RomneyCare Revisited

Sally C. Pipes
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Posted: Nov 14, 2007 8:50 PM
RomneyCare Revisited

It’s one thing to pass a law, hold a press conference, and boldly declare to have solved an intractable public policy problem, such as the lack of universal health insurance. It’s quite another to actually have the so-called solution deliver as promised.

That’s the lesson that Republican presidential hopeful Mitt Romney relearns every day, as he woos voters in Iowa and New Hampshire, distancing himself from his past health care handiwork even as those he left behind in Massachusetts struggle to make the plan work.

Romney’s Massachusetts plan has been troubled from the start, performing particularly well with members of the media but less well with the premium-paying public. Universal coverage was jettisoned almost at the outset, when officials accepted the argument that the plans were not affordable for 20 percent of the uninsured. The state has enjoyed one year of artificially low premiums, due to the intervention of Democratic Governor Deval Patrick and the strong imperative not to let the plan fail before it enrolled its first customer. But the law of gravity cannot be repealed, even by the most charismatic and determined politicians.

It’s now crunch time in Massachusetts. The estimated 500,000 residents who still haven’t purchased health insurance must sign up by November 15th or risk being fined $219 when tax time rolls around in April. Compared to the premiums, the many may elect the fines. But they all won’t do so quietly.

Like all the current Democratic presidential candidates’ health reform plans, Romney’s Massachusetts reform was premised on the idea that universal coverage was a practical, if not moral imperative. It took a bipartisan effort to pass. Sen. Edward Kennedy (D-MA) worked on the state’s Democratic legislators. Romney handled the business community. It is always assumed by academics, policy analysts, and members of the media - the cheerleaders for universal health coverage - that the people will jump at a chance to achieve health security at a mere fraction of their monthly wages.

The result was a blended plan that employed both a carrot and a stick. The carrot is taxpayer subsidized insurance and the ability to use pre-tax dollars to purchase individual plans through a state created and administered bureaucracy. The stick: not taking responsibility will end in a fine for both individuals and employers.

The carrot’s been dangling for many months. Now, here comes the stick.

We’ve learned and relearned many lessons in Massachusetts. First, people will accept free services and they have enrolled in the taxpayer funded plans. According to the state, 56,000 more people now sport Medicaid cards and another 101,000 in the zero premium plans offered as a result of the reform.

The corollary lesson, however, is not so happy. People don’t welcome a requirement to pay for something that they aren’t already purchasing. According to the best estimates, to date, a mere 26,000 have signed up for subsidized plans that require premiums. Only 8,306 have purchased the unsubsidized plans offered through the state’s new bureaucracy.

This has huge implications for state spending. The plan doesn’t contain any meaningful cost-control mechanisms. The bureaucrats managing the new health care agency are expressing concern about cost trends. People purchasing the insurance are older and sicker than projected, resulting in losses to the insurance carriers. Outside of the plan, Massachusetts health insurers have projected increased health premiums of 8 to 12 percent. The plans for which the taxpayers are subsidizing will likely require similar increases in cash.

At this point, it seems smart for Mitt Romney to run from his plan and distance himself from its design even as Hillary Clinton and other Democrats embrace it. The goal of universal coverage has already been abandoned. If the government can’t get people to purchase insurance in the next few days, Romney’s handiwork will end up as another expansion of big government—enrolling thousands more in Medicaid, creating an expensive bureaucracy to expand taxpayer subsidized insurance, sticking the taxpayers with much of the cost. That’s not an achievement about which one brags on the stump—especially not in a Republican primary.