Tags: Obama | healthcare | Romney

Romneycare Didn't Work in Massachusetts

Friday, 16 Oct 2009 05:34 PM

By Steve Baldwin

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The focus on Obama's healthcare agenda has renewed interest in the healthcare reform plan then-Gov. Mitt Romney designed and initiated four years ago in Massachusetts.

Part of this is because Romney promoted the plan during his presidential run as one of his signature accomplishments. Since it appears obvious to everyone that Romney is positioning himself again to run, it would be wise to scrutinize this first-in-the-nation statewide healthcare reform.

Indeed, Democrats have even referred to this Republican's plan as a model, and socialized medicine advocates such as Sen. Ted Kennedy and Hillary Clinton praised it. All the more reasons we need to educate ourselves as to what the Romney plan does, how has it performed in Massachusetts, and what lessons does it teach us as we continue to debate healthcare on the federal level.

Interestingly, Kennedy made it clear that Romney’s plan was a model for the nation when he declared: “The federal government should join his home state of Massachusetts in enacting universal health coverage.” Romney echoed Kennedy, writing in USA Today in July that “the lessons we learned in Massachusetts could help Washington find" a better way.

Not surprisingly, Romney and his supporters give the impression that his plan has been performing spectacularly well. Since the plan was implemented three years ago, a few groups and publications on the right have written favorably about it, claiming the plan is based upon free market principles.

Romney evangelicals tout the plan as “innovative” and “applauded by experts.” Stalwart conservative publications such as Human Events and NationalReviewOnline have featured writers who have written favorably about it. And even the Heritage Foundation praised the plan and apparently was involved with its design.

Romney himself billed it as “a bold plan to improve the American healthcare system by putting conservative, market-based principles to work.”

So what’s the problem? Well, just about every free-market group in the country – outside of Heritage – considers the plan a disaster and a warning to Congress to avoid government involvement at any level of healthcare reform. The Heritage Foundation's support is understood more easily when one realizes that Romney’s foundation gave it a large donation.

In short, soon after Romney became governor, he decided to cobble together a healthcare reform plan along with the Democrat majority that controlled the state legislature. Many conservatives were wary from the beginning because of Romney’s support for a government-controlled single-payer plan dating back to his Senate race against Ted Kennedy.

The plan Romney developed three years ago created an unprecedented mandate requiring both individuals and employers to buy health insurance. The fine for individuals who refused to enroll in the plan is as high as $1,068. While the private insurance market was allowed to continue insuring people, the government created a slew of mandates for private insurers and created several new state bureaucracies to police them.

And it’s not working. As the free-market Heartland Institute documents, there are no cost-control provisions in the plan. As a result, the premiums are skyrocketing. The Romney administration had estimated premiums at around $200 but they have hit $380 a month, nearly double the original estimate. That’s $4,560 annually!

The Council for Affordable Health Insurance, an insurance industry-funded group that advocates free-market healthcare reform solutions, says that, although “the new law has significantly reduced the number of uninsured, the state is also straining under the exploding costs.”

As a result of the reforms, the council says, Massachusetts residents “now face one of the most expensive heath insurance markets in the country."

Dr. Merrill Matthews, the council's director, says the plan is “not a model for reform, but a costly invasive boondoggle that should be avoided at all costs.”

Another free-market healthcare group, the Citizens’ Council on Healthcare, contends that the plan “mimics the vehemently opposed ‘HillaryCare' legislation of 1993” and that the plan will establish an “intrusive and prescriptive bureaucracy” that will “ration healthcare.”

The Health Freedom Institute says the plan "includes new taxes on business that don’t provide insurance. . . and chilling new invasions into personal privacy.” The Galen Institute wrote a report about how the plan will lead to new taxes and described the Romney plan as an “over-reach of state control.”

The Massachusetts-based Center for Small Government blasted the plan on grounds it “mandates everyone who doesn’t have insurance to buy it – or suffer tax penalties,” and commented that “Romney’s mandate will cost individual taxpayers many thousands of dollars every year in health insurance premiums for unwanted policies.”

The Association of American Physicians and Surgeons remarked that the plan is, “A Model? . . . another description might be a witch’s brew. When it fails, expect a demand for stronger magic: single payer.”

Jim Rappaport, former chairman of the Massachusetts Republican Party, called the plan “an unmitigated disaster. . . it was fundamentally flawed from the beginning.”

The Cato Institute says “It’s hard to tell everyone you’re the heir to Ronald Reagan while you’re touting Hillary Clinton’s healthcare plan. There is no material difference between the two.”

Clearly, there are many serious problems with the Romney program; here’s a summary:

1) The plan's cost continues to rise, and healthcare now costs more than the pre-reform days. Many costs are hidden, and Romney and his defenders don't acknowledge them. Indeed, the amount the state spent on healthcare has increased 42% since 2006.

The Cato Institute wrote that, “According to a study funded by the BlueCross BlueShield foundation of Massachusetts, Romneycare caused spending growth to accelerate further. The study indicates that without reform, spending would have grown by just 6.4 percent in 2007. Instead, it grew by 10.7 percent – two-thirds faster.”

Even Romney doesn't seem to understand the real cost of his plan, publicly stating that the plan cost only around “$707 million a year, about half of which comes from the federal government, so the net cost to the state is slightly more than 1 percent of the state’s total budget.”

Incredibly, he fails to represent accurately what the Massachusetts Taxpayers Foundation actually says about the plan’s cost. As the Cato Institute writes, Romney is not counting the “mandated state spending by individuals and employers.” And he seems to not be aware that the taxpayers foundation estimates the plan’s full cost will exceed $2.1 billion in 2009, about three times higher than Romney has been citing in his speeches.

As Cato writes, “Romneycare is covering the uninsured at a cost of about $6,700 each. For comparison, in 2007 the average cost nationally of an individual policy was just $2,600. That’s a bad idea, even by government standards.” A plan that costs almost three times more than the national average is a unmitigated disaster.

2) Romneycare is already leading to a two-tier system of care; indeed, it is engaging in the dreaded “rationing.” As the Boston Globe writes, Massachusetts doesn’t have enough money to pay for the coverage so “officials . . . are cutting $100 million from Commonwealth Care, which subsidizes premiums for needy residents. The poorest residents, along with the newest – legal immigrants – will take the hit.” Already, the plan is reverting to rationing care! Wasn’t the whole purpose of a government control system to give equal care to everyone?

3) Romneycare heavily regulates the private insurance market to the point where many low-cost insurers have decided to avoid the state. As Sally Pipes of the Pacific Research Institute states, “Despite claims to the contrary, Romney’s legacy to Massachusetts is a more regulation health environment. The alleged market maker – The Commonwealth Connector – issued regulations that dictate the design of health plan, 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.”

4) The premiums are so high — $4,560 — that people are opting out of the system and paying the penalty to do so. People are paying more for insurance now than they were before the "reform." As the Wall Street Journal states, “insurance in Massachusetts is among the most expensive in the nation because of multiple mandates, such as premium price controls.” Indeed, premiums are growing 21 percent to 46 percent faster than the national average because of state regulations.

5) According to the Cato Institute, the healthcare market "has grown even more rigid and expensive, with some of the longest waiting times in the nation.” Sounds just like healthcare in a socialist nation.

6) The “free-market reform” Romney boasted most about — the use of a government agency called the “Connector” to connect people with private insurance plans — is basically useless. Only 21,000 people have used it.

7) Finally, the plan has massively increased state-funded abortion, which Romney claims he had no choice to include coverage for, because of an alleged court mandate requiring state health plans to pay for abortions.

Well, not exactly. First of all, the court “mandate” was only a declaratory opinion and is not binding unless the Legislature codified it. It never did.

Secondly, the court ordered states to cover only “medically necessary” abortions, but Romneycare covers abortions for any and all reasons.

Third, just by creating a statewide plan that subsidizes healthcare for those who can’t afford it, Romneycare created a whole new category of state-subsidized abortions. Before healthcare reform, Massachusetts had an uninsured population of 460,000 people, which means at least 200,000 women not previously eligible for abortions, now are.

Romney also placed a Planned Parenthood adviser on the board that governs Romneycare. And no, there are no pro-life representatives on the board. Romney made no effort whatsoever to limit state-funded abortions.

What are the lessons of Massachusetts? Well, as the Wall Street Journal writes, “The Massachusetts non-miracle ought to be a warning to Washington” to avoid any type of healthcare reform partnership between government and the private sector. Although Romneycare has not taken over the private insurance market yet, it solidified what many consider to be an unconstitutional idea: the notion that business is legally responsible for healthcare and by extension, the government is as well.

If healthcare costs in Massachusetts continue to skyrocket, it will be only a matter of time before the state government takes over the private health insurance market. It is apparent that any type of private/public partnership will pave the way toward total government control of all aspects of healthcare.

A number of legislators are advocating just that.

Healthcare is not a constitutional right and is best organized and delivered by the free market.

The problem is we don’t have a free market today in healthcare. For example, liberals have forced insurance companies to compete in select geographic areas and have mandated insurance plans to have certain expensive features. Instead of designing various government/private partnerships to reform healthcare, our legislators need to deregulate the private healthcare insurance market and allow the market to reform itself.

Steve Baldwin is a former California state legislator who is president of Baldwin Research and Consulting.

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