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KHN has convened two discussions to��review the politics and policy of health care as the 2012 election nears.

• In the first segment, KHN’s Mary Agnes Carey and Karen Tumulty of the Washington Post discuss the��Obama and Romney plans with former Democratic Sen. Tom Daschle and conservative health care analyst Avik Roy.
• In the second segment, Carey and Tumulty are joined by KHN’s Sarah Varney and Politico’s Jonathan Allen��for a reporters’ roundtable to discuss the impact of health policy on��both congressional and presidential races.

A transcript follows.

MARY AGNES CAREY: Good day and welcome to Health Care Policy & the 2012 Election. While the economy remains the dominant issue this campaign season, health care is another top concern among voters. Today we’ll take a closer look at the presidential candidates’ health care proposals and how those ideas are influencing the race to control the White House and Congress. First, a conversation with well-known policy analysts and then a journalists’ roundtable.

Former Senate Majority Leader Tom Daschle was a key behind-the-scenes player in passage of the health care overhaul law and remains one of its most vocal defenders. Sen. Daschle is now a senior policy advisor at DLA Piper. Avik Roy is a senior fellow at The Manhattan Institute, a conservative think tank, and he writes a health care policy blog for Forbes. He is an outside health care adviser to the Romney campaign. Joining me in the questioning is Karen Tumulty, national political correspondent for the Washington Post. Thank you all so much for being here. As we were just discussing, there wasn’t a lot of health care in last night’s debate, but did you hear anything you think moved the needle? Sen. Daschle?

TOM DASCHLE: Well, I think the whole debate about contraception and just what impact the current law has on women and the difference between the two candidates became really one of the focal points, probably in the second-tier of importance overall as the debate went back and forth. But clearly, that is a distinction that the president wanted to talk a good deal about, and I think Mr. Romney attempted to explain his position. Except for that, I was a little disappointed that we weren’t able to get into the health issues with greater consequence than we did.

MARY AGNES CAREY: Avik?

AVIK ROY: That’s one of the things that Romney brought up in one of his discussions was the point about: Does Sen. Obama’s promise that premiums would go down, or health costs would go down, for every family – or average family – in the United States by $2,500 per year? When in fact, premiums have gone up by that amount since the Affordable Care Act was passed. I think the issue of the rising cost of health premiums is a big part of the challenge that we all face and we all talk about in health policy – and is certainly something that we should continue to talk about when comparing what the Affordable Care Act would do and what Gov. Romney’s plan would try to achieve as well.

KAREN TUMULTY: Although the law has not been implemented, actually, so forces that they argue would drive costs down haven’t really taken effect yet.

AVIK ROY: True, but the insurers are anticipating a lot of the mandates and regulations coming into force, and that’s one of the reasons why premiums continue to increase as people try to lock in certain cost increases – both providers and payers – before those provisions come into place.

MARY AGNES CAREY: Let’s talk a little about pre-existing medical conditions. As we know, the Affordable Care Act, as of 2014, you cannot deny coverage based on a pre-existing medical condition. And Gov. Romney has a plan on pre-existing medical conditions, he says he has a plan, could you please explain what that is, and is it as comprehensive as what is in the Affordable Care Act?

AVIK ROY: So first we need to step back and understand who are the uninsured in America? If you look at the uninsured in America, the vast majority of people who don’t have insurance in America, it’s because insurance is too expensive, it’s not because they can’t get insurance. There is a small percentage – an important population of people – but it’s a small percentage of people who today don’t have protections in terms of being able to get insurance regardless of pre-existing conditions. Because there are a lot of people who can, right? So, if you’re in the small group market, you can get, you have guaranteed issue in the small group market. Where we don’t have guaranteed issue is in the non-group market, which a small fraction of Americans participate in.

And why is it? Why is it that there are people out there who can’t get insurance because of a pre-existing condition? It goes back to a quirk in the tax code from World War II, whereby employers sponsor insurance and get a huge tax subsidy for doing so. And as a result, there are a lot of inefficiencies that come out of that, one is that health insurance is more expensive and the other is that because employment is tied to insurance – when people lose their job or switch their job, they have gaps in coverage. So that’s what creates the pre-existing condition problems. We have to understand first what’s causing the pre-existing conditions problem in the first place. So there are two ways to address it: One is to do what the Affordable Care Act does, which is create another sort of policy patch on top of that, which then requires the individual mandate, subsidies for lower-income individuals and all the other mechanisms to ensure that if you’re going to have guaranteed issue for everybody, you’re going to do all the other things.

That’s what creates the Affordable Care Act to a large degree. The Romney approach is to say: Let’s address the original problem. The original problem is that people don’t own their own insurance and can’t take it from job to job. They can to a degree [with] HIPAA, which the senator was involved in shepherding through Congress – it was an important advance in that regard. But there are still other things you can do to expand HIPAA protections to people who have credible coverage. And then for people who still have those gaps, do more with high-risk pools and do other things to make sure that the people who can’t get insurance today have the ability to get it through subsidized high-risk pools at the state level.

MARY AGNES CAREY: Is that enough, Sen. Daschle?

TOM DASCHLE: Unfortunately, no. It’s all about actuarial calculation and actuarial viability and you can’t get to actuarial viability to cover all of those. And I would differ slightly. It’s not a small percentage. We’re talking about 50 million people that don’t have insurance and another 40 million people who are very under-insured in this country. Nearly 100 million people, and they’re all under the age of 65, so it’s a very significant portion of the population. And the problem we have today is that, because of the actuarial calculations that all insurance companies with the business models that they are forced to use consider as they try to determine the degree to which they can make insurance affordable to those who have pre-existing conditions, it simply doesn’t calculate without everybody participating. Now, everybody does participate today but in the most inefficient way. We already have a mandate and the mandate is the one that requires uncompensated care to be provided, and we all pay for the cost of uncompensated care – added to our bill, mandated to our bill, if you will – at the time when we pay our bills to the doctor in the hospital.�� So what the Affordable Care Act tries to do is to put in place an opportunity to create a new actuarial model that relies on universal participation.�� That allows then the actuarial balance to come back to what it needs to be to allow the insurance companies to comfortably cover all of those with pre-existing conditions today.�� That’s what it does, ��and as Karen so correctly points out, we don’t really have that model in place yet.�� It doesn’t really kick in until 2014.�� The states are going to have a year to put in place exchanges that will allow us the opportunity to create these insurance levels at different actuarial values, but that won’t begin for another year and a half.

AVIK ROY: The Congressional Budget Office did a study that analyzed this question of why are people uninsured.�� And 71 percent of the people who were uninsured over a long period of time were uninsured because of the cost of insurance.�� Only three percent were uninsured because of their health status –they couldn’t get insurance because they were ill.�� So it’s an important population.�� In a big country like ours, if under one percent of people have this problem, that’s still one to three million people.�� So it’s still an important problem for us to understand.�� But we have to make sure that whatever the solution is doesn’t drive up the cost of insurance for the other 99 percent of the population.�� And that’s part of the challenge with the Affordable Care Act is that it doesn’t do enough. In fact it goes in the other direction, in terms of driving up the cost of health insurance for the vast majority of people who have it already.��

TOM DASCHLE: I’m not familiar with that study, but it just defies credibility.�� It would seem to me – you look at the obesity problem in this country, you look at the Type II diabetes problem we have in this country, you look at the coronary and other chronic illness problems we have in this country – and I know statistically and demographically, it’s more than three percent of the population.�� So I want to go back and look at that study.�� So regardless of what the percentage, the problem is still there.�� It’s one of actuarial accountability and actuarial balance and the only way you get there is with a mandate.��

KAREN TUMULTY: Could I get a couple of scenarios out here and if you could play it out for us what the next couple of years would look like.�� Suppose Mitt Romney wins the presidency, but – as is almost certain – the Republicans are somewhere short of 60 votes in the Senate, whether they’re in a small minority or a small majority.�� A President Romney says he would repeal Obamacare.�� How far could he get in this sort of situation?�� He could use the reconciliation process to some degree, but how much of this bill would be dismantled?

TOM DASCHLE: I would say that the bulk of it can be dismantled.�� If a president is determined to do it, he can do three things.�� First of all, he can pass legislation.�� As you say, he can use reconciliation for certain amounts affecting the budget of the federal government.�� And that’s calculated to be somewhere in the 40 to 60 percent range, depending on how parliamentarians ultimately rule on some of these budgetary questions.�� So that’s number one.�� Number two: through rule making.�� He can really do a lot to change the course of the legislation because – especially with the Affordable Care Act – the secretary and the president were given wide latitude.�� And third, he can defund it.�� He can just simply not dedicate resources within the budget.�� That will be his prerogative as he sets his own budget.�� So he could have a profound effect on the outcome of the ACA in a very short period of time.

MARY AGNES CAREY: What do think would be the reaction to that?�� Let’s say, to Karen’s point, ��the thought is perhaps Republicans keep the House, Democrats keep the Senate – how does Congress respond under that scenario?

TOM DASCHLE: I think if you make the assumption that it will be a status quo election and the Houses remain the same, where the Senate is still governed by a Democratic majority, in the House the Republicans, there really isn’t a lot they can do.�� They wouldn’t have the consensus that it would take to override a veto or to press legislation that the president could sign.�� So it is most likely that you would see a significant stalemate.�� That said, I think there is an inexorable momentum that is going on.�� And as I look at the health sector all over the country, there are things that are happening out there – on payment reform, on delivery reform, on insurance reform – that are not reliant necessarily on the ACA.�� So I think you’ll still see movement.�� We’re at a very transformational time, but nothing like the definition that the ACA provides this movement today.

MARY AGNES CAREY: Avik, how do you see this playing out – this scenario concept?

AVIK ROY: Well, I’ll certainly defer to the Senator’s expertise about reconciliation. I would agree that, in general, the point of reconciliation is that you can use reconciliation to pass legislation that is germane to the budget. And clearly the ACA is germane to the budget.�� And a piece of repeal legislation would theoretically be simpler.�� It’s not like you have to pass every provision, every section of the ACA or repeal each section one by one.�� You can repeal them in chunks, which makes it more germane to the deficit.�� So in that sense reconciliation is easier to use with repeal than it is with passing the original bill.��

In terms of what would happen if the Democrats control the Senate, I think it’s pretty unpredictable.�� I can say certainly I don’t know if grassroots conservative or congressional Republicans have articulated what they would want to do in that setting.�� I think that what Gov. Romney has stated is that if he doesn’t have a Senate majority, what he would certainly do is he would try to assign waivers to the states to liberate states from implementing as much of the law that he would have the legal authority to do. So he would use executive orders to limit the implementation of the law. But aside from that I think a lot of people would have to do some hard thinking about where they could work with the other side.

KAREN TUMULTY: Let’s look at the other alternative. Say President Obama is reelected. We’re coming up on 2014, he’s got of sort of put the key in the ignition and turn it and see if the car engine turns over here. If you were secretary of HHS and you look out across the map and you have all these states in various degrees of preparedness, in various degrees of eagerness to do this, what would be keeping you awake at night?

SEN. TOM DASCHLE: I think the degree to which there are deadlines in the legislation that I think could be a challenge to meet in some cases with the states currently in the position they are, so I think what would keep me up in part would be, number one, could we meet those deadlines?

I think the president would probably use the authority that he has to intervene and to set up in many cases a federal exchange, or a federal system, to accommodate those states that are simply farther behind. But I think more than that, what keeps me up mostly would be the larger budget about health as we go into the fiscal cliff decisions, and all of the other huge legislative challenges the president and the Congress will be facing. What will happen to Medicare, what will happen to Medicaid, what will happen to the funding of the implementation of the ACA with the backdrop that we’re going to be facing beginning almost immediately around the budget and the fiscal cliff?

KAREN TUMULTY: What do you think?

AVIK ROY: I think that’s absolutely right. I think the broader fiscal picture, particularly with the lame duck session coming up but even afterwards,�� health spending continues to be the dominant growth driver of federal spending in general, and regardless of what happens with the Affordable Care Act, regardless of what happens with Gov. Romney’s approach to Medicare reform, these problems are not going to go away so it’s going to be a challenge and it’s going to have to be something both sides are going to have to come together on. I think that’s one of the things that is really important here, that there’s not going to be an ideological victory on this stuff. You’ve got to find people on both sides of this equation who are willing to work together to find solutions.

KAREN TUMULTY: Plus you have a lot of governors, even Democratic governors, who are pretty skeptical that even with the federal match on the Medicaid that they can make these numbers work. Is that a valid concern?

SEN. TOM DASCHLE: This is as good a deal that governors are ever going to get in terms of the expansion, but I think that every executive, every chief executive, whether it’s state or federal, is going to be facing a lot of these budgetary challenges with a degree of anxiety, with a degree of frustration, because they know the clock is ticking and the calendar pages are turning, and they just don’t have a lot of time.

Time and budget and overall yearning for some degree of consensus on some of these things is going to be very high.

MARY AGNES CAREY:�� While Medicare will be a part of the discussion next year on the budget, it’s also a big part of the campaigns, lots of discussion about premium support, about Gov. Romney and Congressman Ryan’s proposal on premium support.

How do they assure the American public that the amount of money they will provide in premium support to allow a senior to buy traditional Medicare or a private health insurance plan, that that will be enough and it will rise enough with the increase in health care costs that seniors don’t have to go digging into their pockets to get the coverage that they choose.

AVIK ROY: This is the whole reason why the plan was designed the way it was. You may remember about a year ago in the Republican primaries all the candidates kept getting asked: Do you support the Ryan plan? Do you support the Ryan plan? and what Gov. Romney said was: I support the broad principle of entitlement reform but I’m going to come up with my own plan. And everyone said: What does that mean?�� But eventually he rolled out his plan.

What was his plan? His plan responded to just that criticism. It said that we are going to bring up the level of premium support in every market so that it matches what will be necessary to cover all the traditional benefits that are covered today. ��And what you do is you have a bunch of insurers, including the traditional government-run Medicare fee-for-service option, compete and whoever has the second-lowest bid of the group, that would be the level of the subsidy.�� But that level of the subsidy would mean that every senior would be guaranteed coverage for the exact same benefits they have today. The whole reason he went to that system, and there’s no cap in Gov. Romney’s approach. For ��example with both the old Ryan approach, with President Obama’s budget, there’s this cap of Medicare can only grow at a certain amount, the ACA also has a growth rate.

MARY AGNES CAREY: Is this the GDP plus a half a percentage point that you’re talking about?

AVIK ROY: Exactly. Gov. Romney’s plan doesn’t have that kind of a growth cap. The approach of Gov. Romney is let’s let competition do the work and not arbitrarily put a global budget cap on the way we adjust these payments. ��So there’s a 100 percent iron-clad guarantee that the payments will cover the benefits. ��It may be that in certain markets, like in the study the Kaiser Family Foundation recently published, that the Medicare [fee-for-service] traditional government-run option is cheaper. In other markets, it may be that private insurers are cheaper. But seniors would have the choice to choose whatever plan they want. And they would have the ability to select the plan that was best for them. And if they wanted to pay more for a more generous plan, they could do that.

MARY AGNES CAREY: Sen. Daschle?

TOM DASCHLE: Well I think it’ll work about as well as the SGR has worked over the last 13 years.

MARY AGNES CAREY: The sustainable growth rate, that pays doctors in Medicare.

TOM DASCHLE: Yes, we pay doctors, and they were given all the assurances — and I must say I was part of that in the early years and feel very badly that we didn’t do a better job of addressing many of the concerns raised at the time.

But I think there are two choices legislators have: They can either cut and shift or they can redesign and improve these programs. Cutting and shifting doesn’t solve the problems, it simply exacerbates them by passing on the responsibilities to others including the beneficiaries. I’d much rather address the core issues that we face, in addressing costs effectiveness in a lot more comprehensive way, than by cutting and shifting. But that’s really what we’re doing: We’re putting older people into the individual market —which the CBO has said is a lot more of an expensive approach to use. First, because administrative costs are so much higher, secondly because you’ve got a lot more involvement in the part of a lot more organizations where the coordination of that coverage becomes a lot more complicated.

You know we already give seniors the choice as they have an opportunity to sign up for Medicare Advantage, so to take it beyond that with a new voucher program in the individual market—the most expensive marketplace in health care in the country today—is not an example of cut and shift that I think the majority of members of Congress can support, or will support.

AVIK ROY: So I completely agree with that dichotomy between cutting and shifting versus structural reforms that improve the efficiency of the program, but I would contend that it’s the Affordable Care Act that does the cutting and shifting. It cuts provider payments by $450 billon which will drive a lot of providers out of business. And what you’d rather do instead is let seniors have control over their own health dollars and buy plans that are more efficient. There’s a lot of literature that’s come out the last couple of months that’s shown that Medicare Advantage plans with the same level of benefits is more cost-efficient than traditional fee-for-service. So why not give seniors the option to buy the same benefits at a lower cost?

KAREN TUMULTY: But you don’t buy the argument that healthier seniors will in fact go out and do that, but that will leave sicker seniors back in traditional Medicare and make it more expensive for the government?

AVIK ROY: So what you do is you have a risk adjustment program to ensure that insurers aren’t engaging in risk selection. This is what we do with the Medicare Advantage program, this is what we do with Medicare Part D, this is what we do in the Federal Employee Health Benefits program that all members of Congress belong to. It’s a relatively routine process, and their critique of how you can tweak or improve risk adjustment. But we know a lot about risk adjustment and we can use it to work in this situation.

TOM DASCHLE: Well, you can’t do it actuarially. First of all you can’t tell somebody they can’t leave the system, but you’re going to see this natural evolution away and the healthy people are. You know the other thing I think about is my mother: 89 years old and not a clue, not a clue, about how all this works.

To pit my mother against the marketplace — ��and I might say even I think I know a little bit about this, but the lack of transparency, the fact that we really don’t have�� a market — the health sector is the only place in the country the only sector of the economy that at the time of purchase we don’t know what it’s going to cost or who is going to pay. And we have a lot more statistics on every sports figures than we do on any provider or any institution today.

So the lack of transparency does not allow for the market forces that would work in other settings to work here. They just don’t work. And so I think we really got to be sensitive to the needs of my mother, to the needs of those who understand that in an individual market to put an 89-year-old woman in that setting and expect her to make the best decision is just not do-able.

MARY AGNES CAREY: We’re getting near the end of this campaign, we have another debate coming, and the election will be here soon. How critical is health care in this campaign? And what do the candidates need to say to lock down the voters’ vote — for voters on health care — what is the critical message they need to get out there in the next few weeks?

AVIK ROY:�� I would certainly say Gov. Romney’s first and foremost focus is on the economy. He’s concerned about the state of the economy today and he wants to improve it. The focus of the health care message is primarily around what the ACA does to retard economic growth, what it does to retard our hiring. What it does to our fiscal situation. So it’s really about the economy at the end of the day and how the ACA feeds into that.

TOM DASCHLE: Winston Churchill said it best. He said once: A lie gets half way around the world before the truth gets its shoes on. And that was never more clear than in the debate about health care. There have been so many mistruths and misinformation that I think the best thing the president can do is to contribute to helping to clarify just what it does and what it doesn’t do. What I take a great solace in is the knowledge that the more people know, the more they like.�� They like the protections that they have already been given. They’re going to like when they find out that they’re covered on all 10 categories of essential care in new insurance plans that they are not eligible for today. They are going to like the subsidies they get to help pay down the premiums. They are going to like the new paradigm once it’s filled with greater transparency.�� But today there is just so much confusion in large measure because they have been so many lies.

MARY AGNES CAREY: Karen,�� you’re so closely following the campaign, reporting on it. How did you see health care shaping the campaign as it continues?

KAREN TUMULTY:�� One thing I’ve been struck with, and tell me Sen. Daschle if this is your sense too, I think President Obama has become much more aggressive about framing health care as an economic issue and I do think we heard a little bit more of that in the debate last night, too. Is your sense that they missed the boat on this at the beginning? Are they trying to make up for some lost ground?

TOM DASCHLE: Well, you know the president had a lot on his plate, and I give him that. One of the mistakes that I think we made, when we passed [Medicare] Part D, the drug bill, we passed an education and promotion account that allowed us to actually hire people like [former Sen. ] Bob Dole, a very dear friend of mine, to go out and articulate to the senior population just what it did and how good it was. As one of the last minute decisions we made to bring down the costs, we took all that money out of the budget for the Affordable Care Act. So we really had no way by which to do what we did with Part D, to educate to promote. And I think there was health fatigue after all of the tremendous�� work to get the job done. People just said, “Look, enough already. Let’s move on to other things. I’m tired of talking about it.” But it was a mistake. I think we did well�� with implementation so far.

I think we’ve done well in putting the new paradigm in place. But I think we did poorly at messaging.

MARY AGNES CAREY: How do much of this is getting through to voters? We’re in Washington. We live and breathe the debate over�� premium support or Medicaid block grants or pre-existing conditions. Karen, what are voters getting and what are they not getting?

KAREN TUMULTY:�� I was really struck I was in Nebraska about a month and a half ago with Bob Kerrey,�� who is running for not quite reelection but to get his old Senate seat back.�� And we walked in to a charity that goes around the country giving people dental care. And there had been people in the parking lot of this shopping center where were doing it who had shown up at midnight the day before just to get in and get their teeth worked on. And we walked in and one of the volunteers the first thing she asked former Sen. Kerrey, “Are you for this Obamacare?” And he said, “Yes, I am.” And she says, “I hate that.” So here you are surrounded by hundreds and hundreds of people who obviously don’t have access to basic dental care, and yet the resistance out there is real. I mean people are afraid of what this is and what it means. I don’t think the feelings of insecurity about it have been addressed.

MARY AGNES CAREY:�� Avik, what’s�� getting through?

AVIK ROY: I would say there has been a lot of misinformation about health care. There always is. And that’s true on both sides. So a lot of the talk about throwing grannies off the cliff is misinformation as well, right?

The irony is that premium support is not just something that is used in the Romney-Ryan plan for Medicare reform. It’s used in the ACA exchanges. The ACA exchanges have premium subsidies that are tax credits that grow at a certain rate that may not keep up with the cost of health care inflation. So these are ideas that a lot of people try to adapt to their health care formulas and maybe that’s where some sort of bipartisan approach can come through.�� But I think that at the end of the day one of the things that people are really concerned about is the cost of health insurance premiums.�� And unfortunately the ACA doesn’t do enough. In fact, it goes in the other direction.

Jonathan Gruber, one of President Obama’s advisers, has issued reports to states saying that in Wisconsin premiums in the non-group market will go up by 30 percent, in Colorado by 19 percent because of�� the regulations and mandates�� the law is imposing on insurers. So that’s something that a lot of people are rightly concerned about: health premiums keep going up, they eat up a larger and larger percentage of wages and that has economic effects — and I think that’s something�� we don’t talk about enough when we talk about health reform.

MARY AGNES CAREY: Would you like to weigh in quickly?

TOM DASCHLE: Well, I agree with much of what was said. We know we are going to spend $35 trillion on health in the country in the next 10 years and that we can’t sustain that permanently. But what we have to do is bend the cost curve to bring in play the these mechanisms and we know where we have to look. We have to look at transparency, we have a coordinating chronic illness, we have to look at getting rid of fee for service or finding alternatives in large setting that would allow us to deal with the volume driven approach we have today. We have to deal fraud and abuse. We have to deal with administrative costs. The ACA puts on the field an opportunity for us to do that for the first time.�� Does it solve it all? No. Could it have gone farther? Absolutely.��

I strongly support IPAB [the Medicare Independent Payment Advisory Board set up in the health law] and I know we could have a big debate about that but we won’t today. But it puts in place mechanism to address the causes. It redesigns and improves , which is what I said at the beginning. What we need to do make a difference in health�� costs in the future.

MARY AGNES CAREY: All right. I’m going to leave it there.�� Thank you so much, Tom Daschle and Avik Roy. And Karen and I will be back in a moment for our journalist roundtable.

[BREAK]

MARY AGNES CAREY: Welcome back. We now continue the conversation about health care policy and how it’s playing in the 2012 campaigns. Joining me once again is Karen Tumulty of the Washington Post, Jonathan Allen, senior Washington correspondent for Politico, and Sarah Varney, a senior correspondent for Kaiser Health News. Thank you all, for being here. Thanks Karen, for staying around.

First of all, what did you two think? And Karen, weigh in as well about what you just heard. Sarah?

SARAH VARNEY: I thought it was interesting how Sen. Daschle talked about how just widespread the ACA is. How overarching it really is. And I think that’s something that gets lost a lot in discussion over Medicare, Medicaid, all of the ways in which it has set into place: momentum that really won’t be stopped regardless of whether or not the A-C-A gets repealed.

So you’re seeing a lot of formations of these affordable care organizations in California, where I report. The business market place is really sort of reorienting itself a couple years ahead of 2014. And many people that I’ve talked to over the years — whether they’re at hospital chains, or they work for the county health department, or individual doctors’ practices — all say these are things that we need to do anyway and so we’re going to continue to do them sort of regardless of what happens in Washington. ��

MARY AGNES CAREY: Sure. Jon?

JONATHAN ALLEN: I thought it was interesting to see how much agreement there seemed to be on the states in particular. And all these deadlines coming up and I think you can throw in the Supreme Court decision and what that did. You know with regard to Medicaid and how states are going to deal with whether or not they’re want to take Medicaid money. I think all that agreement that this is like sort of a critical juncture upcoming or set of junctures for the success of this law was interesting. There wasn’t really any disagreement that states are going to have a hard time figuring that out. Sen. Daschle, for instance, talking about the time elapsing quickly, the calendar pages turning, and the budget constraints still being there for all these governors.

MARY AGNES CAREY: Karen?

KAREN TUMULTY: Well, I was a little bit surprised when Sen. Daschle was talking about the powers of the president. It would have to essentially slow walk the implementation of the Affordable Care Act whether or not Congress goes along.

MARY AGNES CAREY: Right. I thought that was very interesting as well. And John, to your point, and Sarah, to yours, I think that there was some commonality there of purpose of looking at the Medicare program, looking at entitlement spending, and how that’s going to figure into all this discussion about the fiscal cliff, entitlement reform, and tax reform if it happens next year. But before we get to next year we do have an election. Health care is very big in that election. And Sarah, I know that you’ve been following a California house race that kind of mirrors this larger debate over Medicare and over the Affordable Care Act.

Tell us about that. ��

SARAH VARNEY: Sure. This is in eastern Sacramento. So this is really where the sort of liberal coast meets the conservative farmlands and sort of exurbs of Sacramento County. This is a redistricted area. It was redistricted in 2010 after the 2010 Census. And it went from being a Republican majority to now being evenly split between Republicans and Democrats.

So you have Rep. Dan Lungren. He’s a nine-term congressman, a Republican, defending his seat against a challenger, Dr. Ami Bera, who challenged him in 2010 and lost. So, Dr. Bera is really playing up in this election compared to how he ran in 2010. He’s really playing up his background as a physician. He was a chief medical officer for a big a big hospital chain in Sacramento and then also the chief medical officer in Sacramento County.

He’s really talking about: I’m the guy to go to Washington. I know how to control health care cost. I did it in this hospital chain. I did it in Sacramento.

I went to a town hall meeting one night of Rep. Lungren’s.�� This was not a campaign event. This was just a town hall meeting that he was just holding for all of his constituents. And for hours, it was just dominated by one question after another about Medicare.�� And Rep. Lungren very much supports the Romney-Ryan plan and basically said at the end of it: If you don’t like it, I’m sorry, but this is what I support.�� And so it was interesting.

There was a group there called the Seniors Against Lungren who were obviously upset with him.�� There were a lot of tea party folks who had come not just from his district, but really from all over northern California, to come down to tell him they supported him. But I think it’s interesting how Rep. Lungren essentially was just saying, in a sense: Take it or leave it.

MARY AGNES CAREY: Does this mirror other campaigns that you’ve read about or covered as reporters?

KAREN TUMULTY:�� I’m struck by the potency of the Medicare issue and the aggressiveness with which the two sides are framing who really gutted it by $716 billion. Basically Paul Ryan’s budget and Barack Obama’s health care law would take the same amount of money from the program, and yet each one is attacking the other as gutting it, and doing it over and over again, no matter how many times they get called on it by the fact checkers.

JONATHAN ALLEN: For several cycles now, we’ve seen Republicans basically make the argument that they’re not necessarily going to win the Medicare debate, but�� what they want to do is at least�� draw even.�� The goal is, if they can blunt this edge the Democrats have had for so many�� years on Medicare by proposing their own plan, by rallying people behind it and getting anywhere close to even, they’ll feel like they’ve got something of a victory.

You’ll notice the debate has tended to be in the past that Democrats are for Medicare, for Medicaid, but particularly Medicare, which affects a lot of voters.�� And then what they do is hammer Republicans for being against it if Republicans want to cut back on it at all. They say: Well , you’re against it. You didn’t vote for it in 1965, You’ll never be for it.

Republicans now under Ryan, first through his budget and now under Romney-Ryan, which is a somewhat watered-down version of the Ryan approach, have an alternative they’re putting forward.�� And they’re able to argue, some would say convincingly, some would say not, but they’re able to argue we are trying to save this program. We believe in this program. Paul Ryan will talk about his mother and his grandmother, and how Medicare was helpful to her. And I think that Republicans feel�� they’re in a much better place in terms of having an argument to put up against Democrats, having a plan to save Medicare, than they were before.��������������������

MARY AGNES CAREY: So it didn’t hurt Republicans for Romney to pick Congressman Ryan, who, Karen, you talk about as so identified with a sweeping reform to the Medicare program?

KAREN TUMULTY: And yet the overhaul of the program that Congressman Ryan has proposed remains unpopular. They try to keep pointing out that it won’t affect current seniors, that it won’t affect even people entering the program in the next few years.�� But it remains a pretty unpopular concept.

MARY AGNES CAREY: So John, are Republicans pulling even?

JONATHAN ALLEN:�� I don’t know that I’ve seen any polling that suggests they’re even yet on this issue, other than in a presidential year, everything gets thrown together,�� so when the two candidates get even, they suddenly are even on every topic.�� But if you take it a little bit outside of that down-to-the-wire presidential environment, I think Democrats still have an advantage on this issue.

The question is, is it what it once was? And are the Republicans laying the groundwork to be able to make significant changes to Medicare in the future if they win power, and be able to say: Look, well�� we have a mandate for this because we’ve been talking about this for a while.�� It’s obviously tricky politics. Democrats who are willing to talk about changes to the program to save money in private conference rooms in the Capitol are suddenly very unwilling and uninterested in doing that come election time, because they know they can go back to beating Republicans up on the idea that Republicans want to underfund it or disestablish it.

MARY AGNES CAREY: Now health care, whether it is the Affordable Care Act or Medicare — and we can talk about Medicaid in a second — ��but it’s playing in so many races. Sarah, I know you’ve also taken a look at the Wisconsin Senate race. Tommy Thompson, the Republican challenger and former governor of the state, and Tammy Baldwin, who’s a Democratic House member, running for an open Senate seat of Herb Kohl. Could you talk a little bit about the Wisconsin race?

SARAH VARNEY:�� Sure. If the Lungren-Bera�� race sort of mirrors Romney-Obama, in a way, the Baldwin-Thompson race is even more extreme because you have Ms. Baldwin, who’s a supporter of single payer which is the system they have in Canada, where you have�� private doctors, private hospitals, but the government is the sole insurer.

It’s interesting looking through some of her literature, and some of her ads which she’s putting forward this personal story that she has, that when she was 9 years old, she was being raised by her grandparents, and she had to go into the hospital for three months. And she was not covered as a dependent on her grandparents health plan. So it didn’t cover the hospitalization. When she came out and recovered, her grandparents were unable to get any insurance for her because of a preexisting condition.

So she talks a lot from a very personal place about how she arrived at her viewpoint of the role around the role health care in the United States. That’s obviously a direct contrast to Mr. Thompson, who does not support the Affordable Care Act and would really like to repeal the ACA, although he says he would like to preserve the wellness and prevention programs and he essentially wants to move to a market based plan.

KAREN TUMULTY: And he is a little bit compromised on this, because at least while the act was being hammered out he was saying positive things about it, and he also in his time as HHS secretary actually signed the waiver with which Mitt Romney was able to implement a very ACA-like law in Massachusetts.��

JONATHAN ALLEN: It’s a really interesting race here in Wisconsin, and it’s fascinating that Tammy Baldwin’s in shouting distance of a guy who was a very popular governor in part because of his willingness to experiment with public policy, which has now, as you point out, kind of boxed him in a little bit. Not only did he sign that waiver, but he was doing the [Medicare] prescription drug plan in 2003. He was literally on the floor of the House of Representatives — Mac and I remember that very harrowing three hour vote from 3 a.m. to 6 a.m. — he was down there twisting arms on the floor.

KAREN TUMULTY: And unpaid for we ought to point out, too. There were no offsets in the budget. This was on the credit card.

JONATHAN ALLEN: Right, it was a big deficit increaser. But also I think a law that starts to foreshadow what was going to happen in health care. When you actually deal with the public policy as opposed to just the elections, a lot of these guys are in similar places on the ideas. And that becomes trickier for him to get out of and just be against what is in Obamacare.

MARY AGNES CAREY: How is health care playing in the swing states? I’m thinking about Florida, the Connie Mack, Bill Nelson race. Closer to where we are in Virginia, the race for Senate there. Is Medicare a big issue in the swing states? Is the health care law a bigger issue in the swing states? Are they both predominant issues?

KAREN TUMULTY: When you go to different places, you hear different things. In the places that are particularly depressed or particularly hard hit by this economy, you hear a lot of people who have lost their jobs and who are worried about their own health care. In Florida, who is it who is really raiding Medicare has become a major, major part of the conversation.

JONATHAN ALLEN: I think there’s a real fear among seniors that Medicare won’t continue to be there, because it is on an unsustainable path unless there are some significant changes. And I think everyone who is serious recognizes that, whether or not they will say that outside of private conference rooms.

Marco Rubio, the Republican Senator from Florida, last time around ran on a platform that included reforming entitlements, included reforming Medicare in a way similar to what you’re seeing from Romney and Ryan now. I think a lot of people thought that was going to be very dangerous for him. I think it probably didn’t help him win, but he also did win. It didn’t prevent him from winning. And I think that Florida voters in particular are open to listening to the various ideas.

Now how they end up voting is another question, but they are at least open. I imagine older voters in other swing states are also somewhat open to hearing solutions. Because they don’t see how Medicare is sustainable without other changes.

KAREN TUMULTY: And people know their own circumstances. A lot of the pushback on the Affordable Care Act is from small businesses, too. Which has been certainly a part of Mitt Romney’s argument which is that these are the job creators.

SARAH VARNEY: One of the stories that I’ve been working on recently�� is following Democrats who voted for Reagan in 1980 and 1984. I was talking to voters in West Virginia, and the suburbs of Chicago, and in rural California, an area called Gilroy, which is the garlic capital of the world.

JONATHAN ALLEN: We’ll move a little bit farther away from you.

SARAH VARNEY: And it was interesting because the three voters that I ended up recording for the story, although I talked to many more than that, really ended up reflecting the three different places that you can end up on this issue.

One of the women, who lives in the suburbs of Chicago, is a Romney supporter. It’s her view that what Ryan and Romney are proposing is really no different than the Medicare Advantage plan that’s available today. And so she doesn’t see a problem with it. She thinks the ACA can be repealed and there would be really no impact on her or her family’s life.

Another voter I spoke to in rural West Virginia. These are all folks who were in their 30s and 40s in the 80s and are now on Medicare. So they’re older now – 60, 70 years old. And this one man is independent.�� He’s an undecided voter. He has said I just don’t really know who to believe. I don’t think if Obama stays in office he’s really going to be able to get much done with the Senate. And if Romney gets elected I don’t think he’s really going to have a lot of pull to really get anything done either.

But he’s very distrustful of this idea that the free market is really the place to turn to for an answer. He thinks there will be this cherry-picking by the insurance companies if they move forward with this Medicare plan.

And then this women in Gilroy, the garlic capital — she’s sort of bewildered. She’s going to vote for Obama. She just simply said it doesn’t make sense to me that if you have for-profit companies coming into the Medicare space that they’re going to be able to do this less expensively than Medicare —that if there’s a profit margin involved when there isn’t’ one now for the Medicare program, how on earth does that add up?

JONATHAN ALLEN: I think it’s fascinating that you were talking to a voter who said I don’t think Obama’s going to be able to do that much, I don’t think that Romney’s going to be able to do that much. But Sen. Daschle was in here earlier saying just how much power the administration has — not just in the health care law, the ACA, but also just sort of more broadly.

An administration we’ve found out over the years has a lot of power until Congress steps in and says, no, you can’t do that — through repealing regulations, through reactions to what administrations do. In particular in the ACA, the secretary of Health and Human Services was given a ton of power to implement. But even more broadly like you see with regulatory power, who is president makes a huge difference in the way that policies are implemented, in the way long-standing laws are interpreted. Then the courts and the Congress can sometimes jump in but are generally reluctant or unable to do so. So it’s interesting that they feel like maybe it doesn’t matter who’s president, that they weren’t going to be able to get something done. Sen. Daschle’s view was that the executive is extremely powerful.

MARY AGNES CARY: Let’s talk about Medicaid. Very different views from the candidates on Medicaid. Mitt Romney would turn it into a block grant. The president would expand it to as many as 17 million people. But then we know the Supreme Court gave states the right to either expand or not expand to this additional population.

Karen, how is Medicaid playing in the elections from your perspective? What have you seen and heard?

KAREN TUMULTY: It is pretty much the dog that isn’t barking, at least from what I’ve been hearing. There was a flurry of activity right after the Supreme Court decision in which states did get this option to drop out. But you talk to health care economists and they say this is the big wild card in the bill when the rubber hits the road and it has to become reality. There is no health care economist who doesn’t believe who doesn’t believe that you’re going to have to up those reimbursements of providers through the roof.

MARY AGNES CARY: You’re talking about payments to hospitals, to physicians, to those who provide the care to the Medicaid beneficiaries.

KAREN TUMULTY: That you are simply not going to be able to find providers for all of the additional people if states continue to reimburse doctors and hospitals at the very low rates that they do for Medicaid. So that does have potential to be the real element of this bill that could explode the cost.

MARY AGNES CARY: One thing that intrigued me: The president did a campaign ad on Medicaid. And he focused on the fact that Medicaid pays such a large percentage of long term care in this country, which a lot of people don’t understand until they experience it themselves.�� Is that resonating with voters, the Medicaid angle and the fact that perhaps if you don’t need it today you might need it tomorrow? Have you seen that Jon?

JONATHAN ALLEN: It’s an interesting choice for the president. We’re so accustomed to politicians ignoring the Medicaid population. Medicare is seen is sort of as this big group of people who are out there as potential swing voters, as people who are going to be animated as people who actually go to the polls. And with the Medicaid population, not as much.�� I don’t know whether it ends up resonating with voters. I do know this. It is the area where the two parties seem to fight the most without making any noise.

So President Obama wanted to expand Medicaid and SCHIP, the children’s health insurance program — huge amounts of money in the ACA went into that. When Paul Ryan came out with his first budget, what did do? He decided that he wanted to turn that into a block grant program, he wanted to take a lot of that money back out of the system. To save money, would be another way of looking at it. But these were not things that people talked about. They talked about what was the effect on Medicare. They talked about the health exchange. They talked about everything other than Medicaid, which largely serves the poor and disabled but also does long-term care as you point out. It will be interesting to see if Obama gets traction on that.

SARAH VARNEY:�� I can tell you in California at least, California has been very aggressive in implementing the Medicaid expansion, even several years earlier. So almost every county in California is involved in this initiative to expand Medicaid to uninsured adults. So those people are now being and have been for the last year being enrolled in this sort of Medicaid lite program, which starting on Jan. 1 2014, if all this goes forward, a switch gets flipped, and they are automatically enrolled into Medicaid. And I do wonder. These are people I’ve spent a lot of time with.

I did a story that looked at how people who are coming out of prison are disproportionately benefitting from this, because a lot of men, particularly, who come out of prison are uninsured. They’re adults with no children in the home, so this is – trying to get them enrolled with local providers, those sorts of things. These are not people that politicians necessarily care about – I’m sure they care about them, but they’re not trying to get their vote.

I do wonder though, at least in a state like California – obviously California will most likely vote for Obama – but nonetheless, I wonder if, in a way, it has sort of brought people into the fold a little bit more. Because before this they had just sort of been out in the wilderness on their own, completely uninsured, not connected to any kind of services at all. And there has been a lot of work done in the counties – even conservative counties – like Kern County, where Rep. McCarthy is from, to really educate people about why this expansion is happening and that it is in fact linked to the Affordable Care Act.

MARY AGNES CAREY: Jon, you were talking a moment ago, if I understood you correctly, about how Democrats may privately admit that they may need to make some changes in the way Medicare is done and how the program is delivered, but no one is going to do that now on the heat of the political season. And we talked a little bit about how some things that can happen in a divided government setting – the administration’s power. But let’s talk a bit more about divided government, which we may have next year.

One, who knows who’s going to get the White House? Republicans look like they’re going to get the House. The Democrats may or may not control the Senate – or do so by less of a margin.

Is there any room for Democrats to embrace the premium support idea, not as currently structured, perhaps, by Gov. Romney, but this idea of limiting the amount of money the government contributes for Medicare coverage? Or is that simply so hot of an issue that they would never go there?

JONATHAN ALLEN: Like most issues, if everybody in Congress joins hands and jumps off the cliff together, the public won’t notice until they get the bill, and then they may be angry.

I do think that there’s probably room for a lot of different policy solutions if they can agree to take a risk together. I’m not sure that the environment is there for that. We’ll have to see what happens after the election. I don’t foresee if you have a status quo, with President Obama staying in power, Democrats in the Senate, Republicans in the House – I don’t see John Boehner’s House Republicans suddenly saying: Boy, we ought to start compromising with Barack Obama now; he’s sure got a mandate.

So I think that if those changes are going to be made, they’ll probably be made sometime next year.�� It’s not likely to happen in a Lame Duck. I think that they would likely be slowly implemented, because no politicians wants to face the voters right away, much like ACA was kind of slowly implemented.

MARY AGNES CAREY: Nowhere near the midterms, right?

JONATHAN ALLEN: Right.�� With all these caveats, I guess at some point they’re going to have to make some changes. You just look at the numbers. Medicare eats a larger and larger percentage of the budget.

KAREN TUMULTY: That’s what I think that we all think: Someday, this mythical day far into the future will arrive, when there will have to be some grand bargain on entitlements. I don’t know that the system of deeply divided government that we have now is capable of that anymore.

It’s not 1983 anymore, where everybody could come together on a Social Security fix.

JONATHAN ALLEN: Can I toss out a counter view to that? I’m not suggesting this will actually happen, but Bill Clinton got his welfare reform law in his second term – I’m sorry he got the welfare law right at the end of the first term, but got the big budget deals early in the second term.

This was a situation where he wanted a legacy, where he felt like he had an opportunity to work with Republicans, or I think he moved toward them to get something done. If President Obama sees an opportunity to do some of those things, it is possible for him to focus on both sides. But I don’t think he’s going to get that unless he come for the Republicans pretty far.

KAREN TUMULTY: That was also after the Republicans themselves had an incentive to move, because they’d been through the government shutdown, and their own brand was looking pretty ragged , as well.

MARY AGNES CAREY: And I can’t imagine either party would want to go through that one other time.

Reflecting just for a moment again, last night – I know there have been some recent polls that show that Gov. Romney’s support among some women had increased. And there was a small back and forth on contraception, access to contraceptives, where the president was very pointed in his remarks.

Does that do anything to erode that measure Gov. Romney had over the president? Did the president sort of reclaim that issue last night? Sarah, what do you think how that will move forward?

SARAH VARNEY: It’s hard to know. I was actually watching the debate at the hotel bar.

MARY AGNES CAREY: Very focused on the debate, I’m sure.

SARAH VARNEY: Very focused on the debate over my glass of wine. So there were people from all over the country who were at the bar. And people sort of seemed to tune out when that issue actually was raised.��

I don’t know if that’s just simply the setting, of course. But even found it difficult to sort through what they were both saying. They were both kind of talking over one another. It seemed implausible that Mr. Romney would say something that was flatly untrue, as President Obama countered.

So I’m not really sure. I think it was very hard – just even as a viewer — to sort of follow that. And if you didn’t know the issue particularly well, I don’t know how you end up making a judgment on who won that point.

MARY AGNES CAREY: What do you think, Jon?

JONATHAN ALLEN: I think the question is: Why was Mitt Romney making such progress among women.

MARY AGNES CAREY: That’s a great question.

JONATHAN ALLEN: Older women, just like older men, have always been more inclined to be with Romney. As you go down the age range, they go closer and closer toward Obama, to the point where at the youngest age range, I think, Obama had an 18 point lead.

Why were women going over to Romney? Was it because he finally made the economic point to them? Or a national security point to them that made them think: I want this guy to be my president? ��Or is it because the contraception issue, the war on women idea backfired? If that’s the case, then maybe some of that will erode. But I don’t think Mitt Romney loses points with women from last night, if they were moving toward him because of issues other than the social issue, the health care issue.

KAREN TUMULTY: My understanding is the broad cohort of women, the women who were moving ��toward Gov. Romney were primarily white, upper-income women. And so I did notice, I thought President Obama last night was much more explicit, much more aggressive about arguing that contraception is part of a whole package of issues that are, in fact, economic issues for women.

JONATHAN ALLEN: We’ll have to see how that plays. If there are white women with money that you are talking about, is it that they are compassionate toward women who have less money, women who may need their employer to provide contraceptive coverage, or perhaps government funding of Planned Parenthood? Or do they look at it and say: Well, I’m taken care of, I don’t have to worry about whether a round of birth control costs $10 or $50? I think we’ll just have to wait and see.

MARY AGNES CAREY: As we all know, the election is just a few weeks away. I’d like to close with your thoughts on what you think the candidates have to say to voters to lock down those votes, as far as health care goes. Karen, I’d like you to start.

KAREN TUMULTY:��Well, I do think that President Obama’s embrace of the term Obamacare was a watershed. I think they finally realized that he had dealt himself this hand and they he had better go with it.

JONATHAN ALLEN: I think that the sale for Obama is that the health care system is better than it was when he took office and it’s going to continue to get better in the next four years and that he ought to be able to be in place to implement it. I think that’s case he needs to make.

On the other hand, I think Romney ��needs to make that his alternative view of the world will not, as people have criticized him for, through granny off the cliff. He needs to make people comfortable with the idea that you can make changes to Medicare and other health care programs that are compassionate and that serve the least among us without making cold, Machiavellian decisions.

MARY AGNES CAREY: All right, Sarah, you have the last word.

SARAH VARNEY: I think, to some extent, some of these arguments just seem to be circling around one another and you don’t necessarily get anywhere, around Medicare and the Affordable Care Act. I almost wonder if, as we talked about with Medicaid, if there is an opportunity for that issue to really come to the fore.

I think about my own father, when his mother was needing to go into a nursing home, she’s somebody who had to spend down all of her savings. She was a very proud women, who had saved up money. But in order to go into a nursing home, this is what she had to do. And I think there are enough people who are faced with that situation, for Democrats at least, if they really want to hit home on that issue, I think it’s an issue that hasn’t really been used as much as it probably could be, to at least get people to start listening again, when they may have already tuned out what feels to them just like a lot of noise.

MARY AGNES CAREY: Okay, well you’ve given us all so much to think about. I want to thank Sarah Varney, Jonathan Allen and Karen Tumulty. Thank you very much for being here. And I’d like to thank all of you for watching. I’m Mary Agnes Carey with Kaiser Health News.