In a fascinating profile of Mitt Romney as Bain Capital businessman, Benjamin Wallace-Wells explains the shorthand version on why Romney tackled health care as Massachusetts governor:
Stemberg served then (as now) on the president’s council of Massachusetts General Hospital, and he remembered a conversation he’d had with a doctor named Peter Slavin, who has been the chief executive of that hospital system for most of the last decade. “[Slavin] mentioned this huge problem,” Stemberg told me, “which is all these uninsured people clog the ER.” The hospital had to treat them. “There was a law that said that all the insurance companies had to fund the free care. That system made absolutely no sense. “It was, as Stemberg told Romney, “the least efficient way to serve them.”
And thus Romneycare was born, sold in large part as a way to combat the free-rider problem. It was either a misdiagnosis of the problems underlying the health care system or it was purposefully a state-level workaround of a problem-causing federal regulation, the Emergency Medical Treatment and Active Labor Act (EMTALA). Avik Roy explains how EMTALA creates and exacerbates free-rider problems in hospitals.
EMTALA requires that hospitals provide emergency care to anyone who needs it, regardless of citizenship, legal status (i.e. illegal immigrants), or ability to pay. Technically speaking, EMTALA only requires this of hospitals that accept Medicare and Medicaid insurance. But since Medicare and Medicaid represent more than half of all health expenditures in the United States, very few hospitals are equipped to function without government funding, and therefore, nearly every hospital in the United States is covered by EMTALA.
EMTALA is, indeed, the central factor in the "free-rider" phenomenon. The government forces hospitals to care for these individuals, without financially compensating hospitals for the cost of doing so. It is one of the largest and most coercive unfunded mandates in the United States.
There's only one problem with Romney's continued defense of Romneycare: it hasn't worked. As Sally Pipes points out, emergency room visits increased by 9 percent in the years following Romneycare's passage. And the Heritage Foundation's Bob Moffitt, a longtime supporter of the Massachusetts health law, has admitted that the mandate approach has not worked:
Yes, in the early 1990s, we, along with other prominent conservative economists, supported the idea of such a mandate. It seemed the only way to solve the "free-rider" problem, in which individuals can, under federal law, walk into any hospital emergency room nationwide and rack up big bills at taxpayer expense.
Our research in the ensuing two decades has led us to realize our initial idea was operationally ineffective and legally defective.
It's understandable that Romney has striven to defend his Massachusetts plan. It was his signature achievement as Governor, and to renege would be to give up what he has built in the media as a major accomplishment. But in grassroots conservative circles, Romney's devotion to his Massachusetts health care law is an unacceptable original sin.
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