Romney Intends to Repeal “Obamacare” in 2013—Has He Thought Through the Unintended Consequences If He Does?

Romney says he will repeal “Obamacare” if he is elected. Given that this has been part of his platform from the beginning of the campaign he is entitled to do that if he wins.

I did not support passage of the Affordable Care Act (ACA) in 2010 because I saw it as an unaffordable entitlement expansion with no real hope of containing costs.

But the practical reality of killing the Affordable Care Act in 2013 is a different matter.

Obama vs. Romney: A Detailed Analysis of Mitt Romney’s Health Care Reform Plan

Let’s take a look at Mitt Romney’s Health Care plan using his own outline ("Mitt’s Plan") on his website.

Romney's approach to health care reform summarized:

• "Kill Obamacare" - There seems to be no chance Romney would try to fix the Affordable Care Act––he would repeal all of it.
• No new federal health insurance reform law - There is no indication from his policy outline that he would try to replace the health care reform law for those under age-65 ("Obamacare") with a new federal law--his emphasis would be on making it easier for the states to tackle the issue as he did in Massachusetts.
• Small incremental steps - His approach for health insurance reform for those under age-65 relies on relatively small incremental market ideas when compared to the Democrats big Affordable Care Act--tort reform, association purchasing pools, insurance portability, more information technology, greater tax deductibility of insurance, purchasing insurance across state lines, more HSA flexibility.
• Getting the federal government out of the Medicaid program - He would fundamentally change Medicaid by putting the states entirely in control of it and capping the annual federal contribution--"block-granting."
• Big changes for Medicare - Romney offers a fundamental reform for Medicare beginning for those who retire in ten years by creating a more robust private Medicare market and giving seniors a defined contribution premium support to pay for it.

Romney vs. Obama--Romney Would Kill "Obamacare"

“On his first day in office, Mitt Romney will issue an executive order that paves the way for the federal government to issue Obamacare waivers to all fifty states. He will then work with Congress to repeal the full legislation as quickly as possible.”

Romney vs. Obama: The Romney-Ryan Medicare Plan Compared to the Obama Medicare Plan—Who’s Telling the Truth on Medicare?

They both are and they both aren’t.

I’ve never seen a week in health care policy like last week. The media reports have to be in the thousands, all trying to make sense of the furious debate between Obama and Romney over Medicare.

As someone who has studied this issue for more than 20 years, it has also been more than exasperating for me to watch each side trade claims and for the press to try to make sense of it.

This blog post is quite long because the subject matter is complicated. If you want to cut to the chase, see my conclusion and summary at the end of this post.

Wyden and Ryan—One is Up and the Other is Down—and They Are Both Telling the Truth

Republican Vice Presidential pick Paul Ryan isn’t the only one Democrats are piling on this week. The knives have come out for Senator Ron Wyden, the Oregon Democrat.

I guess that isn’t a surprise. If Ron Wyden is right on Medicare then so are Paul Ryan and Mitt Romney.

The fundamental problem here is that the Democrats have decided that their best path to victory in the November elections is to say that the Republicans want to destroy Medicare as we know it and that the Democrats can preserve it.

The truth is that no one can preserve Medicare as we know it. There isn’t a prayer that your father’s Medicare will be around in 10 years. There is a legitimate policy debate going on about the direction we will have to go with it.

Romney Jumps on the Waiver Bandwagon--And Creates Even More Uncertainty Over the New Health Care Law

Republican presidential frontrunner Mitt Romney has pledged to end “Obamacare.” Upon taking office, he would immediately begin the process by granting the states waivers from having to implement it:

“I’ll grant a waiver on Day One to get repeal started. On Day One, granting a waiver for all 50 states doesn’t stop it in its tracks entirely. That’s why I also say we have to repeal Obamacare, and I will do that on Day Two, with a reconciliation bill [requiring only 51 votes in the Senate] because as you know, it was passed by reconciliation with 51 votes.”

Romney appears to be on thin ground in making his waiver promise and his promise to use reconciliation to stop "Obamacare" could lead to chaos in the market and among consumers.

The waiver promised is based on a provision in the law authored by Senator Ron Wyden (D-OR). Wyden’s provision was designed to allow states to petition the feds to opt out of the new health care law by taking the federal money that was going to be spent in their state under the Affordable Care Act and draft a comprehensive plan of their own that covered at least as many people as well as the Affordable Care Act would have.

Here is the provision straight out of the Affordable Care Act:

"(1) IN GENERAL.—The Secretary may grant a request for a waiver [to a petitioning state]...only if the Secretary determines that the State plan...will provide coverage that is at least as comprehensive as the coverage defined [by the new health law] and offered through Exchanges established under this title as certified by Office of the Actuary of the Centers for Medicare & Medicaid Services based on sufficient data from the State and from comparable States about their experience with programs created by this Act and the provisions of this Act that would be waived; [that the state] will provide coverage and cost sharing protections against excessive out-of-pocket spending that are at least as affordable as the provisions of [the new health care law] would provide; [and] will provide coverage to at least a comparable number of its residents as the provisions of [the new health care law] would provide; and...will not increase the Federal deficit."

And, in any event, this waiver provision in the law will not take effect until 2017. How Romney could use this waiver provision to stop the law in its own tracks on its primary effective date of January 1, 2014 is not at all clear.

Romney is arguing that this language is written in a way that would give his Health and Human Services (HHS) Secretary the ability to just grant a waiver to the states to skip most of the law!

For example, the Romney camp is suggesting that the requirement to provide coverage to a comparable number of people doesn’t refer to how many people are covered but instead allows them to interpret that as just making a comparable number of health insurance plans available in the market.

Say what?

It is possible that a Romney administration could try to delay implementation of critical parts of the law from the scheduled January 1, 2014 implementation date. With so much of the implementation of the law up in the air waiting for a Supreme Court ruling and the 2012 election results, it is not out of the question that there will have to be delays past 2014, no matter who is president.

But if Romney tried any delays intended to derail the law, I would have to believe that about every liberal and progressive group in America would instantly be in front of about every federal judge in the land—likely with success.

Romney has also argued that he would use the Senate budget reconciliation process to repeal the new health law, “on Day Two.” Presuming the Republicans continue to control the House, and have a simple majority in the Senate, as well as the White House, they can do lots of damage to the law with the 51 votes needed to pass a budget reconciliation bill. But a budget reconciliation bill would have to apply only to the budget-related elements of the new law—such as the premium subsidies. That procedure could also kill the individual mandate, Medicaid expansion, money for the insurance exchanges, and the employer mandate.

Key non-budget elements of the bill—such as the insurance underwriting reforms—would take 60 votes to repeal—a big stretch for the Republicans most likely to capture Senate seats in the low 50s. Even with a couple of Democratic defections, it would be very difficult to get to 60-votes for a full repeal.

So, Romney and Republican majorities could create a scenario where any budget items, like premium subsidies, would be stripped from the law. But non-budget items, like the insurance reforms granting coverage to all comers, would remain in effect. The impact of that kind of situation would be sizeable for the insurance risk pool where insurance companies would have to take all comers but have little growth in the number of people they would insure.

And, don’t look for Democrats to come to the rescue of the insurance industry in this kind of scenario. They would use every bargaining chip they had to try to preserve the law Romney has promised to kill.

In trying to keep his promise to kill the law, Romney could end up creating a chaotic environment driven by enormous uncertainty over just which parts of the new health care law would be implemented--for consumers, health care providers, and insurers.

Doesn’t that make you feel better?

The Lightweight Romney Health Plan

Mitt Romney has outlined his new health plan. He outlined five key steps in an op-ed in USAToday. Here is a summary:

Step 1: Give states the responsibility, flexibility and resources to care for citizens who are poor, uninsured or chronically ill.who are poor, uninsured or chronically ill.

Step 2: Reform the tax code to promote the individual ownership of health insurance.

Step 3: Focus federal regulation of health care on making markets work…For example, individuals who are continuously covered for a specified period of time may not be denied access to insurance because of pre-existing conditions. And individuals should be allowed to purchase insurance across state lines, free from costly state benefit requirements. Finally, individuals and small businesses should be allowed to form purchasing pools to lower insurance costs and improve choice.

Step 4: Reform medical liability. We should cap non-economic damages in medical malpractice litigation.

Step 5: Make health care more like a consumer market and less like a government program. This can be done by strengthening health savings accounts that help consumers save for health expenses and choose cost-effective insurance.

It looks to me like his health care outline is more intended to make conservative Republicans happy then to really propose ways to reform America’s health care system.

There isn’t one new idea here and it all comes straight from the 2010 Republican campaign playbook.

I have a number of questions:

1. We all seem to agree that the biggest problem is the cost, and therefore the affordability, of health care. Where’s the cost containment in his plan?
2. He talks about giving states the “resources” to take care of the uninsured and the poor. Just what resources, how much money, and where will that money come from?
3. He wants to reform the tax code to permit individual ownership of insurance. But the real premium support most working Americans get is from their employer. When an employer provides health insurance it does so by paying an average of 70% of the cost–worth about $9,000 for family health insurance today. The health insurance tax benefit is worth perhaps 20% of that cost for most workers. How does Romney intend to make an individual system as effective in supporting the purchase of health care? How much support is he willing to provide and where will the money come from?
4. He proposes guaranteeing insurability for those who are continuously covered. But to be continuously covered, an individual has to be able to afford the insurance. How will he assure consumers not just have access to insurance but also affordability?
5. He proposes allowing people to purchase insurance across state lines so that they have access to lower cost insurance. Just which state has low cost and affordable health insurance?
6. He proposes that individuals and small business be able to form purchasing pools to lower costs and improve choice. Presumably, the only difference from these pools and those now offered by insurance companies are that his pools would be exempt from state benefit mandates. How would he protect the existing small group and individual markets from “cherry picking” as the healthy would be enticed to leave the existing state-regulated pools while the sick remained where they could get more comprehensive coverage?
7. He proposes medical malpractice reform. Experts generally believe the kind of reform he is proposing would lower the country’s health care bill by about $60 billion a year. However, that is only about 3% of our annual costs. What other cost containment proposals does he have?
8. He says that his market reforms, such as expanding Health Savings Accounts (HSAs), will drive down costs. HSAs, in various forms, have been around for 20 years–since 2004 in their present form. Yet the free market has only embraced HSAs as a very small part of the system—about 10% of the market. Why does he believe the tinkering with their plan design he is proposing will quickly make them a significant part of the market or make them more affordable?
9. What about Medicare? The Romney op-ed in USAToday doesn’t even contain the word, Medicare. His speech in Michigan today only made a passing reference to the Ryan Medicare plan, while promising a plan of his own in the future.
10. What about Medicaid? He briefly mentions block grants for the states. But how much money would he give the states compared to what they have now?

It looks to me like Romney’s newest health care plan is more about embracing the conservative Republican “free market” campaign talking points list of aging health care ideas in order to prove his bona fides in the primary states, more than it is a serious health care reform proposal.

I doubt even the “Tea Party” Republicans, it is meant to please, will buy it.

When it Comes To Health Care Policy It Really Doesn't Matter Which Democrat Or Which Republican Wins Their Nomination

With "Super Tuesday" upon us, I am once again bringing back a post that argues there is little difference among the candidates in each of their respective parties.

My suggestion is that you not cast your caucus or primary vote for a candidate based upon their health care reform plan.

From “thirty thousand feet” the leading Republicans are offering much the same health care policy ideas—a more vibrant market serving a more responsible consumer who would control his health care choices in a system that doesn’t need to spend more money.

And, from that same "thirty thousand feet," the two remaining Democrats are all offering about the same thing--$100 billion+ in new annual spending to guarantee access for virtually all Americans to existing public and private health plan options as well as some new ones created by the government.

Republicans support an open market—no mandates and less insurance regulation—believing that the market must first get costs under control by developing new and more efficient offerings for people in the private market based on consumer-driven principles and new and more efficient and appealing options for people who have public coverage as well.

Democrats call for shared responsibility—often mandating employers and consumers to participate in their near universal system made up of Medicare, Medicaid, SCHIP, private individual coverage offered through government-run marketing structures, a Medicare-like government plan option for those under age-65, and existing employer plans.

I hate to say that it doesn’t really matter which of the Democrats, or Republicans, wins their separate primary battles. But in terms of the nits health care policy it really doesn’t.

Sure there are differences in their health care policy proposals. Among the Democrats, Obama doesn't have an individual mandate to buy coverage while Clinton does. Among the Republicans, McCain uses a tax credit to help people buy coverage while Romney talks about tax deductions.

But remember, these are political proposals--generally just a few pages long. The real health reform process will eventually have to go through the legislative "sausage factory" that is Congress and I will suggest that the starting point from one Democrat compared to another, or one Republican compared to another, is hardly material.

As you prepare to vote in your state's caucus or primary, I would recommend that you focus on the other issues that are important to you, the "electability" of each of the candidates, and perhaps most importantly on the issue of health care, which of these candidates can finally break the health care reform logjam and get something done.

Whoever the eventual nominee is in each of the parties, we will have a Democrat and a Republican offering a dramatically different approach to American health care security.

The general election is where the big decision will be made on health care--and everything else.

You can see my analysis of each of the candidates plans by using the index in the right column.

A Detailed Analysis of the Romney Health Care Reform Plan

A Detailed Analysis of the 2007 Romney Health Care Reform Plan

See an analysis of the 2012 Romney Health plan Here: A Detailed Analysis of Mitt Romney’s Health Care Reform Plan

This following is a repost from October 22, 2007.

Mitt Romney puts his faith in a reinvigorated health care market—not unlike his Republican rivals. But Romney puts a bit of a different spin on that by focusing on giving states the incentives to craft the solution that works best for them.

The governor that signed the Massachusetts health reform law––that forms the basis of most Democratic presidential candidates health care plans including Clinton, Obama, and Edwards—distances himself from those policies. But he also he says he is “proud" of his role in that legislation.

Romney seems to rationalize being so closely involved in a plan that served as the example for Hillary Clinton’s health plan with his more recent “federalist” (states' rights) approach to health care by saying that the states should be encouraged and assisted in doing what works for them. So, if Massachusetts wants a Hillary Clinton-style plan, fine. If another state wants a more purely conservative approach that looks more like this Romney plan, that is fine too.

Frankly, I find his, “I’m OK if you’re OK,” position a little frustrating and said so in a recent post: Mitt Romney's Health Plan--A Foot in Each Canoe.

But, Romney is consistent with the Republican playbook on health reform by calling for a more robust private health insurance market, making changes to the tax treatment of insurance, and promoting state-based innovation.

Romney sees the federal government’s role as facilitating, not mandating, state reform so the states can be “laboratories of innovation.”

Let’s look at the four key elements of his plan as he has described them in the, “The Romney Vision”—a slide in a health care PowerPoint presentation on his website:

1. Make Health Insurance Affordable

• State market reform
• Full Tax deductibility
• Medical liability reform
• Technology and free market dynamics

He would make insurance affordable by giving the states incentives to deregulate their individual health insurance systems. He sees their many benefit mandates and regulations as adding too much wasted cost to the system.

He is right that many states have loaded up health insurance policies with benefit mandates. He needs to tell us which benefit mandates he considers frivolous and unnecessary in order to identify the potential savings. Would he have states cut requirements for regular mammograms from policies? Saying there are too many mandates is one thing but we should see the list of mandates he considers unnecessary.

It has been my experience that this is one that sounds good until you ask the politician to give you that list and then it shrinks considerably--as does the savings forecast.

The Kaiser Family Foundation summary of his proposal says that he has identified, "benefit mandates, guarantee issue, community rating, direct access to specialists and other features as over-regulation contributing to high cost insurance."

And what about medical underwriting rules, coverage of pre-existing conditions, and age rating? How would he expect the states to make the individual market more robust and cover everyone no matter their age or medical condition?

I have spent 35 years in the health insurance business and I am struggling to understand just how you throw the sick and the older to the market wolves and magically make the market more able to cover everyone? Given his "federalist" view, perhaps Romney expects the states to come up with innovative ways to cover the people the insurance underwriters don't want. But there is no free lunch--you end up with the old and the sick in a state pool and the young and healthy being insured by the private sector. How is that a better system?

It is ironic that on the one hand he says we need to give the states more flexibility toward making the health care system work but then says the states have gummed up the insurance system with too much regulation and the feds need to give them incentives to make it better.

He calls for “full tax deductibility” of health insurance rightly pointing out that individuals are at a disadvantage here. But just how would he get everyone covered with limited tax assistance? In Massachusetts, a family of three needs to be able to come up with $7,000 to $9,000 for a family health insurance policy—and that has a $2,000 per person deductible. If the family is in a 20% tax bracket, they still have to come up with the other 80%.

Governor Romney needs to be more specific on just how families earning more than the poverty level but less than a comfortable living, say between $25,000 a year and $75,000 a year, can afford the cost of health insurance, and if they are sick or older, how they can get a policy.

How many people earning even $75,000 a year have an extra $5,000, or more, in the budget for health insurance?

Republicans have been calling for medical liability reform (capping damages) since Lincoln was president with no success. As long as there are 60 Democrats in the Senate it won’t happen.

Governor Romney points to technology as a means to bring costs down—as do all of the other candidates, Republican and Democratic. But the market has been concentrating on this for years and only blunted health care costs. Just how will Romney force greater progress?


2. Provide Access to Quality Health Insurance for Every American

• Affordable policies for middle-income Americans
• Premium assistance to help low-income uninsured afford private health insurance.

Presumably, by reinvigorating the individual health insurance market he would make health insurance more affordable for middle-income Americans. Just as in the last section, he needs to tell us how he will do that. If he stripped every benefit mandate out of every state’s health insurance policies, he might decrease the cost 10% to 30%--but he would also strip out a lot of benefits. What does he anticipate the states will have to do here, will everyone, no matter their age or health, be covered for an affordable price?

Romney calls for premium assistance for those with a low-income. He expects the states to be more innovative in using block-grants of existing federal money (presumably SCHIP and Medicaid) to cover more people. He argues that there aren't 45 million uninsured but rather 12 to 19 million and that there is no need for more spending or taxes. But in his own state of Massachusetts, that has federal approval to use its federal money in more innovative ways, the system is coming up way short in being able to assist those doing better than the really poor but not well enough to be able to afford the cost of a policy--for example that family of three making $50,000 a year who is expected to pay all of the $7,000 to $9,000 for a policy with a $2,000 deductible.


3. Portability: End Risk of Losing Insurance

• Develop and grow individual market
• Premium assistance to help low-income uninsured afford private health insurance

Once again, just what changes is he suggesting for the individual health insurance market? The market is not currently able to cover all of the people that a Romney plan would send its way. Today, you have to pass medical underwriting, not have a serious pre-existing medical condition, and be subject to age-rating which makes policies relatively cheap for the young and expensive for the old.

If he expects states to dramatically cuts benefit mandates and turns the market loose, why won’t it gravitate in the direction that forced the creation of all of these state rules in the first place? On day one, there were no state regulators. They showed up when abuses began.

Presumably he expects the states to rejigger existing funds in innovative ways to come up with the money to be able to help low-income consumers buy health insurance. But, this is where Massachusetts is struggling today and California is bogged down in trying to figure out how to pay for a new health insurance bill. The experience in both of these states tells us that there simply isn’t enough money to create adequate subsidies from existing sources--state and federal.

In Massachusetts, the subsidies stop at 300% of poverty—just under $50,000 for a family of three. That family is expected to buy a policy that costs $7,000 to $9,000—with no support. With a Romney tax deduction, they might offset 20% of that cost. How does Governor Romney expect the states to be innovative in closing that gap? What does Romney expect other states do that he didn't do in Massachusetts?


4. Reduce Growth of U.S. Healthcare Spending

• Full Tax Deductibility
• State Insurance market reform
• Medical liability reform
• Everyone in the system

We keep seeing the same short list of policy bullets under each Romney heading; medical liability reform, state insurance market reform, and tax deductibility.

The same comments apply.

His final point is that he would have everyone in the system--but he wouldn’t spend more money believing there is enough already in the SCHIP and Medicaid program that could be more creatively spent.

He argues that by giving the states greater flexibility they will innovate--his "federalist approach to health care reform. But then he says the states have over-regulated the individual health insurance system and the feds need to straighten them out by giving states incentives to turn the carriers loose in a free market system.

Is this “a foot in each canoe” once again?

Additional post: Romney Says There Are Already "Pots of Money" in the States to Pay For Health Care Reform---Where?
Earlier post: Romney Wants to Reform State Health Insurance Regulation--Just What Does He Mean by That?

Washington Post: McCain "Has Some Good Ideas on Health Care"

The Washington Post is not known for favoring Republican prescriptions for health care reform. That is why their editorial today calling the McCain health care reform proposal, "the most detailed and thoughtful of the Republican proposals," caught my eye.

McCain has gone further in some respects than his Republican opponents on health care. Instead of providing people with a tax deduction, McCain converts the same tax savings into tax credits which will do more good for people in the lowest tax brackets--lower earners who need the most help.

McCain also puts more emphasis on cost containment--albeit with a focus on "coordinated care" that the provider community has tended to resist. "Coordinated care" may have a logic to it but McCain needs to also tell us why the providers will be willing to play ball with him when they have generally rejected the market's attempts to do the same thing.

The Post also rightly points out that the McCain health plan is weak on how he would use a more vibrant market to offer coverage to everyone just as his plan grants more flexibility to a market known for "cherry picking" when the rules aren't there to prohibit it.

McCain has always struck me as a Senator who is willing to work with all sides to find a common sense solution to problems even when that means moving off his party's ideological base and creating political problems for himself.

McCain worked with Ted Kennedy on the failed "patient rights" bill of the late 90s--which largely failed to pass only because the market adopted many of its requirements and undercut the need to do it. McCain's efforts on the tobacco settlement also crossed party lines to get a deal done. And, his efforts on campaign finance reform and the failed immigration reform (in tandem with his President) all point to someone who is going to find a solution even if it means doing business with political opponents--and at great cost to his own political support.

If we get a Republican President, health care reform is only going to be possible if that Republican is able to work with Democrats. If, as we now expect, Democrats control the Congress that will be essential if we are to avoid more gridlock. Even if the Republicans capture one or both of the House or Senate, it will still take plenty of Democrats to get anything as big as health care done.

One can also argue that Governor Romney shares the ability to work across the aisle since he did the deal with his Democratic legislature to do Massachusetts health care reform. However, the fact that Romney seems to deny that role on alternate days when it suits his audience doesn't give me a lot of comfort.

McCain has certainly shown that pragmatism and may be the real reason he got somewhat of an endorsement today by The Washington Post.

You can access my review of each of the major candidates' health care reform plans in the column to the right.

Republican Candidates Wouldn't Have Been Able To Get Coverage Under Their Own Health Reform Plans

Republican presidential candidates have called for a greater reliance upon the individual health insurance market. But many of these same candidates have had cancer and wouldn't have been able to get individual coverage under their own health reform plans at the time of their treatment.

Ricardo Alonso-Zaldivar had a great story in the Los Angeles Times recently.

Ricardo points out that Rudy Giuliani has had prostate cancer, John McCain melanoma, and Fred Thompson has had lymphoma.

All have called for a more robust individual health insurance market. But that market today relies upon medical underwriting--people who have had cancer will have great difficulty finding an insurance company to underwrite them. As the Times reports, "Cancer survivors -- even if they have been free of disease for several years -- are routinely denied health insurance when they try to purchase it as individuals."

If coverage is offered, it often comes with restrictions on the disease the person suffered with or high premiums.

Even after being treatment free for five years it's hard to get coverage. Ricardo cited a survey of 22 insurance companies Karen Pollitz did at Georgetown University about a hypothetical breast cancer survivor who was five years out from a successful treatment. "Eleven companies said they would deny coverage, and six said they would issue a policy at standard rates. One company said it would charge double the usual premium. Another said it would issue a policy but exclude future cancer treatment. Three insurers did not respond."

Romney goes even further than the other Republicans by calling for less regulation in the state-based individual health insurance market then we have today.

Employer plans generally cover all new employees--albeit with as much as a one-year pre-existing condition provision if the new employee did not have prior coverage. However, all of the Republicans provide tax incentives that would move coverage away from the employer model and onto the individual model.

No one should be able to wait to approach an insurance company until they are sick and expect to get coverage--they should have bought it in the first place. But when individual coverage costs thousands of dollars a year, many can't afford to get it. Some people lose their jobs and their coverage.

Lots of people are out there without health insurance coverage and it has nothing to do with personal irresponsibility.

Today's COBRA might help--an 18 month extension for a worker who has left their employer so long as they can afford the full cost of their employer's plan--which averaged $12,000 a year for family coverage in 2007.

A reformed health insurance system based upon an individual insurance model can work. However, the Republican candidates have not closed the loop on how they would make it affordable for people to buy coverage in the first place or how they would overcome medical underwriting and age-rating that are now at the core of this business model.

Good thing these guys didn't get laid off, lose their coverage, and have to go find individual coverage under their own health reform plans!

You can access my review of each of the candidates' health plans in the column to the right.

Romney Says There Are Already "Pots of Money" in the States to Pay For Health Care Reform---Where?

Mitt Romney says states could implement comprehensive health care reform without having to raise taxes.

However, states trying to replicate the Massachusetts health plan would likely have to raise taxes in order to pay for it. That is the conclusion of a November 3rd Boston Globe article. Here are some points:

• Massachusetts had something other states don't have--a $610 million uncompensated care pool that Mass was able to use for covering the uninsured.
• The uncompensated care pool comes from assessments on hospitals, insurers, and state tax revenue.
• Mass is using roughly $160 million from the uncompensated care pool, along with other state and federal funds, to fund Massachusetts plan.

But the Romney people say states wouldn't have to raise taxes: "We firmly believe you can do this in a revenue-neutral way,"said a spokesperson. "There are these pots of money around that states do receive or their hospitals receive that you can say, 'Let's use that in the best fashion, let's use that more wisely, let's use that to get people into health insurance plans, so they're not using that in a hospital room."

Just where does Romney think these "pots of money" are in the states? As he should have learned in Massachusetts, that state's program already draws on the federal programs (SCHIP and Medicaid) to help pay for the plan. On top of that comes the $160 million from the "free care pool." With all of that there still isn't enough money--the regulator has had to back-off on the coverage mandate for the near poor because of a funding shortfall.

The Romney campaign's health plan has as its core the notion that there is enough money in the states already that they can craft their own version of health care reform and cover their people.

In California, the governor and legislature, now in a special session, are grappling with a state health reform plan that at last look had the Democrats proposing to pay for it with an employer payroll tax of 2% to 6.5%, taking the per pack cigarette tax from 87 cents to $2.87, and raising billions in new hospital taxes. And, that is after "creatively" using SCHIP and Medicaid money.

Romney says he wants the states to be "laboratories of innovation." But, Romney needs to tell us where these "pots of money" are in the states for health care reform.

Recent post: A Detailed Analysis of the Romney Health Care Reform Plan

Poll Shows Democratic Presidential Candidates Attracting Independents and Moderates With Their Health Reform Plans

I was struck by this conclusion in today's Los Angeles Times regarding their recent voter survey:

"In one of the most politically significant results, the poll finds that independents and moderates were generally lining up with Democrats in the healthcare debate.

"The survey also suggested an explanation for the emerging alignment: Independents were most likely to complain about "job lock" -- the view that they are stuck in jobs they don't like solely because of health benefits.

"In all, 20% of independents said they or someone in their household were forced to stay in a job because it provided healthcare, compared with 13% of Democrats and 5% of Republicans.

"Independents are more insecure in terms of the issue of 'job lock,' which causes them to lean more toward Democrats on the healthcare issue than Republicans, said Robert Blendon, a public opinion expert at the Harvard School of Public Health."

As I have said in earlier posts regarding the Republicans' health reform proposals, their positions may look good in the primaries where they must please only conservative Republican voters, but they risk losing the middle of the country if they don't get a lot more serious about health care reform.

Romney Wants to Reform State Health Insurance Regulation--Just What Does He Mean by That?

Republican presidential candidate Mitt Romney is calling for the cutting of state health insurance regulations to make policies more affordable. He blames the over-regulation of health insurance at the state level as one of the primary reasons health insurance costs so much.

Of course the reason that health insurance costs so much is that health care costs so much, but we’ve discussed that one plenty of times before.

Romney’s proposal comes straight from the conservative Republican playbook on health care. The thinking goes that state regulation has made health insurance expensive—just let the market set its own standards and costs will come down as people buy the policies they need.

To a point, these advocates are on to something. There are too many rules making costs higher from one state to another. Kentucky virtually blew its market up in the mid-1990s with excessive regulation, as one example. The new Massachusetts health insurance law (that Romney signed) refuses to recognize tens of thousands of existing health insurance policies because they don't meet minimum benefit requirements--particularly when the policy has a high deductible.

In fact, you can argue that the minimum health policy standards Massachusetts now has, because of the new law Romney signed, makes it the most regulated health insurance market in the union.

It would also be helpful if we had one regulator in the health insurance space rather than more than 50 and policies that could be sold on a national scale.

But those who advocate a “free market” for health insurance also need to heed recent history.

In the 1980s and early 1990s we had a virtual free market. Health insurers could cover whomever they wanted, drop people when they became sick or give them a whopping rate increase to drive them off. The vaunted “association health plans” many conservatives would like to bring back were in their glory—and largely made money “cherry picking” the best risks.

Most of the state health insurance regulation we live with today came out of the “cherry picking” controversy of the late 1980s and early 1990s.

There is plenty of regulation that is counterproductive and adds unnecessary waste.

But, most of it—the rules that add the biggest costs—were the direct result of some pretty bad free market experiences.

Is Romney looking to trim bureaucratic waste from the health insurance market?

Or, is he calling for turning the calendar back to 1990?

Just where is the health insurance regulatory waste he wants to eliminate? The voters deserve the details on this one.

Mitt Romney's Health Plan--A Foot in Each Canoe

Up in Wisconsin's Northwoods, camp counselors play a game with the kids in which they put two canoes together in the lake and have the kids try to stand up with one foot in each canoe. As you can imagine it's an almost impossible balancing act.

I was reminded of that last week sitting by our lake reading reports of Mitt Romney’s health plan proposals.

Romney has two canoes to deal with:

• He signed, and participated in the development of, the Massachusetts health plan law that has become the basis for the health plans proposed by Democrats John Edwards and Barack Obama—and likely the plan Hillary Clinton will offer.
• He is running as a conservative where there is a virtual requirement to offer market-based health reform ideas and to stay away from big government plans—which about all conservatives consider the Massachusetts plan to be.

Romney clearly has a foot in each canoe:

• He has referred to the Mass health plan as an “example of how he used conservative principles to provide affordable health insurance to all state residents."
• Recently in New Hampshire, Romney charged, "Barack Obama [whose health plan looks like the Mass plan Romney signed] said we're going to have the government take over health care. He at least had the integrity to say he wants to raise your taxes." He added, "The right answer is not a government takeover, it's not socialized medicine. It's not Hillarycare." Later, Romney said, "I don't want the guys who ran the [Hurricane] Katrina cleanup running my health care system."

Romney is trying to position himself as the darling of the conservative wing of the Republican Party—a smart thing to do if you want the nomination.

So, it comes as no surprise that his health plan principles come right out of the conservative Republican playbook on health care:

• Changing the tax code so more people are able to buy health insurance in the individual market.
  
• Promoting health savings accounts (HSAs) and high deductible health plans.
• Giving states more flexibility in how they use federal health care funds.
• Encouraging states to reform their state health insurance regulatory oversight to reduce the cost of insurance.

Romney seems to be trying to rationalize the two canoes by saying what worked in my state isn’t what I would do in yours, “A one-size-fits-all national health care system is bound to fail. It ignores the sharp difference between states, and it relies on Washington bureaucracy to manage. I don’t want the people who ran the Katrina cleanup to manage our health care system.”

But the same day he announced his health care plan, Romney spokesmen Eric Fehrnstrom, had this to say, “What’s important about the Massachusetts health care law is that it’s working, and Mitt Romney got it done by reaching across the political isle. We have fewer uninsured, the cost of policies is coming down, and more and more people are taking personal responsibility for their own care.”

So, if Romney is elected and has a Democratic Congress unwilling to enact a conservative Republican health program, will Romney again do the same deal he did with Massachusetts Democrats? I am sure that Senators Obama and Clinton would vote for it.

Watching someone with a foot in each canoe try to maintain his balance is always a hoot!

You can also see the complete Romney health care PowerPoint.

Romney Condemns Obama's Health Plan--But Obama's Plan is a Clone of the Massachusetts Plan Romney Signed!

Mitt Romney criticized Barack Obama's health care proposal over the weekend in New Hampshire. According to The Baltimore Sun, Romney said, "Barack Obama said we're going to have the government take over health care. He at least had the integrity to say he wants to raise your taxes." He added, "The right answer is not a government takeover, it's not socialized medicine. It's not Hillarycare." Separately, at a Sunday town hall meeting, Romney said, "I don't want the guys who ran the [Hurricane] Katrina cleanup running my health care system."

I am not here to tell you Obama has the best plan, or he doesn't--or that any other candidate does or doesn't for that matter. I do feel comfortable in telling you that Obama pretty much has the plan Romney signed into law in Massachusetts.

In fact, Obama's plan doesn't go as far as the Mass plan Romney signed--the Obama plan doesn't have an individual mandate!

Which planet is Romney from?

Previous post on Obama plan details: Clinton, Edwards, Obama--Offering Health Care Reform Proposals More Similar Than Different

Previous post on the Mass plan as political "baggage" for Romney: Mitt Romney Looking for Support Among Conservative Republicans--A Health Care Achilles Heel?

Wall Street Journal Sends Shockwaves Through the Health Insurance Markets With the Headline "Health Savings Plans Start to Falter"

It's the kind of headline I would have expected to see in the New York Times instead of the Wall Street Journal but there it was in Tuesday's edition.

Vanessa Fuhrmans' article seems to have unleashed some pent-up frustration in the health benefits market on the subject of health savings accounts (HSAs) specifically and consumer-driven care generally. It is as if it represents a turning point for how health savings accounts (HSAs) and consumer-driven care are going to be seen by the benefits market from this point forward.

The article points out that HSA growth may have stalled--the number of workers enrolled in HSAs through work grew only slightly, from 2.4 million in 2005 to 2.7 million in 2006. When employees had a choice of plan type, only 19% picked an HSA. The surveys also show low satisfaction rates for these plans. The managing director of Towers Perrin's health care practice: "If I were a product manager in any other industry and saw the scores this low in customer satisfaction and understanding, I'd be thinking of pulling that product from the shelves and retooling it."

Just to get my own bias on this issue out in the open, I have never believed that consumer-driven health care was any kind of silver bullet for solving America's health care problems. That said, I don't see much harm in making these plans available--particularly to consumers who can afford the extra financial risks they can create. These plans enjoy better consumer acceptance in the individual health market--particularly among higher paid consumers because they are a fantastic tax preference and a great way to fund the high deductible plans this higher-earning market tends to want anyway.

But HSAs as a health policy tool to fix the American health care system? Give me a break.

Consumer-driven care is a concept built on a free market foundation. And that foundation is turning out to be one that is pretty weak.

• First, for people to act in an efficient way, they have to have information. They have to know their options and be able to assess the options. The medical directors of the leading health plans can hardly manage care optimally. How did we ever expect regular folks to figure it out. The information just doesn't exist--beyond some marketing brochures.
• Second, the consumer-driven movement assumed that patients would want to take more control of their health care challenges if there was a financial incentive for them to do it. We are finding that the opposite is true. The health care delivery system is a hugely complex tangle and consumers are more interested in finding providers and/or insurers they can trust to guide them through it than thinking this needs to be their preoccupation. Ask anyone who has had a serious illness, or managed one for a close relative, and they will recount one nightmare after another about trying to get the best care and their frustration in trying to untangle bills and insurance documents. Who would actually want to do this?
• Third, and you have all heard this a million times but we have to keep it on the list, 75% of all health care costs are incurred by the 15% sickest people. Look at all the consumer-driven financial incentives and you will find they are first-dollar oriented. Those people with all the high health care claims, and most of the costs, blow through those corridors very quickly and into full-pay areas where they no longer have financial incentives to better manage care--if they wanted to and could.

More information, price transparency, incentives to be better health care consumers, are all great ideas. Clearly, these concepts are responsible for the much better take-up rate for generic drugs and the huge savings there. The $5 co-pay and $100 deductible were around way too long. But the consumer's ability to be buy serious health care like he would buy a set of tires was a silly idea in the first place. This idea was pushed by the same "geniuses" who today write books about how we will save the U.S. health care system with new technology as the next "silver-bullet." All true to some extent but far more a sign of just how naive they are about the down-to-earth challenges we face.

We are at an interesting place in the national health policy debate.

One Democrat after another--so far Obama and Edwards--is proposing comprehensive health reform built around the Massachusetts health reform plan. That plan now has its challenges in getting off the ground and proving-out its proponents' ideas.

On the Republican side, we already have two candidates--Giuliani and McCain--who have said they want to work toward a more market-driven health care system with the consumer-driven concepts and HSAs at its core. But now even the Wall Street Journal is challenging the bottom line in that health care philosophy.

We have two big competing health reform ideas--one Democratic and one Republican--facing off in the upcoming national election just as real life results from both of these models are becoming available.

The candidates had better be careful to connect their rhetoric to the reality.

McCain to Propose a Health Care Reform Plan--Both Democrats and Republicans Becoming Predictable on Health Care

Republican presidential candidate Senator John McCain said this weekend that he is working on a health care reform proposal. He gave no time for its release but did mention a number of components:

• His plan will not include tax increases.
  
• It will not include any coverage mandates--presumably individual or employer mandates.
• He would make greater use of health care information technology.
• It will expand on the current State Children's Health Insurance Program (S-CHIP).
• It will include greater emphasis on individual responsibility and will include the use of health savings accounts (HSAs).
• It will include medical malpractice reform.
  

While short on details at this early stage, McCain's health reform plan would appear to follow the usual conservative Republican philosophy of more individual responsibility and the use of market forces.

It would also appear that McCain's proposal will be very similar to the preliminary information we have seen on Rudy Giuliani's forthcoming health care reform proposal.

Both the leading Democratic and Republican presidential candidates appear to be falling in line along predictable policy outlines.

Generally, Democrats are emphasizing more comprehensive and expensive plans that look a lot like the recently enacted Massachusetts plan--with costly expansions of existing public and private plans and requirements that individuals and/or employers pay for coverage. Many Democrats see the bigger health insurance pools, like employer plans and traditional Medicare, as the best way to deliver affordable and comprehensive benefits.

Republicans, on the other hand, generally favor more individual responsibility, a more transparent market, and a movement away from the traditional, and generous, employer-provided health care that many Republicans believe have helped push health care costs higher. Many conservative Republicans believe employer plans have insulated consumers so much that the usual market forces have been lost in health care and that the private markets should also be brought to bear to bring Medicare and Medicaid costs under control.

During the primary season at least, health care doesn't look to be a deciding issue. Simply, the leading Democrats all look to have similar health care proposals--no real opportunity to differentiate candidates there. Now, it appears that at least two of the leading Republicans--McCain and Giuliani--will also have indistinguishable health care proposals.

However, Republican presidential candidate Mitt Romney has yet to tell us what his health care platform will look like. Romney is presenting himself as a conservative Republican but, as the recent Governor of Massachusetts, has signed the Massachusetts health reform law that has become the baseline for the leading Democratic candidates' health care reform proposals.

Now what will Romney do? Will he move in the direction of the Democratic Massachusetts-like proposals or will he move away from his own legacy and away from Massachusetts? I wouldn't bet on this self-described conservative offering anything like the Massachusetts-style plans we have seen the Democrats propose.

Presuming no surprises from Romney, there will be little on health care to differentiate the front-runners in either party from their leading rivals during the primary season.

But, come the general election, there will likely be a clear choice on health care. From what we have seen so far, Clinton, Edwards, and Obama all have proposals dramatically different than what we will see from McCain and Giuliani--and likely Romney.

Come November on health care, the choice will likely be very clear.

The Mandate Myth--Health Reform Plans Don't Have to Mandate Coverage to Work But They Do Have Be Affordable

As the presidential candidates, Republican and Democratic, begin to come forward with their health reform plans, a side debate is heating up about whether any meaningful health care reform plan has to have a mandate, individual or employer.

The reasoning goes that for health care reform to work we need to get about everyone in the pool--both in order to solve the uninsured problem and to be able to adequately spread the cost of health insurance across as many people as possible.

We do need to spread the cost of insurance over a big pool to get the best cost structure--a pool that isn't just populated by the old and sick and therefore one that costs a lot.

However, the notion that we have to either mandate that all individuals buy coverage--or that all employers provide it--is a myth.

Today, there are a number of health insurance pools that are large enough to provide an optimal spread of risk. Each of these pools is voluntary--not mandatory:

• Most employer plans. No employer requires all employees to join their health plan. All employer health plans are voluntary. Yet employer after employer--many self-insured with just a few hundred participants--have very efficient programs.
• The Part D Medicare drug benefit. The plan is voluntary and enough people have signed up to make it workable.
• Part B of Medicare. The portion of Medicare that covers physician and other non-hospital costs is voluntary and almost all seniors sign up for it.

Each of these voluntary health insurance plans works quite well without any individual mandate.

However, each of these plans is affordable. Employers typically pay at least 75% of the costs for their employees. The government pays 75% of Medicare Part D and Part B costs.

So, it's simple.

The problem is not making people buy coverage--the problem is making health insurance coverage affordable. Massachusetts learned that this year when they first tried to mandate that all citizens buy health insurance but had to back-off because they couldn't produce a health insurance plan that everyone could afford.

If you make health care affordable enough people will come to adequately populate the insurance pool.

The challenge is not to force people to buy health insurance. The challenge is making it affordable so they can.

Many are now focusing on whether or not Barack Obama, John Edwards, Hillary Clinton, Rudy Giuliani, or any of the rest, have a mandate in their health reform plans.

Wrong.

What we need to focus on is how are they going to make health care affordable.

It's the costs, stupid!

Related posts:
Giuliani Set to Announce a Health Care Proposal--But He Has to Make it Affordable for Everyone

Deja Vu in Massachusetts--We've Been Down this Road Before--The Massachusetts Health Care Plan and Health Care Costs

It's the Cost of Health Care Stupid!!!

Giuliani, McCain, and Romney--Where Are Their Health Care Plans?

Looking at the leading Republican candidates for president you wouldn't think health care is much of an issue.

In fact, finding anything the top three Republican candidates have said regarding health care is sort of like playing, "Where's Waldo."

A recent tour of their official campaign Websites:

Rudy Giuliani - Click on "On the Issues" on Giuliani's Website and health care isn't listed as one of the eleven issues shown from "Fiscal discipline" to "Marriage." Apparently, he hasn't made the connection between Medicare going broke and "Fiscal Discipline."

The only reference I found to Giuliani's health care platform on Google was a story in the Des Moines Register where he mentioned health care vouchers, high risk pools for the uninsurable, and support for President Bush's State of the Union proposal to end the tax exemption on employer provided health insurance in favor of a standard tax exemption. He was also quoted as saying he supports, "fee market, profit-driven" health care as one that serves people best.

John McCain - Click on the "On the Issues" icon on McCain's Website and you get his position on nine issues from "Government Spending, Lower Taxes and Economic Prosperity" to "Protecting Second Amendment Rights"--but none of them deal with health care. Like Giuliani, apparently McCain hasn't made a connection between "Government Spending" and our ballooning entitlement costs--particularly Medicare. He also doesn't mention health care under the "Human Dignity" portion of his platform.

McCain is not a newcomer to health care--he was a primary sponsor, with Senator Kennedy in 1999, of the failed "Patients' Bill of Rights" that would have regulated health insurers.

Mitt Romney - Romney's Website actually mentions health care! Under the "Issue Watch" icon, health care is the tenth of eleven issues he lists. The third issue he lists is, "Competing With Asia." He makes no connection between this and American health care costs (he might ask Detroit about that). Under the "Health Care" issue icon he shows three short statements including, "The health of our nation can be improved by extending health insurance to all Americans, not through a government program or new taxes, but through market reforms."

Romney does not mention the Massachusetts health reform bill he signed that does create a new and very large government program and started out mandating that consumers buy health insurance that costs about $7,000 for a family of three ($2,000 deductible plan, average age of 37).

Apparently, the leading Republican candidates, unlike their Democratic opposites, don't think they need to address health care to win the Republican nomination.

Maybe, and only maybe, that makes sense in the short term, but they would be wrong to underestimate just how important an issue this is to American voters.

You wouldn't think the Democrats won the last election.

Recent post: Clinton, Edwards, Obama--Offering Health Care Reform Proposals More Similar Than Different

Mitt Romney Looking for Support Among Conservative Republicans--A Health Care Achilles Heel?

Former Massachusetts Governor Mitt Romney is working hard to boost his popularity among conservative Republicans. He seems to be saying all the right things for conservatives. That, plus the longstanding suspicion conservative Republicans have had for both Rudy Giuliani and John McCane have given Romney a shot at the party's powerful conservative wing.

Romney has a certain amount of health care reform credibility in the run up to the 2008 elections because he signed the Massachusetts Universal Health Bill. That legislation was a major bipartisan accomplishment when no one at either the state or federal level has been able to accomplish much toward solving the problem of the uninsured.

But that accomplishment could turn into a real political problem for Romney among those same conservatives if the program isn't able to get past a very serious threat to its success. As we have posted before, the average insurance company bids for the mandated health plan averaged $380 per person per month--or $13,680 per year for a family of three. When the legislation was passed, it was estimated the average per person monthly cost would be $200.

The Mass regulator is now in the midst of trying to solve that problem by looking at more limited plan designs and pressuring insurers to bid more aggressively. But that will be very hard because a comprehensive health plan insurance plan just plain costs that much in Massachusetts.

The regulator can add deductibles and big copays to get the cost down. However, what good does it do to give a poor person a health insurance plan with a $2,000 deductible?

The Mass regulator has a choice--pay the real cost of a health insurance policy or offer some stripped down coverage that does a low income person little good.

The middle class would fare no better. A family of three making more than three times the poverty level ($48,000 per year) would be expected to pay the full cost of a family policy--$13,680 per year at the $380 average premium. Even if the regulator gets the premium down to $300 per person the annual cost for a family of three would be $10,800 per year--23% of a $48,000 before tax income. And, that policy might have a $2,000 front-end deductible.

What kind of reaction do you think conservatives are going to have if they hear Romney is taking credit for a health insurance bill that requires all Mass families to buy a health insurance policy at those prices?

Conservatives seem to be getting more and more interested in a Romney candidacy.

But if the Massachusetts health plan looks like just another fiscally irresponsible foray into health care policy, Mitt Romney's conservative honeymoon many be over.