OP-ED

The Lightweight Romney Health Plan

Mitt Romney has outlined his new health plan. He outlined five key steps in an op-ed in USAToday. Here is a summary:

Step 1: Give states the responsibility, flexibility and resources to care for citizens who are poor, uninsured or chronically ill.

Step 2: Reform the tax code to promote the individual ownership of health insurance.

Step 3: Focus federal regulation of health care on making markets work…For example, individuals who are continuously covered for a specified period of time may not be denied access to insurance because of pre-existing conditions. And individuals should be allowed to purchase insurance across state lines, free from costly state benefit requirements. Finally, individuals and small businesses should be allowed to form purchasing pools to lower insurance costs and improve choice.

Step 4: Reform medical liability. We should cap non-economic damages in medical malpractice litigation.

Step 5: Make health care more like a consumer market and less like a government program. This can be done by strengthening health savings accounts that help consumers save for health expenses and choose cost-effective insurance.

It looks to me like his health care outline is more intended to make conservative Republicans happy then to really propose ways to reform America’s health care system.

There isn’t one new idea here and it all comes straight from the 2010 Republican campaign playbook.

I have a number of questions:

  1. We all seem to agree that the biggest problem is the cost, and therefore the affordability, of health care. Where’s the cost containment in his plan?
  2. He talks about giving states the “resources” to take care of the uninsured and the poor. Just what resources, how much money, and where will that money come from?
  3. He wants to reform the tax code to permit individual ownership of insurance. But the real premium support most working Americans get is from their employer. When an employer provides health insurance it does so by paying an average of 70% of the cost–worth about $9,000 for family health insurance today. The health insurance tax benefit is worth perhaps 20% of that cost for most workers. How does Romney intend to make an individual system as effective in supporting the purchase of health care? How much support is he willing to provide and where will the money come from?
  4. He proposes guaranteeing insurability for those who are continuously covered. But to be continuously covered, an individual has to be able to afford the insurance. How will he assure consumers not just have access to insurance but also affordability?
  5. He proposes allowing people to purchase insurance across state lines so that they have access to lower cost insurance. Just which state has low cost and affordable health insurance?
  6. He proposes that individuals and small business be able to form purchasing pools to lower costs and improve choice. Presumably, the only difference from these pools and those now offered by insurance companies are that his pools would be exempt from state benefit mandates. How would he protect the existing small group and individual markets from “cherry picking” as the healthy would be enticed to leave the existing state-regulated pools while the sick remained where they could get more comprehensive coverage?
  7. He proposes medical malpractice reform. Experts generally believe the kind of reform he is proposing would lower the country’s health care bill by about $60 billion a year. However, that is only about 3% of our annual costs. What other cost containment proposals does he have?
  8. He says that his market reforms, such as expanding Health Savings Accounts (HSAs), will drive down costs. HSAs, in various forms, have been around for 20 years–since 2004 in their present form. Yet the free market has only embraced HSAs as a very small part of the system—about 10% of the market. Why does he believe the tinkering with their plan design he is proposing will quickly make them a significant part of the market or make them more affordable?
  9. What about Medicare? The Romney op-ed in USAToday doesn’t even contain the word, Medicare. His speech in Michigan today only made a passing reference to the Ryan Medicare plan, while promising a plan of his own in the future.
  10. What about Medicaid? He briefly mentions block grants for the states. But how much money would he give the states compared to what they have now?

It looks to me like Romney’s newest health care plan is more about embracing the conservative Republican “free market” campaign talking points list of aging health care ideas in order to prove his bona fides in the primary states, more than it is a serious health care reform proposal.

I doubt even the “Tea Party” Republicans, it is meant to please, will buy it.

Robert Laszweski has been a fixture in Washington health policy circles for the better part of three decades. He currently serves as the president of Health Policy and Strategy Associates of Alexandria, Virginia. Before forming HPSA in 1992, Robert served as the COO, Group Markets, for the Liberty Mutual Insurance Company. You can read more of his thoughtful analysis of healthcare industry trends at The Health Policy and Marketplace Blog, where this post first appeared.

Livongo’s Post Ad Banner 728*90

34
Leave a Reply

33 Comment threads
1 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
6 Comment authors
Rob NRob N., PharmD, MSRob N.Virginia Health Insurance ExpertMargalit Gur-Arie Recent comment authors
newest oldest most voted
Peter
Guest
Peter

“What in the world does tax free employer compensation have to do with comparing the “traditional insurance based model” versus HSA/HDP?” “For 2010, the annual contribution to a HSA is $3,050 for an individual and $6,150 for a family. These figures will vary from year to year but tend to be around the $3,000 and $6,000 marks. Your employer can also make contributions to your HSA, but you still need to stay within the annual contribution limits. If you’re aged 55 to 64, you can make ‘catch-up’ payments to the tune of $1,000 for 2010. The Advantages of Having a… Read more »

Rob N
Guest

What in the world does tax free employer compensation have to do with comparing the “traditional insurance based model” versus HSA/HDP? Both are tax free employer compensation. Both would take a huge hit and pass on more costs to employees if it went away. That argument is terrible and appears a bit desperate. Look, my employer gave nothing extra when they offered the HSA/HDP. They took the savings from moving to the HDP and paid for the whole plan and gave us the balance as a match in our HSA. It is budget neutral. For any company, this decision could… Read more »

Peter
Guest
Peter

“I will stick with the reality of today. ”

Tell me how HSAs/HDHPs have changed so much in 5-6 years? Maybe you could also tell me if these plans would be as attractive if you did not receive the benefit as tax free(subsidized) employer compensation? Maybe, there is a free lunch after all.

Virginia Health Insurance Expert
Guest

@Margalit – I don’t work for an insurance company, I’m an agent and work for people like you. I have nothing to do with price negotiations, networks, or anything else. You also misunderstood what I said – if you want lower prices, talk to the providers. Ask your hospital why they charge $2500 for an MRI when the imaging center will do it for $400. No, I do not find it disturbing that insurance companies are reporting record profits because statistics can be skewed very easily to how the person wants to present them. For example, if a company makes… Read more »

Margalit Gur-Arie
Guest

Rob, Your HSA is working fine for you because your employer is very generous. Folks at Walmart (and many other places) don’t get such a nice arrangement. Folks that buy on the private market don’t either. As to offsetting the cost of charity care for hospitals, I think that not having to pay taxes (non-profit?) is a pretty adequate offset. @Virginia, as far as I can tell, consumers hire insurance companies to pay for their health care needs in a group purchasing manner. Is there a particular reason why you think that it is not your job to negotiate good… Read more »

Peter
Guest
Peter
Rob N
Guest

Thanks for sharing your articles from half a decade ago. I will stick with the reality of today. You can keep thinking nothing has changed in 5-6 years.

Rob N
Guest

Peter, Where are you getting your information from. You seem to make some bold statements that do not correlate with reality. I have presented facts and your best argument is that I am in a silo and do not represent the world. My silo is a company with 23K employees and the same type of plan is offered throughout my state by other companies. You say HSAs do not save people money and guess at my circumstances, I have young kids and use a lot of healthcare, and HSAs have saved me a lot of money. I am wondering if… Read more »

Peter
Guest
Peter

“You seem to have a hard time understanding the difference between providers and the insurance company.” There are just providers of health care and providers of healthcare insurance then there are patients. “Sounds to me like you want a free all-you-can-eat healthcare buffet and patients shouldn’t have to actually plan anything for themselves or shop around based on price like they do with every other single industry.” On the contrary, I am for driving down costs more than anyone, and there is no free lunch, but healthcare, as has been discussed here many times before you started posting is not… Read more »

Virginia Health Insurance Expert
Guest

@Peter – You seem to have a hard time understanding the difference between providers and the insurance company. If you want a lower price, talk to your doctor, not the insurance company! They make agreements with the insurance companies for network patients. Let me say this again – there is no such thing as a free lunch. You want a co-pay? Fine, it’ll cost you a lot more money and drive up everyone’s healthcare costs. Sounds to me like you want a free all-you-can-eat healthcare buffet and patients shouldn’t have to actually plan anything for themselves or shop around based… Read more »

Peter
Guest
Peter

“That’s because employers are shifting more of the price of insurance to workers, resulting in higher copayments and deductibles.” Well DUH! HSA/HDHP have not lowered system costs for patients one cent, they have lowered claims by, “residents cut back on imaging tests, chose generic drugs, or postponed elective procedures such as knee replacements.” How much knee pain should a patient endure in order to afford the deductibles/co-pays? Why is the patient now the doctor is determining if that image is necessary? FSA/HDHP were developed because insurance companies needed a product to push that gave the facade that the insurance costs… Read more »

Virginia Health Insurance Expert
Guest

@Peter & Margalit – I think you do not understand how health insurance pricing works. There is a cost for everything – when you have a policy with low deductible and co-payments for services instead of a simple deductible + 100% coverage afterward, you are paying the insurance company an awful lot of money to do some paperwork for you, especially in the individual market where the difference in pricing between HSA and co-pay plans with equal out of pocket expense maximums. Speaking of cost-sharing reducing the utilization rate (which lowers health insurance premiums), look what’s finally happening in Massachusetts… Read more »

Peter
Guest
Peter

“Your math does not match what I am seeing. I work for a large not-for-profit health system.” Then that’s why what you’re narrowly seeing is a Cadillac HSA/HDHP. Now look at the rest of the world. “The only small downside is that you need to have the money in your account prior to using it (unlike an FSA). So, for your first year’s first few months you are at some risk” What kind of risk? That would mean you’ve bet your illness won’t be too severe, lengthy or costly. “if you live pay check to pay check” The higher the… Read more »

Rob N., PharmD, MS
Guest

Margalit, Your math does not match what I am seeing. I work for a large not-for-profit health system. I previously paid $80 per pay period (every 2 weeks) x26 pay periods/year for an annually premium cost of $2080. My company now pays the entire amount of my high deductible plan (my cost is $0). They also match my HSA up to $1500. This means that I start off with a net $3580 compared to my colleagues who opt for a $250 deductible plan. I have done the math on this in multiple scenarios, in no scenario is the HSA a… Read more »

Margalit Gur-Arie
Guest

@Virginia Just to be clear, people as a group do pay the entire price for their health care, either through premiums or through taxes. Nobody else pays for health care other than people. Certainly not corporations. Whatever employers pay is in lieu of wages and on top of that it is passed down to consumers through higher prices for whatever widgets they make. I assume that what bothers you is that individual people don’t pay exactly what their individual expenditures are at a certain time. I thought that’s what insurance is supposed to be for. Either we have insurance, or… Read more »

Peter
Guest
Peter

HSAs are good for people who don’t need medical care.