burdensome, budget-busting constraints, this legislation heeds to the calls of states from across the country and provides a common-sense solution to stem the growth of government and begin to put the states, not Washington, back in charge. Regardless of political affiliation, this initiative has the potential to garner strong, bipartisan support and represents a strong first step in achieving comprehensive Medicaid reform.”

Republicans can cut Medicaid all they want, but people in their states will still become sick and need health care. They will either die early because care was rationed or receive uncompensated care that will be compensated by private insured payers. The bottom line is that cutting budgets doesn’t do anything to lower underlining health care costs, because it doesn’t diminish the demand for services. In fact, it probably increases demand at the most expensive end of the spectrum.

As Judith Solomon at the Center for Budget and Policy Priorities (CBPP) has pointed out, “[r]epealing the maintenance-of-effort provision would almost certainly result in a sharp increase in the number of Americans who are uninsured, as states scale back eligibility for low-income children, parents, seniors, and/or people with serious disabilities.” “During the recession of the early 2000s, some 34 states cut back Medicaid and CHIP eligibility — causing 1.2 million to 1.6 million low-income adults and children to lose coverage.”

Yesterday, the House voted to eliminate federal grant money to help states establish their own insurance exchanges — market places that will help consumers purchase and compare coverage options beginning in 2014. As the Hill’s Sam Baker reports, “[t]he measure passed 238-183 after Republicans dismissed complaints that the bill would tie states’ hands and shift power to the federal government.” Rep. Michael Burgess (R-TX) maintained that “Washington would dictate operation and structures of the exchanges” to the states:

BURGESS: Will Washington or Austin choose the official benefits that will be paid to patients. Section 102 of the Patient Protection and Affordable Care Act. Section 102 says that responsibility is Washington’s. Will Washington or Austin control whether health savings accounts and other consumer driven plans can be offered? Section 4202 D2 says Washington wins that round….I think Mr. Speaker you begin to get the impression, this is not state flexibility this is of and run by Washington D.C.

Watch it:

But as Rep. Frank Pallone (D-NJ) pointed out, the amendment would not remove the requirement for states to set-up the new market structures by 2014 and would therefore increase federal control over the states. As the Congressional Budget Office has pointed out, “[u]nder H.R. 1213, CBO assumes that some states will move forward without federal funding to establish exchanges, but that the federal government will be required to take responsibility for setting up exchanges in more states than is expected under current law.”

“My colleague on the other side, I don’t understand. You are saying that you want Austin to do it. You want Austin to have the flexibility to frame a program that is done best because you think Austin and the state is going to do it best, well if that’s the case, why in the world are you putting this bill on the floor,” an exasperated Pallone said in response to Burgess. “By passing this bill you are simply abdicating the right of the state to make a decision and to have the flexibility to set up a good program that’s tailored to the state. It’s the exact opposite of what you’re saying you want to do.”

While the Affordable Care Act does establish a federal baseline of protections and regulations, states that choose to operate their own exchanges still have a great deal of flexibility. For instance, states can establish their own governance structure for the exchange — through a state government agency or a nonprofit entity or partner with different states — develop sub-state exchanges, join a regional exchange, decide whether or not to have separate exchanges for businesses and individuals and families, and develop a process of selecting which plans can participate in the exchange. States can also include public plan options or insurance cooperatives (co-ops) in their exchanges.