ECONOMICS:For those who get cover through it, Medicaid is a much-needed form of financial aid. It is also, quite literally, a life-saver

THERE’S A lot we don’t know about what Mitt Romney would do if he won. He refuses to say which tax loopholes he would close to make up for $5 trillion in tax cuts; his economic “plan” is an empty shell.

But one thing is clear: if he wins, Medicaid – which covers more than 50 million Americans, and which president Barack Obama would expand further as part of his health reform – will face savage cuts.

Estimates suggest a Romney victory would deny health insurance to about 45 million people who would have cover if he lost, with two-thirds of that difference due to the assault on Medicaid. So this election is, to an important degree, really about Medicaid. And this, in turn, means that you need to know something more about the programme.

For while Medicaid is generally viewed as healthcare for the non-elderly poor, that’s only part of the story. And focusing solely on who Medicaid covers can obscure an equally important fact: Medicaid has been more successful at controlling costs than any other major part of the nation’s healthcare system.

So, about coverage: most Medicaid beneficiaries are relatively young (because older people are covered by Medicare) and relatively poor (because eligibility for Medicaid, unlike Medicare, is determined by need). But more than nine million Americans benefit from Medicare and Medicaid. Elderly or disabled beneficiaries account for most of Medicaid’s costs. Contrary to what you may have heard, the great majority of Medicaid beneficiaries are in working families.

For those who get cover through it, Medicaid is a much-needed form of financial aid. It is also, quite literally, a life-saver. Romney has said that a lack of health insurance doesn’t kill people in America; oh yes, it does, and states that expand Medicaid coverage show striking drops in mortality.

There’s a widespread perception, gleefully fed by right-wing politicians and propagandists, that Medicaid has “runaway” costs. The truth is the opposite. While costs grew rapidly in 2009-2010, as a depressed economy made more Americans eligible for the programme, the longer-term reality is that Medicaid is significantly better at controlling costs than the rest of our healthcare system.

According to the best available estimates, the average cost of healthcare for adult Medicaid recipients is about 20 per cent less than it would be if they had private insurance. The gap for children is even larger. And the gap has been widening over time: Medicaid costs have consistently risen a bit less rapidly than Medicare costs, and much less rapidly than premiums on private insurance.

How does Medicaid achieve these lower costs? Partly by having much lower administration costs than private insurers. It’s always worth remembering that when it comes to healthcare, it’s the private sector, not government programmes, that suffers from stifling, costly bureaucracy. Medicaid is also much more effective at bargaining with the medical-industrial complex.

Consider, for example, drug prices. Last year a government study compared the prices Medicaid paid for brand-name drugs with those paid by Medicare Part D – also a government programme but one run through private insurance companies and forbidden from using its market power to bargain for lower prices. The conclusion: Medicaid pays almost one-third less on average.

Is Medicaid perfect? Of course not. Most notably, the hard bargain it drives with health providers means quite a few doctors are reluctant to see Medicaid patients. Yet given the problems facing American healthcare – sharply rising costs and declining private- sector coverage – Medicaid has to be regarded as highly successful. It provides good if not great coverage to tens of millions of people who would otherwise be left out in the cold and does much right to keep costs down.

By any reasonable standard, this is a programme that should be expanded, not slashed – and a major expansion of Medicaid is part of the Affordable Care Act.

Why, then, are Republicans so determined to do the reverse, and kill this success story? Partly it’s their general hostility to anything that helps the 47 per cent – those Americans whom they consider moochers who need to be taught self-reliance. Partly it’s the fact that Medicaid’s success is a reproach to their anti-government ideology.

The question – one the American people will answer very soon – is whether they’ll get to indulge these prejudices at the expense of tens of millions of their fellow citizens.