Magazine | September 10, 2012, Issue

What to Say about Health Care

Romney and Ryan can offer a compelling alternative to the president’s massive entitlement

Just a few weeks ago, hope seemed to be fading that Governor  Romney would find a way to get the upper hand in the health-care debate with President Obama. Romney’s candidacy has many strengths. Because of his background, he is very well positioned to carry the party’s economic message, which is almost certainly why he won the nomination. But on health care, former senator Rick Santorum — the last serious Republican contender with Romney for the nomination — surely had it right when he said Romney was not the best person to prosecute the case against Obamacare. After all, the health-care legislation Romney championed in Massachusetts is now known (somewhat unfairly) as the plan that became the model for Obamacare, most especially because it included a mandate that individuals purchase health insurance. Democrats clearly relish the thought of President Obama’s reminding voters that the legislation Romney denounces as a “government takeover” shares some critical features with the legislation he himself signed into law.

So expectations among conservatives for a strong Romney performance on health care have been low. They fell even lower when the Supreme Court upheld most of Obamacare’s key provisions as constitutional. A general sense of resignation had started to settle in that, in 2012, Obamacare would not be exploited as a political opportunity as Romney focused entirely on the president’s miserable economic record.

All of that changed overnight when Romney selected Representative Paul Ryan as his running mate.

Most commentary in the days after the Ryan announcement was about Medicare and its future. Right away, the Democrats and many in the mainstream press used the selection of Ryan to use fearmongering rhetoric about Ryan’s proposal to reform Medicare for future recipients. But Romney and Ryan were ready for the attacks and successfully seized the occasion to bring Obamacare’s unpopularity back into the public consciousness. In ads and speeches, the Republican ticket has reminded voters repeatedly that the president and the Democratic congressional leadership cut Medicare by more than $700 billion to partially finance Obamacare’s massive entitlement expansions. For Romney, this is ideal political terrain: He didn’t cut Medicare as part of the Massachusetts plan, and highlighting Obamacare’s Medicare cuts is the perfect way to point out the contrast between Obama’s approach and his.

It has also helped the Romney campaign tremendously that Ryan is carrying much of the load. He knows these issues cold, because he is a prominent budget expert, and health care in general, and Medicare specifically, are central to the nation’s long-term budgetary troubles. Ryan’s adeptness in debating the topic was on full display at the February 2010 White House “summit” on health care, during which Ryan dismantled the phony deficit-reduction claims the president and congressional Democrats were making about Obamacare.

The challenge for the Romney-Ryan ticket is to channel the political momentum generated by this early Medicare counterattack into a larger conversation about broad visions for health care. Although Obamacare remains unpopular, it will be difficult to uproot it without articulating a compelling replacement strategy that can solve the problems in the health-care sector without Obamacare’s massive expense and heavy-handed government coercion. Here again, Ryan will be indispensable, because he has become one of the party’s most articulate and persuasive advocates of a patient-driven health-care system.

Of course, not even Ryan would help if the Romney campaign were stuck on promoting policies that resembled the approach taken in Massachusetts. Fortunately, it is not. Romney has given two speeches devoted entirely to health care, one in May 2011 and one in June of this year before the Supreme Court decision. He focused more on his general ideas for reform than on specific policy changes. That’s understandable: In the 2008 campaign, Senator Obama spent tens of millions of dollars on ads attacking and distorting the detailed and very credible reform program of John McCain. There’s no reason for Romney to provide a similar opening. And yet, despite the lack of details, it’s clear where Romney wants to go, and it’s absolutely the right direction.

#page#To begin with, Romney understands that the source of much of the dysfunction in American health care is federal policy, including the tax treatment of health insurance and the structure of Medicare and Medicaid. When he was governor, Romney couldn’t fix these problems, which is one reason he ended up supporting the plan he did at the state level. But if he wins the presidency, he can change the federal policies that are driving up costs and leading to uncertainty of coverage. And his statements about reform make it clear that he will do so.

Let’s consider taxes more specifically. Today, the tax law provides a heavy subsidy for employer-paid insurance plans, which means that most Americans choose to get their coverage through their work rather than on their own. This bias toward employer plans has made it nearly impossible for a robust and stable marketplace for privately purchased plans to emerge. This, in turn, contributes heavily to the uninsured population, as people can’t keep their plan when they leave their job. The tax preference for employer plans also contributes to high and escalating health-care costs, because it is conferred without limit and thus encourages expansive insurance arrangements in which third parties make purchase decisions.

Romney proposes to end the bias against individually owned insurance, thereby encouraging the formation of a market in which individuals can purchase affordable plans. He hasn’t yet specified how he will do this, but at this stage he doesn’t need to. It is sufficient for him to make clear that, in a Romney administration, the United States would finally begin to see a functioning marketplace emerge for people who, for whatever reason, would like to get insurance on their own. This could be done through the creation of a new tax credit for individuals who buy insurance, or through some wider-ranging plan that provides an identical deduction or credit to people regardless of where they buy their coverage.

Another important feature of the Romney-Ryan vision is a new approach to ensuring that people with preexisting conditions can get insurance. With Obamacare, the president and his allies orchestrated a government takeover of American health care, all in the name of allowing people who had developed a costly health condition to get insurance at affordable rates. To do this, they imposed a one-size-fits-all benefit plan and required insurers to charge everyone the same premium, even if someone had previously been uninsured and was now signing up for coverage because he knew he would need it. This approach discourages people from getting insurance when they are healthy, because they can always get it when they are sick; and this in turn drives up costs. Obamacare tries to solve this problem by coercing people into buying government-sanctioned insurance.

The Romney approach is entirely different. It rewards people for staying continuously insured by protecting them from premium adjustments based on their changing health status. This would mean that people could move from job-based coverage to the individual market far more easily than they can today.

A final prominent feature of the Romney-Ryan vision is its reliance on state initiative. In Obamacare, the states are essentially tasked with implementing federal regulations and rules, with little discretion. Romney believes states, not the federal government, should take the lead in reform. He would grant the states complete flexibility in the design of Medicaid within a federal block-grant structure, and autonomy over insurance regulation. His only regulatory adjustment would be to allow consumers to purchase insurance across state lines, thus creating more of a national market for low-cost plans.

Many additional details must be fleshed out for the kind of plan Romney envisions to work. But they need not be articulated until after the election. For now, it’s enough for Romney and Ryan to give voters their overall vision for reform and to emphasize how it will differ from Obamacare. The contrast will be sharp indeed.

The debate over health care comes down to who’s in charge. Under Obamacare, it’s the federal government. All of the key decisions affecting how resources are allocated will be made by the Department of Health and Human Services. That’s why Obamacare can accurately be described as a “government takeover.” The Romney-Ryan vision is of a decentralized, market-based system, with consumers and patients calling the shots. That’s the way to get the market oriented to satisfying patients’ needs at affordable prices.

Between now and November, this is the message Romney and Ryan must hammer home. And with Ryan on the ticket, there’s every reason to believe that’s what they will do.

– Mr. Capretta is a fellow at the Ethics and Public Policy Center.

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