South Carolina Governor Nikki Haley (R) literally begged Congress to block grant Medicaid at yesterday’s town hall hosted by CBS. Haley argued that if the federal government allocated a pre-defined amount of dollars for Medicaid, rather than providing a matching fund that keeps up with health care costs, South Carolina would have greater flexibility to manage its program:

HALEY: We have to lead. And so, what I would beg of both the Congress and the Senate, which I think everybody should agree on, is give us flexibility. Quit mandating any spending down. Medicaid alone is a quarter of South Carolina’s budget. Give us the ability to decide what the health care needs are of our citizens…And block granting in Medicaid is huge for us.

Watch it:

Unless South Carolina has developed some new innovative ways of delivering health services below cost, the “flexibility” Haley’s seeking is really permission to spend less on a safety net health care program. Under a block grant structure, South Carolina would receive an annual federal appropriation that would be less than current projected growth of the program, and the state would have to to make up the difference by increasing spending or (more realistically) capping enrollment, cutting eligibility, limiting mandatory benefits, and lowering provider reimbursements.

In fact, according to a recent report from the Kaiser Family Foundation, South Carolina could cut its enrollment by up to 53 percent under the block grant initiative offered by Rep. Paul Ryan (R-WI).

The Benfield Group is pushing back against the highly problematic McKinsey study about employers dropping coverage as a result of the Affordable Care Acrt and has released this four page perspective showing that large employers — those with 5000 or more employees — “will continue to offer comprehensive health insurance coverage to their employees”:

Under the right circumstances—and some might say extreme circumstances—Benfield’s research suggests that some jumbo employers could drop ESI. However, when we asked about what would cause employers to exit employer sponsored healthcare, the responses we received focused more on the need to compete for talent than to manage costs. In fact, nearly three-quarters of employers we surveyed indicated that “competing for talent” was the main factor they would consider in a decision to continue providing health and pharmacy benefits to employees. Conversely, when asked the likelihood of discontinuing benefits to their employees, 21% said they were highly likely and 49% somewhat likely to drop coverage if their industry competitors stopped offering health benefits. Think “arms race,” with health care benefits as weaponry. Economics of the decision came in second to talent retention concerns. [...]

McKinsey reports it is advantageous for employers to drop healthcare coverage and pay the penalty vs. bear cost of continuing to provide coverage. Meanwhile, Benfield’s jumbo employer panel indicated that the math behind dropping ESI doesn’t work out to an economic benefit… If you take whatever you’re spending today on behalf of your employees and give that to them saying “go out and buy what you can with that,” then you have to do a couple things (to keep employees whole). One, you’ve got to make up to them the tax basis that they’re now going to have to account for as income. And two, in doing so, you’re going to have to replace the lost income to them in their overall remunerations.

Benfield’s findings are in line with other reports predicting relatively small drops in insurance coverage. After the first 10 years, the Congressional Budget Office estimates that “the number of people obtaining coverage through their employer would be about 3 million lower in 2019 under the legislation.” Actuaries at CMS estimated that just 1.4 million would move out of employer coverage. Some of this is premised on the belief that employers are generally reluctant to give up control over a key employee benefit and recruiting tool, which the Benfield findings reinforce.

My CAP colleagues Judy Feder and Nicole Cafarella have an issue brief out today in which they argue that rather than privatizing Medicare and opening it up to “competition,” policy makers should work to extend “Medicare’s effectiveness in containing costs to the private sector.” The Affordable Care Act already sets an “annual target for Medicare per capita spending growth and triggers Medicare payment changes if spending projections indicate the target will be breached” and Feder and Cafarella propose extending this mechanism to the private sector:

What does make sense to achieve further per capita spending reduction is to align the
private sector with the public sector’s commitment to health care payment reform…To slow the per capita growth rate systemwide, policymakers should enact legislation that modifies the target to apply beyond Medicare to private insurance spending and to trigger all-payer payment reform if the target is breached. [...]

Building an effective partnership between public and private payers to slow the cost of
health care across the economy — not just in Medicare — will take time. But Medicare
beneficiaries can’t wait, and the Medicare trust fund is exhausted in 2024.

The bottom line is that Medicare is already doing a better job of containing health care costs than private insurers, and Feder and Cafarella suggest building on what works instead of trying something (competition of private insurers) that has never produced any actual savings or been adopted by any other industrialized nation.

The seven Republicans who took part in yesterday’s presidential debate in New Hampshire all promised to repeal the Affordable Care Act without offering alternatives for expanding access to insurance or lowering health care costs. Instead, the GOP fudged the facts of the law and stood by Rep. Paul Ryan’s (R-WI) proposal to privatize the Medicare program. Below is a one minute compilation of the GOP’s top six health care myths and the facts that undermine their claims:

– CLAIM 1 FROM BACHMANN: The Congressional Budget Office said the Affordable Care Act will kill 800,000 jobs. FACT: The CBO actually found that some people would leave the workforce or work less because they can find affordable health coverage elsewhere. This is a reduction in the supply of labor, not a reduction in the supply of jobs.

– CLAIM 2 FROM BACHMANN: Obamacare took $500 billion out of Medicare, shifted it to build a new entitlement for young people. FACT: The health law does not cut the current Medicare budget; it slows the growth in the program by removing $500 billion from future spending over the next 10 years. The cuts help stabilize Medicare by eliminating overpayments and slowly phasing in payment adjustments that encourage greater efficiency. As a result, the law extends the life of the Medicare trust fund by nine years and allows seniors to retain all of their guaranteed Medicare benefits.

– CLAIM 3 FROM ROMNEY: I would issue an executive order paving the way for Obamacare waivers to all 50 states. FACT: The executive branch and the Department of Health and Human Services (HHS) don’t have the authority to grant blanket waivers — those powers are reserved for Congress.

– CLAIM 4 FROM PAWLENTY: Medicare is not financially solvent. FACT: Medicare is fully solvent until 2024. After 2024, the hospital fund will still be able to meet “90 percent” of its commitments.

– CLAIM 5 FROM SANTORUM: Paul Ryan’s Medicare plan is “identical to what seniors already have” — Medicare Part D. FACT: It’s not. The government pays 74 percent of costs in Medicare Part D and grows that support at the rate of program costs. “Ryan’s plan covers about a third of beneficiary costs, and that support grows at the rate of inflation — so much more slowly than the rest of the program, or than Medicare Part D.”

– CLAIM 6 FROM SANTORUM: The Independent Payment Advisory Board (IPAB) will ration care to seniors beginning in 2014. FACT: The IPAB kicks in if health care spending goes beyond a certain threshold and is statutorily prohibited from rationing benefits or increasing co-pays. In fact, Paul Ryan even supported a more aggressive IPAB-type reform in 2009.