There is no doubt that the campaign to “repeal and replace” ObamaCare will have its weakest standard bearer if Mitt Romney becomes the Republican candidate for President. His embrace of an “individual mandate” to buy health insurance or pay a penalty, as legislated in his 2006 Massachusetts health reform, is anathema to those faithful to the ideal of limited government. When Mr. Romney declares that he will issue a universal waiver from ObamaCare’s regulations as his first executive order, the people who should be voting for him fear that such action would be a substitute for repeal, instead of a preparation for it. (Do these folks really think a clean repeal bill, like the one passed by the House of Representatives in January 2010, will be on the president’s desk on inauguration day?)
But maybe we should look at it another way: If Mitt Romney had never signed his 2006 law (which was motivated, as the president’s men are so fond of telling us, but an idea generated at The Heritage Foundation), those of us committed to defeating ObamaCare would never be in the fortunate position we are today – the whole, ungodly mess hanging by a thin thread after a brutal hazing in the Supreme Court last week.
Without Massachusetts’ 2006 law, there is almost no likelihood that the Democrats would have written an individual mandate into the bill. Instead, they would have just hiked taxes. The only reason they painted a thin varnish of so-called “individual responsibility” onto the bill was so that they could pin some of the blame on Mitt Romney and certain conservatives who had embraced it. As noted by Avik Roy, the individual mandate was traditionally anathema to liberals, who prefer straight-forward tax hikes.
Americans believe in second chances. The oral arguments before the Supreme Court last week were a rare opportunity to dispassionately re-examine the divisive healthcare debate of two years ago. What happens if, after the smoke clears, we get a second chance at healthcare reform?
We’ve long known that healthcare will be a central theme in the 2012 presidential contest. The High Court’s deliberations and June decision only reinforce that reality for President Obama and Governor Romney.
Unlike with the Patient Protection and Affordable Care Act (PPACA), the constitutionality of Governor Romney’s Massachusetts law has never been seriously questioned. States, not the federal government, have police powers, allowing them to require purchases (car insurance, taxes and licensure) and to pass wide-ranging public health laws and public safety laws. The Bay State law enjoys broad popular support.
In contrast, the case before the Supreme Court was brought by the majority of states. Regardless of what the Court decides, the PPACA will continue to polarize the country.
President Obama may cite Romney’s Massachusetts reform as inspiring his efforts, but there are profound differences in the size, reach and financing of the two laws. Elected just six months after the law’s passage, Romney’s successor, Democratic Governor Deval Patrick, has obscured some of those differences by taking a big government approach to implementation.
Where Romney sought an open marketplace for individuals to purchase benefit plans ranging from catastrophic to generous, Patrick has drastically limited choices and mandated minimum coverage levels beyond private-market norms.
In politics, a month is a lifetime, and 7 months is an eternity. It’s four months from now to late June when the Supreme Court issues its ruling on the health law, and it’s several months until the election.
No one knows what will happen between now and the election. But whatever occurs, it will be a psychological and political time.
Democrats will put on a brave face. They will say it’s not over until it’s over, that the individual mandate was originally a Republican and Romney idea, that the justices will come to their senses, that this is a moral not a constitutional issue.
Republicans will say that the health law is a train wreck, that it was rooted in ego and arrogance of an overly ambitious president, that Democrats poisoned the whole politics process by completely ignoring the other party and the American public, and that the whole idea of individual and Medicaid mandates is toast.
If they are smart, and there is no guarantee of that, the GOP will issue a detailed alternative plan resting on incremental market reforms with proper government oversight.
“Inaction “ on Massive Scale
Over the next seven months, we are likely to have “inaction,” if I may borrow a term from the hearings, on a massive scale.
Former Gov. Mitt Romney has taken considerable heat during the Republican primaries for the health-care legislation that passed while he was in office.
Sadly, election-year politics have overshadowed the real lessons of Massachusetts’ experiment.
The core question then-Gov. Romney was trying to answer was this: Should Massachusetts continue to pay hospitals more than $1 billion a year to care for the poor, or should it create a way for individuals to purchase their own insurance?
Romney’s original proposal was simple: Stop subsidizing expensive hospital care and instead require all residents to carry at least catastrophic insurance. Anything beyond that would be a matter of individual choice. The idea was to prevent taxpayers from having to pick up the tab for people unable or unwilling to pay for their own medical care.
To facilitate reform, Romney’s plan established a central agency, an “exchange,” where individuals could buy health insurance directly.
Though the overwhelmingly Democratic Legislature amended Romney’s proposal, the new law, if properly implemented, could have made the health-care market far more customer-focused.
But that didn’t happen. Just months after the law was passed Romney’s successor, Democrat Deval Patrick, became responsible for implementing the 2006 law. Since then, almost every key bureaucratic decision has leaned toward government control and away from individual decision-making and the market.
For example, the exchange’s idea of “minimum coverage” is equal to some of the most generous plans in other states. Additionally, roughly 40 percent of the people in the exchange pay no monthly premium for insurance, while small businesses have been hit with a variety of onerous requirements. Instead of creating a market with many choices, insurance has been over-standardized and the number of available plans limited, curbing innovation in plan design.
As I pointed out in a previous post, Theda Skocpol’s wonderful book, Boomerang, provides many telling details about Bill Clinton’s futile efforts to reform the U.S. health care system in the early ’90s. The book details many of the mistakes that the Clinton team made in drafting and promoting the legislation. But the failure of health care reform does not rest solely at the president’s feet. Instead, we, the general public, are also to blame. We ultimately got the policies we deserved.
Skocpol relates a powerful anecdote that nicely captures the sense of public confusion surrounding the general public during the Clinton reform efforts. It was March of 1994, and the Clinton team was trying to convince reluctant legislators to craft a bill consistent with its general approach to health care reform, which was a politically moderate bill that shunned the single payer plan preferred by liberals in favor of a bill based on “managed competition,” an idea embraced early on by moderate Republicans. Around this time, a Wall Street Journal/NBC news poll asked people what they thought of a plan that would “guarantee a standard private health benefits package… and promote competition… and require employers to buy insurance” for their employees. This description fit the Clinton plan to a “t,” and 76 percent of the public viewed it favorably. The dude had found the policy sweet spot!
Only one problem. When that same poll asked people if they approved of the “Clinton plan,” only 37 percent demonstrated support.
Public contradictions over health care reform run even deeper than antipathy to anything Clinton-esque. In its own polling, for example, the Clinton team learned that any plan they crafted that emphasized guaranteeing people “standard or basic” health care benefits would fail, because people wanted “comprehensive benefits,” feeling like it was only these more generous benefits that would be relevant to their own lives. (The administration also learned that the words “plan” and “program” were, ahem, program killers!) At the same time that the public clamored for comprehensive benefits, people also expressed their skepticism that a Democrat like Clinton could craft a health care reform bill that wouldn’t burden the taxpayers with a huge new expense. Well, of course Clinton couldn’t do that. It’s kind of hard to give everybody a Lexus at Hyundai prices!
It’s too bad former Massachusetts Gov. Mitt Romney doesn’t want to talk about his state’s health care reform legislation on the campaign trail. If he did, he’d have a pretty good story to tell.
The reform plan, which President Obama used as a model for the national reform, lifted the number of insured residents in the Bay State from 86.6 percent in 2006 to 94.2 percent in 2010, according to a new study published yesterday by Health Affairs.
An expansion of public programs didn’t account for the gains. The number of people with employer-based coverage rose to 68 percent of the adult population in 2010 from 64.4 percent four years earlier. This is exactly the opposite of what many business groups are claiming will happen after the national reform goes into effect in 2014.
Moreover, out-of-pocket expenses declined for the average beneficiary. The number of people reporting they paid 10 percent of their family income on health care fell from 9.8 percent to 6.1 percent over the four years. Again, early fears that the Massachusetts reform would lead to a major shift in costs to consumers have not panned out.
Preface: In the past few weeks Governor Romney has received withering criticism for his support for the Massachusetts Health Plan and his seemingly hypocritical opposition to Obamacare. Frankly, his responses to this criticism have not been stellar. I sometimes wonder if he realizes that he is on firm ground here. So as a favor to the Governor, I offer this prepackaged statement:
My fellow Americans. Not a day goes by when some of my colleagues in the Republican Party accuse me of hypocrisy for supporting the Massachusetts Health Plan when I was governor of that great state, while opposing Obamacare. I cannot respond to this accusation in a simple sound bite. So please lend me your ears for five minutes while I explain my position.
My job as governor was to implement policies reflecting the wishes of the people of Massachusetts. By approving the Massachusetts Health Plan, I did what my constituency elected me to do. I am proud to have signed the legislation authorizing the Massachusetts Health Plan, but this does not mean that I support Obamacare.
My critics point out two similarities between the two plans. Both plans mandate health insurance purchase and both create health insurance exchanges. Both features were right for Massachusetts. Health insurance markets do not work perfectly; that is why there isn’t a single state, red or blue, that does not heavily regulate them! Many individuals are shut out from buying health insurance. If they get sick, they face financial ruin. And if they are unable to pay for their medical care, providers shift the costs onto the rest of us.
The health insurance exchange levels the insurance playing field and assures that everyone can purchase insurance at affordable rates. Every health economist with whom I have spoken tells me that the exchange will not work without a purchase mandate. Once everyone is buying insurance, the cost shift will end; this will hold down health insurance costs for everyone.
Romney’s remark last week about firing your insurance company apparently harmed him little in the New Hampshire primary. But as the quote has rocketed around, it might be misleading some into thinking that the Massachusetts health care reforms that Romney signed into law made it so people can willy-nilly get rid of an insurer that doesn’t pay their claims on time.
The comment deserves a second look. Can you really fire your insurance company? The answer is that it’s darn difficult even in Massachusetts—the land of Romneycare.Continue reading…
Presidential candidate Mitt Romney’s reform plan for Medicare is just as cautious―and carefully vague on some key details―as might be expected from an politician famously sensitive to the winds of public opinion.
Romney’s proposal looks a lot like those offered by last year’s Rivlin-Domenici Debt Reduction Task Force and the 1999 National Bipartisan Commission on the Future of Medicare. Like those proposals, and also the plan offered by House Budget Chair Paul Ryan, Romney’s would convert Medicare into a premium support program in which beneficiaries would receive a fixed contribution towards the cost of coverage. However, unlike Ryan’s plan―received so negatively by seniors that it cost Republicans a House seat―beneficiaries would still have traditional fee-for-service Medicare as an option.
Under the Romney proposal, commercial insurers would compete with traditional Medicare in offering a basic set of benefits. Beneficiaries would choose from a “menu” of plans, paying out-of-pocket for any difference between the premium and the federal support contribution. Lower-income individuals would receive larger premium support amounts, while beneficiaries selecting options with premiums below the support amount would keep the savings. Also, as with the other similar proposals, there would be a gradual increase in the Medicare eligibility age from today’s 65 years.
Although it was immediately attacked by various liberal commentators, the Romney proposal seems on the surface to be a reasonable approach to a program that otherwise is headed for bankruptcy. How reasonable, however, will depend on numerous details that have been carefully left vague. (Interestingly, the proposal is nowhere mentioned on candidate Romney’s campaign web site.)
Almost everyone thinks we should insure the uninsured. I don’t recall even a single dissenter. Yet it is precisely when everyone agrees on something that thinking begins to get very sloppy. So let me be the devil’s advocate and challenge the idea.
Why do we want to insure the uninsured? Forget about the costs, for a moment. Are there any benefits? What are they? I can think of four candidates. If people are insured:
- They may get more health care.
- They may get better care.
- They will enjoy protection from the financial effects of catastrophic illness.
- They will be less likely to be free riders on the charity of others.
The first three items are “it’s for his own good” benefits and, frankly, the case for them is pretty lame — especially in the context of RomneyCare and ObamaCare. If you expand the demand for health care but do nothing to increase supply, people in the aggregate will not be able to get more care. One person’s gain in care will be offset by someone else’s loss. (At least that tends to be the case, when the principal currency patients use to pay for care is time and not money.) Since the costs of non-price rationing will rise in the process, the whole exercise must make society as a whole worse off.
The same objection applies to the idea of “better care.” Better care for one person must be obtained at someone else’s expense, if the supply of medical resources is unchanged.
[I suppose you could make an additional argument: If we insure the uninsured, they will have a better chance of getting a “fair share” of health care. In other words, care will be distributed more equally. While that argument makes sense in the abstract, it doesn’t work if you segregate the previously uninsured into plans that pay providers below-market rates — as both RomneyCare and ObamaCare do — and cause them be pushed to the rear of the waiting lines. See below.]