Nebraska Gov. Dave Heineman (R) called on the super committee to avoid making further cuts to the Medicaid program during an appearance on Bloomberg TV this morning, saying that while states can swallow small cuts, larger reductions would result in a “cost-shift to the states”:

HEINEMAN: We know there is going to be a reduction in the Medicaid program. If it’s a small reduction, states are prepared to share in that, we will do our part. If it is a dramatic reduction, then it is significantly going to have an adverse impact on state budgets. And when you look at state budgets, there are three big items: Medicaid, the funding we do for the education of our children in K-12 and higher education. So if you dramatically cut Medicaid, you’re going to force us to make dramatic education cuts for our children, that’s not where we ant to go.

Watch it:

Republican governors penned a letter to the super committee last month arguing that states would accept additional cuts if the federal government extended “new flexibility” that would give governors greater control over Medicaid program and loosen federal restrictions. However many of those reforms — like block granting Medicaid, for instance — would result in significant reductions in federal spending, the very same reductions that Heineman is now trying to avoid.

A new poll released by the Robert Wood Johnson Foundation and the Harvard School of Public Health contradicts conventional political wisdom about American public opinion on the role of the federal government in health care.

The poll queried Americans’ views on a number of health-related issues. One question and the public’s response stands out. The poll asked respondents if they prefer a bigger government providing more health care services or a smaller government providing less health care services. 52 percent of Americans chose the former option and only 37 percent chose the latter. The researchers who conducted the poll juxtaposed this with a separate New York Times/CBS poll taken earlier this year showing that most Americans wanted to see a smaller government providing less services — seeming to indicate that the provision of health care services is a particularly popular government role:

Interestingly, only 7 percent of respondents said that the government’s role in health care is the “most important problem in the nation’s medical care system.” A whopping 51 percent of respondents named health care costs as the top problem instead.

Fourteen Republican members of the House of Representatives have signed onto a letter opposing proposals to phase out the tax exemption for employer-sponsored health insurance. The members, led by Reps. Tom Cole (R-OK) and Joe Courtney (D-CT), warned that modification to the system “would have far reaching consequences that would not only reduce health coverage for millions of Americans, but would also increase long-term federal spending obligations.” Both the Simpson-Bowles and Domenici-Rivlin deficit commissions recommended ending the exemption, which costs the government well over $200 billion a year in lost income and payroll taxes. From the letter, which also acknowledges that the Affordable Care Act won’t force employers to dump coverage:

Erosion of employer-sponsored health plans would also dissolve savings that have been built into this system of coverage. Employer-sponsored coverage is generally less costly than individual coverage because firms are able to capitalize on lower administrative costs associated with economies of scale. Employers have also been able to drive costs savings through health management plans. If the tax exclusion were to be eliminated, savings that the employer’s plans generate from economies of scale and adoption of health management plans would diminish as they drop coverage.

Not only would these savings be dissolved, but more employees would be forced onto Exchanges and to Medicaid. The CBO estimates that a majority of employers will continue to offer coverage in light of the changes from the Affordable Care Act; however, this projection hinges on, in part, the tax exclusion for employer-sponsored coverage. The CBO estimates that federal spending on Exchange subsidies will total $777 billion between 2012 and 2021. This estimate will explode, and far outweigh federal revenue gained if this tax treatment is eliminated.

The GOP’s opposition to ending the tax exclusion is significant, since several prominent Republicans have proposed replacing the Affordable Care Act with a “market based” health care solution that ends the employer tax subsidy and provides tax credits that would allow families and individuals to purchase health insurance coverage on the individual market. Republicans in the House also voted for a very similar plan in 2009 as part of their alternative to the Affordable Care Act.

– Karl Singer

The Huffington Post’s Jon Ward has an interesting piece about Romney’s successful roll-out of his plan to partially privatize the Medicare program for future enrollees. Romney — who had leaked aspects of the proposal during interviews — met with Rep. Paul Ryan (R-WI) before officially announcing his “premium support” proposal at the end of last week, and Ryan, in turn, gushed the he is “very pleased with these kind of entitlement reforms.”

He has a lot to be proud of. Like Ryan, Romney seeks to gradually privatize the Medicare program for future enrollees by shifting seniors into private coverage and issuing everyone a “voucher” with which to purchase insurance. Romney also preserves the traditional Medicare option — known as fee-for-service — and seniors would have a choice between using their vouchers towards the existing Medicare program or private insurance. But this approach is still problematic:

1) COMPETITION IN MEDICARE: There is still no evidence that competition between private insurers and traditional Medicare will lower health care spending. In fact, Medicare Advantage has shown us that the opposite may be true.

2) LOWER INCOME SENIORS WILL PAY MORE: Romney’s proposal does say that “lower income seniors will receive more generous support to ensure that they can afford coverage.” But the government’s premium support won’t keep up with premium increases and as a result, seniors who may not be able to afford to pay anything above the government contribution may be stuck in cheaper and perhaps lower quality health plans that contract with lower quality providers or cover fewer expensive tests and procedures. In fact Romney’s plan admits that in geographic areas where private plans are cheaper than fee-for-service, “seniors will have to pay the difference to enroll in the traditional Medicare option.”

3) ADVERSE SELECTION AGAINST SICKER APPLICANTS: Private plans will undoubtedly be encouraged to cherry-pick the healthiest beneficiaries and leave sicker applicants to traditional Medicare. Romney’s plan does require that all plans “offer coverage at least comparable to what Medicare provides today.” However, health economists note that private insurers may still be able to attract a healthier population (and thus select against sicker applicants) by varying benefits by scope (which Romney’s plan does not specifically prohibit) — ratcheting down certain services that sicker beneficiaries rely on like chemotherapy and building up coverage for healthier applicants, like preventive services. If healthier applicants leave the traditional Medicare program, costs will skyrocket, forcing even more seniors out of the government program.

4) WHERE ARE THE COST SAVINGS: Nothing in Romney’s plan would actually reduce national health care spending. At best, this proposal simply shifts costs from the federal government to beneficiaries and private insurers. If Romney repeals or significantly weakens the Affordable Care Act, he’ll be eliminating many of the payment reform and delivery system changes that begin to reorient the incentives in the current health care system to encourage providers to offer care more efficiently. Romney does not include these changes in this proposal, meaning that all he’s doing here is shifting costs from one fairly inefficient payer (Medicare) to another even more inefficient payer (private insurers).

On top of all this, Romney’s plan would also “gradually raise the retirement age to reflect increases in longevity.” This would only save the federal government (very little) money by shifting health care costs to employers that provide health coverage for their retirees, to Medicare beneficiaries themselves, to younger people who buy insurance through the new health insurance exchanges, and to states. In fact, the Kaiser Family Foundation found that raising the eligibility age to 67 would cause an estimated net increase of $5.6 billion in out-of-pocket health insurance costs for beneficiaries. Seniors in Medicare Part B would also face a 3 percent premium increase since younger and healthier enrollees would be routed out of Medicare and into private insurance.