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.

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?