The Kaiser Family Foundation has released a state-by-state report analyzing the impact of the GOP’s proposal to transform Medicaid into a block grant program and repeal the Affordable Care Act. The Republican budget would eliminate health reform’s expansion in Medicaid coverage and transform the program’s matching rate financing structure — under which the federal government pays 50 to 75 percent of each state’s Medicaid costs — into a block grant that would be less than projected costs. Federal spending on Medicaid would fall by $1.4 trillion from 2012 to 2021 and states will receive less federal funding:

According to the new analysis of the plan conducted by researchers at the Urban Institute working with analysts at the Foundation, total federal Medicaid spending reductions over the next decade relative to current law would range from a 26 percent drop in Washington, Vermont and Minnesota, to 41 percent declines Oregon, Georgia and Colorado and a 44 percent decrease in Florida. The analysis also finds that hospitals could see their Medicaid payments fall by as much as 38 percent, relative to current projections, in 2021. [...]

Cuts in federal spending will translate into reductions in enrollment —
“even if states were able to achieve substantial efficiencies by adopting policies to reduce the rate of growth in spending,” the report found. Kaiser examined different scenarios for state responses to reduced federal Medicaid spending and estimated 31 to 44 million Americans could lose their health insurance coverage:

The reductions would be greatest in states with large coverage expansions and smallest in states where there is less of an expansion of coverage.” Therefore, the south and mountain regions — states like Florida, Georgia, Nevada, Oregon, Louisiana and Texas (the greatest beneficiaries of expanded Medicaid coverage under the ACA ) — will now see the greatest reduction in federal funding.

Hospitals would also be affected, as cuts in state payments “are inevitable if health care spending is to be reduced.” Consequently, “[b]y 2021, hospitals would face an annual loss of Medicaid revenue of $84 billion just as the number of uninsured and the need for uncompensated care increases.

All of this is in line with previous estimates of past Medicaid block grant proposals. For instance, an analysis of Newt Gingrich’s 1995 block grant proposal concluded that 48 states would have experienced a reduction in federal dollars and more than 6 million people would have lost Medicaid coverage in 2002.

Although he claims to have had nothing to do with it, Jonathan Cohn’s excellent defense of Massachusetts’ health reform law has seemingly compelled Mitt Romney to deliver a major policy address on health care later this week, during which the former governor will undoubtedly distance himself from his Massachusetts reforms and “lay out plan to repeal and replace Obamacare.”

Expect Romney to call for the repeal of the Affordable Care Act, amplify the failures of Massachusetts reform, argue that one state’s experiences shouldn’t be transferred to the nation. He will likely put forth a proposal that deregulates insurance markets, allows insurers to circumvent consumer protection laws by selling policies across state lines and offers individuals a tax credit to purchase insurance on the open market. It will likely hedge very closely to what Romney offered in 2008:

Deregulate State Markets. Encourage states to eliminate the cumbersome insurance regulations that drive costs up and providers out of the market.

Fix The Tax Code. Level the playing field by making all health care expenses tax deductible, eliminating the special treatment afforded employer-provided health plans.

Stop The Free-Riders. Use some of the money currently spent on providing expensive “free care” for the uninsured at emergency rooms to instead help the truly needy buy private insurance.

Reform The Medical Liability System. Institute federal caps on non-economic and punitive damage awards to eliminate frivolous lawsuits and bring an end to the practice of defensive medicine.

Promote Innovation In Medicaid. Give states flexibility to spend their Medicaid dollars in whatever way they find most efficient and effective.

Bring Health Care Into The 21st Century. Improve quality and enhance transparency by introducing the same competitive forces that drive innovation in other sectors of the economy.

Note the lack of any serious solution for expanding access to the 32 million Americans who will lose health insurance coverage if Romney successfully repeals health reform. The GOP has offered to expand the state-based network of high-risk insurance pools to cover individuals who would be denied coverage in the individual market because of chronic conditions and Romney may very well back a similar solution in his new plan. But creating large risk pools of sick people does not a sustainable health solution make, as the government will have to spend billions of dollars to insure the costly sick patients who private insurers view as unprofitable,

What would work of course, is the kind of moderate approach that Romney championed as Governor of Massachusetts (and Obama adopted nationally) — establishing regulated exchanges, offering comprehensive benefits, and an individual mandate to ensure that there aren’t any “free riders” in the health care system. Unlike the theoretical plan that Romney will likely offer, that kind of solution has proven successful. It has extended coverage to almost everyone in the state, increased the percent of private companies offering health insurance to their employees and lowered the amount of money spent on uncompensated care. In fact, here is a video of Romney making his case for it.

ThinkProgress filed this report from Richmond, Virginia.

A Fourth Circuit panel of Judges Diana Gribbon Motz, Andre Davis and James Wynn just finished hearing oral arguments in two lawsuits challenging the landmark Affordable Care Act. The first case was brought by Jerry Falwell’s Liberty University, and the second by Virginia’s right-wing Attorney General Ken Cuccinelli. While the court will likely not release an opinion for several weeks or months in these two cases, early signs are that the Affordable Care Act had a very good day.

The Text of the Constitution Actually Matters

The ACA’s opponents challenge the provision of the ACA which requires most Americans to either carry health insurance or pay slightly more income taxes. They claim, falsely, that Congress has never before passed a law that imposes a consequence on people who don’t buy a product, and that somehow makes this law unconstitutional.

The judges, however, were clearly bothered by the fact that this supposed ban on laws compelling people to take an action has no basis in the actual text of the Constitution. As Judge Davis put it, the “Constitution does not talk about activity.” Instead, the Constitution provides that Congress may “regulate Commerce . . . among the several states,” and the very first Supreme Court decision interpreting this language made clear that this power is “plenary,” meaning that Congress may choose whatever means it wishes to regulate interstate marketplaces such as the national health care market, so long as it does not violate another textual provision of the Constitution.

The ACA’s opponents dug themselves in a hole because they were unable to cite a single word of the Constitution that supports their claim that Congress cannot pass laws that supposedly “regulate inactivity.” Liberty University’s attorney dug himself even deeper when he tried to add yet another extra-textual limit to Congress’ power. Claiming that Congress can only regulate “tangible” product and not things like health insurance which are not physical. This claim directly conflicts with the Supreme Court’s opinions, and earned no sympathy from the three judges.

What Was Not Said

Cuccinelli doesn’t just claim that the ACA’s insurance coverage requirement must  be struck down, he also claims — wrongly — that the entire statute must be struck down because it is not “severable” from that requirement.  Significantly, however, the judges made no mention whatsoever of this claim — indeed, severabilty was not mentioned once during two hours of arguments. This is as clear a sign as any that the court will uphold the law, because the only reason to ignore the severability question entirely is if you think that it’s not going to come up because the whole law will be upheld.

Cuccinelli also has a “standing” problem. The Supreme Court held in Massachusetts v. EPA that the Constitution “prohibits” states from suing the federal government “to protect her citizens from the operation of federal statutes”—and Virginia’s lawsuit clearly tries to “protect” its citizens from the operation of a federal law. Nearly 100 percent of the arguments on Cuccinelli’s case were devoted to this standing question — a clear sign that the judges do not intend to reach the merits of his case.

Smoke and Mirrors

Ultimately, however, it’s not clear why this argument was anything other than smoke and mirrors, since it is very unlikely that the ACA’s opponents can find five votes on the Supreme Court. This reality was driven home by a few incredulous comments Judge Motz made about a case called United States v. Comstock.

Motz is considered a liberal judge, but she wrote the court of appeals decision in Comstock striking down a federal law permitting civil detention of sex offenders because the law exceeded Congress’ constitutional authority. The Supreme Court reversed, with Roberts in the majority. In other words, conservative Chief Justice Roberts takes a view of federal power that is much more expansive than the view embraced by one of the Fourth Circuit’s most liberal members.

Motz clearly felt burned by this experience. When one of the attorneys tried to explain the basis of the Court’s Comstock decision, she expressed fairly clear disagreement with the Court’s reasoning in Comstock. It also seemed that she felt burned by her experience being reversed by the Supreme Court, and spent a lot of time playing Devil’s advocate with the United States’ attorney to make sure that her understanding of the case was airtight. She even asked whether the word “regulate” in the Commerce Clause might provide a textual basis for the activity/inactivity distinction, although the Solicitor General ably deflected this concern by pointing out that there are two other provisions of the Constitution that allow the ACA to be enacted.

Ultimately, however, it is likely that Motz was merely trying to anticipate the inevitable attacks on her court’s decision when it does what it appears likely to do — uphold the ACA. Moreover, given Roberts’ vote in Comstock it is difficult to imagine that the Supreme Court will knock this law down.

During a speech at the Economic Club of New York yesterday, House Speaker John Boehner (R-OH) poured cold water on the fact that government can drive innovation in the health care sector. “Well, the idea that the government is going to drive innovation in our health care delivery, I believe is an oxymoron,” he said in response to a question from Pete Peterson. “And the fact is, the private sector can bring real change to our health care system in a way that protects the best health care delivery system in the world.” Watch it:

Boehner is entitled to believe what he wants, but as the largest U.S. purchaser and regulator of health care, Medicare actually “exerts a major influence on the rest of the health care system” and “its reimbursement and coverage policies have been widely adopted by private insurers and other public programs.” For instance, since Medicare has emphasized payment reform, “private plans generally use the public Medicare plan’s criteria for covering treatments as their standard of medical necessity, and they have adopted many of Medicare’s innovations in payment methods.” As Robert Berenson and Bryan Dowd wrote in a 2009 article for Health Affairs:

Traditional Medicare has been the source of important payment innovations, moving many payment systems away from FFS to prospective payment, such as the diagnosis-related group (DRG) prospective payment system (PPS) for inpatient services. The resource-based relative value scale (RBRVS) for physician fees, despite its flaws, has been adopted widely by private plans, albeit with higher conversion factors producing higher fees than Medicare’s.

Further, many policy analysts and even some health plan executives think that because of its market reach, FFS Medicare should take the lead in testing and adopting other innovations, such as pay-for-performance (P4P). Commercial insurers also look to Medicare to make initial technology approval decisions and to initiate more-aggressive payment denials—for example, for “never” events and medically ineffective treatments. Such payment reform undertaken unilaterally by private health plans could lead to charges of “rationing” or withholding care, although similar charges have limited traditional Medicare in this area as well.

The Affordable Care Act — which the GOP seeks to repeal — builds on this tradition by establishing an Innovation Center within the Centers for Medicare and Medicaid Services that tests, evaluates, and expands in Medicare, Medicaid, and CHIP different payment structures and methodologies to reduce program expenditures while maintaining or improving quality of care.