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Would ‘Romney’s budget’ slash Medicaid’s nursing-home support?

at 11:00 AM ET, 10/15/2012

“It’s one of the hardest decisions a family can make: Realizing a nursing home is the only choice. For many middle class families, Medicaid is the only way to afford the care. But as governor, Mitt Romney raised nursing home fees eight times. Mitt Romney’s budget cuts Medicaid by one-third and burdens families with the cost of nursing home care.”

-- Narration from President Obama campaign ad

The Obama campaign last week released this ad suggesting GOP challenger Mitt Romney would slash Medicaid funding and leave families with greater costs for nursing-home care. It also claims that the Republican candidate raised fees on nursing homes while serving as governor of Massachusetts, as though this is evidence of his attitude toward the elderly in need.

Let’s examine Romney’s Medicaid proposals and find out what he did to those nursing-home fees to determine whether this ad is misleading viewers.

The Facts

To start, let’s quickly distinguish between Medicare and Medicaid. Both are federal entitlement programs, but Medicare provides healthcare benefits to seniors while Medicaid does the same for the poor, the disabled, and in some cases the elderly — it provides benefits including highly expensive nursing-home care for about six million seniors.

Just to be clear, the issue here is Medicaid, not Medicare. This is important, because House Republicans have proposed a budget that would immediately affect Medicaid benefits while leaving Medicare essentially untouched until 2022.

‘Mitt Romney’s budget’

The federal government currently funds Medicaid with open-ended, matched federal spending for all individuals who qualify for the program, with the states each running their own program.

Romney has provided few details on what he would do with the entitlement program beyond posting a vague plan on his campaign Web site that proposes converting federal contributions into block grants and giving states and insurers more flexibility. That outline doesn’t mention trimming Medicaid funding.

So why does the Obama ad say Romney would cut Medicaid? Because Republican’s running mate, Rep. Paul Ryan (Wisc.), helped craft the House GOP budget, which would cap federal contributions toward Medicaid.

We’ll circle back to this issue later, but for now we’ll focus on whether Ryan’s plan can be attributed to the Republican presidential candidate.

Romney said before selecting Ryan as his running mate that he was “very supportive” of the congressman’s plan and that it sets the “right tone for finally getting spending and entitlements under control.”

That counts as an endorsement to some extent, but Romney’s campaign explicitly said the former Massachusetts governor would craft a detailed proposal of his own if elected president. An internal memo said, “Gov. Romney applauds Paul Ryan for going in the right direction with his budget, and as president he will be putting together his own plan for cutting the deficit and putting the budget on a path to balance.”

Media networks have taken to calling Ryan’s budget proposal the “Romney-Ryan plan,” even though that description is not technically accurate. Still, Romney has set himself up for this kind of trouble with statements and meandering positions that cloud his true intentions — whatever they are.

Nursing-home fees

Let’s move on to the claim that Romney raised fees on nursing homes eight times while serving as governor of Massachusetts. We have previously awarded the Obama campaign Pinocchios for this issue in a previous column.

First of all, the Obama ad does not specify what types of nursing-home fees it is talking about, so the average viewer has no idea whether Romney’s actions directly affect the elderly. The claim actually refers to licensing fees for nursing homes, which would apply to the owners of those facilities.

This does not directly impact seniors living in nursing homes. Furthermore, it’s unclear what the whole issue has to do Medicaid benefits, except for the notion that talking about Medicaid alongside any nursing-home matter might resonate with the elderly.

Keep in mind the sequence of events here. The ad said that Medicaid is the only way some middle-class families can afford care, “but as a governor, Mitt Romney raised nursing-home fees eight times.” This suggests that hiking permitting rates on nursing-home owners proves the Republican candidate would ravage Medicaid benefits.

The ad also leaves the impression that Romney raised nursing-home fees on eight separate occasions during his four years in office. In truth, he raised eight fees in one fell swoop.

How did that work? Massachusetts offers different nursing-home licenses depending on the size and type of facility. Romney in a single instance raised the permitting fees on seven different types of nursing homes and implemented a daily tax of under $10 a day on beds not covered by Medicare.

The Obama campaign counts this as “eight times” that Romney hiked fees on nursing homes simply because the fees appear separately on the state register. That type of nuance is certain to be lost on the average viewer, who might think Romney raised the rates time and again.

(Historical note: Nursing home care was included in Medicaid as part of political deal to ease its passage, with dramatic budget consequences, as explained by this fascinating article by Joseph A. Califano Jr.)

Nursing-home care

Ryan’s budget proposal would roll back the Affordable Care Act, provide Medicaid block grants to the states and cap the federal government’s contribution, tying the amount to a rate of inflation plus 1 percentage point.

Independent analysts have estimated that this plan would trim $800 billion of projected spending from Medicaid over 10 years — resulting in a one-third reduction.

An analysis by the Kaiser Foundation concluded that “the repeal of ACA along with reductions in federal spending for Medicaid through the block grant would almost inevitably result in dramatic reductions in coverage,” mainly because healthcare costs have risen considerably faster than GDP plus 1 percentage point. So coverage is likely to decline, but that still leaves the question of whether elderly beneficiaries in particular would take a hit.

States would have multiple options for dealing with the loss of funds: increasing their own contributions to the program, limiting eligibility, passing costs on to providers and reducing coverage. They could choose whatever combination they prefer.

Passing costs on to providers would amount to taking a page from the Affordable Care Act, which does the same thing as part of an effort to slow the growth of Medicare costs. A report from the Kaiser Foundation estimated that states might reduce payments to providers by 31 percent to 38 percent under the Ryan plan.

The Kaiser analysis laid out two ways that states could make do with the capped block grants if they don’t care to kick in more funding and Medicaid costs outpace the Ryan formula. Here are the scenarios:

1.) States could reduce per-person spending proportionally for all types of beneficiaries

2.) States could reduce per-person spending but shield the elderly and disabled from cuts—thus forcing low-income adults and children to bear the burden of reductions.

Under the second scenario, states would try to protect the elderly from cuts. But it’s unlikely that they could do so entirely. The Kaiser report assumes that states would still need to reduce spending on senior beneficiaries by 10 percent and that the capped block-grant system alone would force about 26.8 million adults and children out of enrollment.

The Pinocchio Test

The Kaiser report suggests that Ryan’s Medicaid proposals are likely to place a greater burden on elderly beneficiaries, even it states try to shield them from from cuts. As such, the Obama campaign is on fairly solid ground in assuming that the plan would affect seniors living in nursing homes.

With that being said, the Obama ad pinned Ryan’s fiscal plan on the Republican presidential candidate, calling it “Romney’s budget.” That’s not entirely fair because Romney has not promised to implement Ryan’s proposals as president. In fact, he has said he would come up with his own plan.

The Obama ad said that Romney increased fees on nursing homes eight times while serving as governor, suggesting the Republican candidate raised rates time and again, and that the fees directly affected the elderly, neither of which is true. This claim also draws a flimsy connection between nursing-home permitting fees and Medicaid benefits.

The Obama ad deserves up to Four Pinocchios for the fee comments alone (this ad counts as a repeat offense), and pinning Ryan’s plan on Romney rates a few demerits as well. But the notion that capping block grants would affect elderly Medicaid beneficiaries is hard to deny. On balance, the campaign video earns two Pinocchios.

Two Pinocchios






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