Healthcare

Mitt Needs to Shed Romneycare Millstone

Call it Mitt’s millstone. It’s heavy and it’s weighing him down. And it could undermine his bid for the 2012 Republican presidential nomination if he doesn’t get rid of it—and soon. 
The millstone is RomneyCare, the healthcare reform legislation then-Massachusetts Gov. Mitt Romney signed into law in 2006, to the accolades of Democrats, including Sen. Ted Kennedy. 

Romney has been defending the legislation since the day he signed it, even as most conservatives attacked it. The notable exception was the Heritage Foundation, some of whose staff played a role in creating it and had a representative standing behind the governor at the signing ceremony.

I was one of the critics then. I was still a critic when I, along with about half a dozen others, was asked to be an informal, unpaid health-policy advisor to the Romney presidential campaign in 2007. And I’m still a critic. Only now, the evidence is in. 

 

Virtually everything critics predicted back in 2005 and 2006 when RomneyCare was moving through the legislative process has come to pass. And one didn’t have to be a prophet to predict what would happen. It was obvious. Here’s why. 

Once people are required to buy health insurance, the government has to define what is “qualified coverage” so people know if they are breaking the law. Then everyone with a healthcare product or service to sell, and the patients who want or need them, will push to get those items included in the standard coverage. That comprehensive-coverage package will be expensive. And that cost drives people to call for substantial subsidies to help them afford the coverage they are required to have. 

Since the government is paying the subsidies, it has a strong economic incentive to keep the cost of insurance as low as possible. And that’s the rub: There is enormous budgetary pressure for the government to push back on any request for price increases, whether from insurers or providers. So the politicians and bureaucrats accuse health insurers and healthcare providers of being greedy and profiteering on the backs of the sick. That’s when the government starts looking for ways to impose price controls. Health insurers and providers may decide to stop participating—or retire, in the case of physicians—reducing the supply. 

A reduced supply then puts even more upward pressure on prices even as the government is arbitrarily imposing downward pressure, exacerbating the problem. Rather soon, the whole arrangement becomes financially unsustainable and a regulatory morass. 
Romney and the Democrats controlling the Massachusetts legislature—just like President Obama and the Democrats in Congress—either ignored or denied this inevitable economic chain of events. 

Romney’s response these days is that Massachusetts had the highest premiums in the country before the 2006 reform legislation and it still has the highest premiums in the country. But that’s disingenuous. Defenders of RomneyCare claimed that by getting everyone in to the pool costs would go down, because they would be spread over more people. But costs have gone up, not down, because of an exploding demand for healthcare from newly insured people who pay little or nothing for that care. And the same thing will happen under Obamacare.

Spending on subsidized care doubled between 2007 and 2009, from $630 million to about $1.3 billion. And premiums have been rising in the 10% to 12% range annually, leading the state treasurer to complain, “We’re still waiting for the savings.” President Obama helped relieve the stress a little with an $8 billion bailout for the Bay State’s Medicaid program. 

Proponents also claimed that costs would go down because people with coverage would go to a family doctor rather than an expensive emergency room. But emergency room visits in Massachusetts are up, not down, because increased demand means people can’t see a doctor in a timely fashion. 

To be fair, Massachusetts now has the lowest percentage of uninsured people in the country, albeit less than universal coverage. But just getting more people insured was not the only goal. The goal, both in Massachusetts and in the recent U.S. legislation, was to decrease the number of uninsured while lowering the costs. Massachusetts has achieved only the former. That’s also likely to be true of Obamacare. 

Romney also defends his plan as a state-based effort, something good for Massachusetts but not necessarily for other states. He’s right. States have the right to experiment, however misguided. And he likes to say that the plan was better before Democrats in the legislature forced changes on him. That’s true, but it also makes him look weak.

Conservatives want a Republican President who will stand up to liberal Democratic legislators, not cave to their demands. 

Mitt’s millstone is that he continues to defend his plan, even as the conservatives he wants to attract are adamantly opposed to Obamacare. He has been trying to convince them there is a difference, but the similarities far outweigh the differences. Conservatives can see the similarities, and they are holding them against Romney. 

What Romney must do is admit the rampant problems with the Massachusetts plan. They aren’t hard to find. There is a constant stream of stories and editorials about the complaints, cost overruns and rationing in the Boston Herald and Boston Globe. He can certainly defend trying to find a solution to the problem of the uninsured, but he must concede that the experiment went awry and explain that he has learned from the mistakes.

Conservatives can be forgiving, but they want their leaders to be honest with them. No one, not even liberals, is buying the notion that RomneyCare is wonderful while Obamacare is a government takeover of the healthcare system. And Romney should quit trying to convince them.

Cartoon courtesy of Brett Noel

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