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Romney On Healthcare: My Way…Or Anybody Else's Way!

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When Mitt Romney outlined his proposal for reforming healthcare to the Florida Medical Association today, he seemed to be saying that Massachusetts's path to healthcare reform was a good route to follow -- unless you were any other state in the union.

I didn't attend the speech, but to judge from the PowerPoint slides that accompanied it, he began by extolling the virtues of the law he enacted in the Bay State when he was governor -- market reforms coupled with mandates and a subsidy for premiums. Together, he said, these have led to new coverage for 200,000 of the 460,000 residents who were previously uninsured. Then, in the next breath, he insisted that the situation elsewhere in the U.S. varied too much -- in cost, in the number of uninsured people, in the size of Medicaid rolls -- for the Massachusetts plan to apply. Instead Romney called for "a Federalist approach," one that would neither "rely on Washington bureaucracy" nor "smother innovation."

So the Massachusetts mandate is gone. Instead, Romney would use federal money that now pays for the uninsured as a cudgel for states to deregulate their health markets. They would then use that money to subsidize the uninsured on a sliding scale. Romney would also reform the tax code, first by eliminating the minimum deductible requirement for health savings accounts paired with catastrophic coverage, then by allowing a full deduction for all qualified medical expenses, which would include premiums, co-payments, and out-of-pocket spending. These alone, Romney said, will reduce healthcare spending by over six percent, and induce up to six million middle-income people to join the ranks of the insured.

Consumer groups will howl that deregulation will strip away protections for policy-holders, and Romney's own material doesn't exactly support the contention that more consumer protections equal higher premiums. It describes California, for instance, as one of the two states with the most mandates (the other is Maryland), but notes that premiums there are among the lowest in the country. Still, let's give Romney credit for being a touch more grounded in reality than some of his Republican rivals. Rudy Giuliani, for one, seems to think that given a tax deduction, a lot of people insured through their workplace will shift to private policies on principle, sucking up the extra cost at first, but ultimately driving the price down so the uninsured can eventually buy in. Uh-huh. Romney, at least, realizes that the uninsured will still need help paying the premiums.

But I'm having trouble with the math. Romney claims that "there's no need for new spending or new taxes" under his plan because "the tens of billions currently spent to treat the uninsured is sufficient to help low-income Americans afford private coverage." While it's true that we pay a lot to subsidize the uninsured -- $43 billion, says FamilesUSA -- any plan to cover them would certainly take in more people and pay for more services. I doubt that what we pay now for what Romney calls "free care" will get his plan very far. (Romney appears to concede this; as far as I can tell, he estimates only 12 to 19 million people will get coverage. By contrast, Democrats Bill Richardson and John Edwards estimate the cost of their ambitious programs at north of $100 billion.) Even so, currently the government doesn't pay all, or even most, of that estimated $43 billion -- society does. According to FamiliesUSA, government programs cover just a third of the subsidy; the insured foot the rest through inflated premiums. So while Romney could plausibly argue that covering the uninsured wouldn't require more spending in some broader social sense, the government would certainly have to write big checks to achieve his modest goals, then find a way to collect that money now spent as excess premiums. And we all know how the government collects money.

Employer-based insurance still provides the bedrock in Romney's vision, and anybody who has a choice between employer insurance or private insurance would be wise to choose the former -- we've discussed elsewhere how the negotiating strength of large employers offers a lot more protection than being on your own. Yet I don't see much in the way of incentives for businesses, particularly smaller firms, to insure their workers, apart from the obligatory promise to lower costs through technology, deregulation, and tort reform. (Today John Edwards insisted that Romney's plan will in fact encourage companies to ditch coverage.)

As a document of political strategy, however, Romney's plan is sublime. It allows him stand by his record as governor while simultaneously repudiating it to the conservative base. At the same time, it positions him nicely for the general election (should he get that far), half-way between Republican proposals that are unlikely to bring any change to the health care economy whatsoever, and the Democrats' sweeping ambition. In a separate statement, Romney seemed enthusiastic about going mano a mano against what he termed "HillaryCare." Hillary Clinton hasn't released any specifics for achieving universal coverage, but that's still a debate I can't wait to see.

A précis of Romney's plan, along with the PowerPoint presentation, is available here.

Last updated: Aug 24, 2007




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