The Spectacle Blog

The Healthcare Speech Romney Should Give

By on 5.31.11 | 12:19PM

Health Economist John Goodman lays out the speech that Mitt Romney should give to placate his conservative doubters without running from his legacy as governor of Massachusetts: 

As governor of Massachusetts, I presided over the most important state-level health reform in our nation's history. From that experiment I've learned a great deal about what works and what doesn't work in the ongoing effort to lower costs, raise quality and improve access to care.

We accomplished four things that are worth emulating nationwide.

First, we cut the number of uninsured by more than half in my state. If that were replicated nationwide, we would have 25 million newly insured citizens.

Second, we insured the uninsured mainly by using money already in the system (for Medicaid and emergency room care), not by raising taxes or cutting benefits for the elderly and the disabled - as ObamaCare does.

Third, we created tax fairness. Massachusetts is the only state in the union where employees get the same tax relief for health insurance, whether it is provided at work they purchase it on their own. This is in contrast to the arbitrary and unfair way the tax system treats people in other states and the much greater unfairness people will be subjected to under ObamaCare.

Finally, we put partisanship aside and sought everyone's help in achieving these goals. Left and right, Democrat and Republican - all worked together toward a common end.

On the other hand, there are things we did that I would not recommend to others.

First, there is no need for a mandate. In Massachusetts, as in other states, people pay lower taxes if they insure and higher taxes if they do not. We have added additional subsidies and fines in my state to make being insured even more attractive. These financial incentives alone account for almost all of our success in insuring the uninsured. Once the government starts dictating the content of everyone's insurance plan, however, the special interests set in, bloating the benefit package and making it prohibitively expensive. By making health insurance expensive and one-size-fits-all, mandates actually defeat the goal of universal coverage.

Second, while increasing the number of people with insurance, we did not create one new doctor or one new nurse. Nor did we deregulate and allow insurers and providers of care to get out from under a mountain of regulations that prevent cost-effective products. As a result, the wait to see a new doctor in Boston is longer than in any other U.S. city. Our emergency room traffic is higher today than before the reform!

I believe the supply side of the market can accommodate a large increase in the number of insured, but only if we give them the freedom to meet the new demand efficiently.

Third, in Massachusetts we adopted the same model of managed competition that is in HillaryCare and in ObamaCare. I like the idea of people choosing among competing health plans. But under managed competition, the premium is the same for everyone, regardless of expected health care costs. That means insurers try to attract the healthy and avoid the sick. After enrollment, the health plans face perverse incentives to overprovide to the healthy (to keep the ones they have and encourage the enrollment of more just like them) and underprovide to the sick (to encourage their departure and discourage enrollment by any more of them).

A better model is the Medicare Advantage program, where seniors also have choice and competition. But in that system, the federal government goes to great lengths to try to ensure that the premium paid for each person matches as closely as possible that person's expected costs. Because the amount the government pays for each senior can differ by ten-to-one or more, insurers compete just as aggressively to enroll a cancer patient as they do to enroll a healthy patient. I believe we can do something similar for the nonelderly population.

Finally, you cannot allow people to game the system. In Massachusetts, some folks remain uninsured while they are healthy, obtain insurance after they get sick, and then drop their insurance again after they get their medical bills paid. We call these folks "jumpers and dumpers" Under ObamaCare we are about to repeat this mistake nationwide. We do not allow people to game the insurance system with impunity in other federal programs. It's not allowed in Medicare Part B, in Medigap insurance or in the Medicare drug coverage program.

Were I president of the United States, I would take these lessons to heart. I would replace ObamaCare with a workable health system - copying what works and avoiding what doesn't work, based on my experience in Massachusetts.

I believe I am the only candidate who actually knows how to do that.

In a way, this would be a very compelling speech. Mitt Romney is better positioned than any other politician to understand both the strengths and pitfalls of Obamacare and other health care "reform" measures. 

Yet concerns about Romney's health care ideas and proposals aren't limited to the policy details. Ross Douthat nicely summed up one troubling aspect about the political philosophy underlying Romney's push for the Massachusetts health care overhaul: "Romney's famous health care bill (with sought access first, and promised cost containment later) is arguably the quintessential example of public policy that looks reasonable in an age of go-go growth, and irresponsible in an age of austerity." 

Romney deserves some compassion for facing conservative criticism for a health care approach that was developed with the help of the Heritage Foundation and thought generally respectable at the time. But Republicans can't be blamed if the recession and the prolonged debate over Obamacare clarified the problems with fiscally extravagant legislation and the Romneycare/Obamacare approach to health care. Romney may be just the manager needed to navigate the post-Obamacare health care landscape, but Republicans may not be looking for a manager. They may be seeking someone with a philosophical outlook that wouldn't have accomodated Romneycare and everything it entails. 

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