Politics & Policy

Dr. Romney Goes National

A Republican health-care plan.

Republican presidential candidate Mitt Romney laid out his health-care plan on Friday in Florida. The former Massachusetts governor has earned both contentious criticism and accolades for working with Democrats to reform health-care there while governor. National Review Online asked a group of health-care experts to take a look at what he had to offer Friday. Here are their reactions.

Michael F. Cannon

Mitt Romney just discarded two of the most counterproductive components of his Massachusetts health-care reforms.

Romney’s law is known for (1) its requirement that all individuals purchase health insurance and (2) the “Commonwealth Connector,” a government bureaucracy much like that championed by First Lady Hillary Clinton in 1993 and rejected by Congress in 1994.

Romney appears to have traded those big-government ideas in for full tax deductibility of out-of-pocket medical expenses and health premiums. Romney’s tax reforms would not do as much to increase affordability or individual ownership as Rudy Giuliani’s would. Nevertheless, they are a dramatic improvement over Romney’s recent past.

Unfortunately, Romney still supports some reforms that would expand government.

Though he advocates block-granting Medicaid, he wants states to use the added flexibility to make more Americans dependent on government for their health care.

He wants to deregulate health insurance, but by having Congress strong-arm the states, rather than by letting Americans purchase health insurance from out-of-state. That’s one free-market reform that neither Romney nor Giuliani have fully endorsed.

Nevertheless, Romney’s abandonment of two major components of his Massachusetts law may signal the decline of big-government conservatism in health care.

Michael F. Cannon is director of health-policy studies at the libertarian Cato Institute and coauthor of Healthy Competition: What’s Holding Back Health Care and How to Free It, 2nd edition (forthcoming).

Robert Goldberg

RomneyCare — like GuilianiCare or proposals being advanced by Senators Burr and Coburn — can win the national debate on health-care reform.

RomneyCare gives people cash and lets them choose the coverage that’s right for them. In Massachusetts, it signed up more people faster than SCHIP signed up in a decade. The difference? Private companies competed for consumers instead of government trying to enroll recipients.

Under RomneyCare people could shop nationwide for the best insurance product for them at the best price. The Democrats would shove everyone into something like the Veterans’ Administration or Medicaid.

Under RomneyCare people could keep the insurance they have or get something else. Under Hillary/Obama/EdwardsCare one would have to pay higher taxes, give up one’s current coverage, and have one’s choices decided by government. While our soldiers returning from Iraq were waiting six months to see a doctor, Hillary told John Stossel that the VA was an example of government success. Under the Clintons, the lifespan of people treated in Medicaid-funded mental-health agencies declined by ten years. Let the Democrats defend Medicaid and the VA. Romney should campaign for health-care choices at lower prices and take the fight to the Democrats at every campaign stop.

– Robert Goldberg is vice president of the Center for Medicine in the Public Interest.

John Goodman

Mitt Romney is the only U.S. politician who can credibly claim to have created universal health care coverage. His Massachusetts Health Plan may yet falter; but so far he has walked the walk, while his Democrat opponents have only chattered.  He alone owns the health care issue.

The Good.  In taking the Massachusetts plan nationwide, Romney has left most of the bad features on the cutting room floor.  There is no individual mandate, no employer mandate, and no managed competition.  States  would have the opportunity to go their own way.  

People who buy their own health insurance would get the same federal tax relief as those who obtain health insurance at work.  Subsidies would allow low-income families to buy private insurance.  A block grant of medicaid funds would give states the ability to move enrollees to the private sector.

The Bad.  People would be able to deduct all out-of-pocket  health costs.  This bizarre idea probably got added late at night when the Romney team was tired.  In New York City, where  the marginal tax rate is 50 percent, you would be able to buy an MRI scan or a stomach staple for fifty cents on the dollar.  The incentives would be to spend, spend, spend.  By contrast, Health Savings Accounts (which Romney also supports) create incentives to save.

The Question Marks.  What kind of subsidy will low-income purchasers of health insurance get?  Romney is still resisting tax credits.  That opens the door to a spending subsidy, which risks becoming another entitlement. As in Massachusetts, funds hospitals now use to provide free care to the uninsured would subsidize private health insurance instead.  That’s good.  But if people turn down the offer and remain uninsured, surely the money needs to go back into the safety net.  That promise needs to be explicit.

 – John Goodman is president and CEO of the National Center for Policy Analysis.

Scott Gottlieb

A patient recently told me he was switching doctors, because he was switching jobs. His new employer didn’t offer his current insurance — a plan incidentally that he was largely happy with. And the plans offered by his new job didn’t include my hospital in its roster of “preferred” practitioners. Even if my patient — I’ll call him Tom — wanted to go outside his employer and re-purchase his present insurance in the private market, tax laws that give unfavorable treatment to such a transaction would make it prohibitively expensive.

These tax rules, and the system of private, employer-based health insurance they spawned, has become the pervasive model in this country, but it was not the product of careful planning or policy design, but rather the result of a series of disconnected political decisions that have left reasonable insurance coverage too costly and incomplete for many Americans.

First was the decision by the Roosevelt administration to make fringe benefits exempt from wartime wage controls. That encouraged employers to offer more health insurance, since better benefits were one of the few enticements they could use to attract workers in a tight, wage-controlled labor market. Next, the government decided that money spent on health insurance provided by employers would not be subject to tax. The result? Increased demand for such benefits, since a dollar of health insurance was more valuable than a dollar of salary.

This leaves people like Tom, who live paycheck to paycheck, at a particular disadvantage. He is tied to his job — for better or worse — since he is unable to purchase economical insurance on his own. Even if he could scrape together the same amount of money his employer was spending to give him health insurance it wouldn’t be enough, since the unfavorable tax treatment means buying the same plan on his own could cost twice as much.

Governor Mitt Romney’s health plan aims to level the playing field, giving people like Tom the same opportunities offered to his employers, or to the wealthy Americans who have enough extra cash to go into the marketplace on their own and buy individual policies, forgoing the tax advantage they’d have if they got a similar plan through a large corporation.

Romney is proposing to change the tax code to allow more people like Tom to deduct their health-care premiums, co-pays, and out-of-pocket expenses. Romney would also give states more flexibility to design programs that help cover more low-income Americans. And the proposal includes medical malpractice reform through the use of specialized health courts and caps on punitive and non-economic damages.

Meaningful reform also needs to free people like Tom to buy health plans that are liberated from all of the extraneous and expensive state “mandates” — on everything from chiropractors to in vitro fertilization — that state legislators heap onto individually bought insurance policies in order to satisfy special-interest groups who use these requirements to make sure their services are covered even if people don’t want them.

The Left complains that the market for health care is broken and they use all the present shortcomings as justification for more government regulation and control. But the problem is that health care isn’t a market at all, and won’t be until people like Tom are liberated to become real consumers of these services, armed with the same tax advantages, choices, and freedom from costly mandates that are offered to big employers.

– Dr. Scott Gottlieb is a resident fellow at the American Enterprise Institute and a practicing medical doctor.

David Gratzer

During his tenure in Massachusetts, Gov. Romney pushed through a comprehensive reform package that won praise from the people at the Heritage Foundation but, also, the people in Senator Edward Kennedy’s office. Critics on the Left and the Right tend to oversimplify the plan. Nevertheless, it is heavy in government requirements and subsidies, and light on deregulation.

Romney’s health-care advisers divide into two camps: the Massachusetts people and the uber-economists. Needless to say, the people who he’s brought from his Boston days see little wrong with RomneyCare. He also is advised by two of the sharpest minds in health policy: Glenn Hubbard and John Cogan. Hubbard and Cogan co-authored (with Daniel Kessler) the best book written in this field: Healthy, Wealthy, and Wise. They favor deregulation, greater competition, tax reform, and host of other free-market ideas.

Romney, in other words, has two sets of advisers, pushing in two separate directions. In Florida on Friday, Romney announced some principles for reform. Wisely, he listened to Hubbard and Cogan. The outline doesn’t have much in way of details, but the ideas are solid and worthy of serious consideration. Together, they offer a dose of needed medicine for American health care.

Voters will need to consider, though, why he didn’t seek the counsel of Hubbard and Cogan years ago.

– Dr. David Gratzer, a physician, is a senior fellow at the Manhattan Institute. His most recent book is The Cure: How Capitalism Can Save American Health Care. He advises the Giuliani campaign.

John Hood

I’ve always thought that one of the most reliable ways to assess a political program is whether it attracts the right criticism. For most politicians, the natural impulse is to find a way to fashion a plan or craft a message that has something for everyone. The impulse isn’t without its virtues. Indeed, most important policy reforms in Washington and state capitols have come from bipartisan or cross-ideological coalitions of some kind, though usually they aren’t 50-50 propositions — there is a senior partner (such as the Republican Congress on welfare reform) and a junior partner (the Democratic president who eventually signed the bill).

Judging by the criticism standard, Mitt Romney has found the right pitch on health care, where useful reforms will certainly require assembling a coalition. Previously, as a governor, Romney sang a bit sharp. Too eager to get his health-insurance measure through the Massachusetts legislature, he acquiesced to excessive regulation. Don’t ask me, ask Teddy Kennedy — who liked the outcome. Bad sign. Now, as a presidential candidate, Romney’s ideas on market reforms and federalism have drawn fire from John Edwards (“it will make a dysfunctional health care system even worse”) and Obama adviser Stuart Altman (“[Romney’s] run away from the Massachusetts plan”).

That’s a start.

– John Hood is president of the John Locke Foundation.

John McClaughry

Mitt Romney’s Health Care Vision is widely shared by almost every policy advocate not wedded to the government-run alternative. Indeed, every ingredient in it has long been on the agenda of Republican leaders in Congress and free market think tanks — including mine, dating back to 1993.

To his credit, Romney was the first governor to address the tax inequities in health insurance, and devise a scheme (“The Connector”) to allow employees to claim deductibility for individual premium payments through simplified employer cafeteria plans.

A major sticky wicket in Romney’s plan is his reliance on state insurance market reform – rarely if ever achieved, and not easily forced by federal pressure. The plan is also vague about the consequences facing impecunious non-participants seeking medical care in his “no free rider” participation system.

Romney’s surprising advocacy of coupling HSAs with even zero deductible insurance would reverse a hopeful trend toward reducing the role of third party payers for normal health maintenance.

That said, Romney’s articulate advocacy of this comprehensive package will add a strong voice to the pro-market side of a debate in which most other Republicans, including President Bush, have fared poorly. That’s a big plus.

– John McClaughry is president of the Ethan Allen Institute, a free market think tank in Vermont.

Robert E. Moffit

Romney’s health-care-reform proposal is a refreshing reaffirmation of federalism. At the federal level, he proposes a universal tax deduction for all health-care expenses. Every person would be able to get the same federal tax deduction for health insurance, for example, regardless of where they got it; health insurance would then be personal and individuals would be able to carry their health insurance from job to job. Romney would also strengthen health savings accounts by eliminating today’s minimum deductible requirement.

These are major and welcome changes. But the real heavy lifting would be up to the states. The Romney plan provides federal incentives for states to reform their insurance markets in ways that would reduce premium costs and expand private coverage options for consumers.

He leaves it to the states to determine how best to work out all the mind-numbing details, ranging from creating new risk pooling arrangements to drafting new underwriting rules. But under the plan, state officials would “earn” federal funds to help low income people get private coverage by making their insurance markets more affordable and consumer-friendly.

Romney’s got this exactly right: Essentially, he’s using existing government funds to do get the uninsured out of the hospital emergency rooms and into private health plans.

Romney’s national tax reform proposal would unify the tax treatment of health care for every American, while his encouragement of innovative state officials would respect the diversity of the states. After all, what works best for Massachusetts may not work well for Mississippi.

– Robert E. Moffit is director of the Center for Health Policy Studies at the Heritage Foundation.

Sally C. Pipes

Mitt Romney launched his “extreme health-care makeover” on Friday, outlining his federal health-care agenda to the Florida Medical Association. The docs, who are calling for Romney’s individual mandate at the national level, must have been disappointed at the former governor’s reversal. Out of Massachusetts and into the primary states, he’s jettisoned the harsh individual mandate for calls for a gentler adjustment to the tax code, deregulation, and a crack down on medical malpractice. To this, I’d say welcome home, but that would require that we know his permanent and fixed address.

Meanwhile, to quote Bob Dylan, his past is close behind. Back in Massachusetts, a slew of new bureaucrats in well-paid jobs are filling in the details of his healthcare handiwork. Despite claims to the contrary, Romney’s legacy to Massachusetts is a more regulated health environment. The alleged market maker — The Commonwealth Connector — issued regulations that dictate the design of health plans, declaring that as many as 200,000 people who were already insured didn’t have the right kind, subjecting them to a fine or forcing them to purchase new insurance. Regulators exempted 20 percent of the uninsured from the mandate. This puts at risk a financial and philosophical pillar of the plan: a redirection of funds from the state’s charity care pool to the subsidized insurance market. Stay tuned to this event, a smash up is on the way.

– Sally C. Pipes is president & CEO of the Pacific Research Institute. She is author of Miracle Cure: How to Solve America’s Health Care Crisis and Why Canada Isn’t the Answer. She advises the Giuliani campaign.

Grace-Marie Turner

Governor Romney is the most battle-tested of all of the Republican presidential candidates on health care issues. The proposal he initiated for the commonwealth of Massachusetts went through the maw of the legislative process, and he necessarily had to make many compromises with an overwhelmingly Democratic legislature in order to get some version of his plan passed. But many people, especially conservatives, are troubled about the over-reach of state control that has been the result of Massachusetts’s health-care legislation.

Now that he is running for president, Romney has an opportunity to talk to voters about his ideas, his true convictions, and the lessons learned from his experience in Massachusetts. To his credit, his latest proposal does not call for an individual mandate that would require people to purchase health insurance. He also clearly understands the importance of having the federal government address the tax treatment of health insurance: He recommends changes that would allow insurance to be portable and not tied to the workplace, and he also would provide new subsidies to the uninsured to purchase private insurance. He also understands, as a former governor, giving the states more authority and resources to improve health care delivery. It is important for Romney to reassure primary voters about his true convictions and to prove that he will stick with the free-market convictions he articulated before the AMA, that he has learned the consequences of over-compromising, and that he truly is on the side of competition and consumer choice.

– Grace-Marie Turner is president of the Galen Institute.

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