Townhall.com, January 27, 2006

Could be signature issue for '08

Massachusetts Governor Mitt Romney won’t call it universal coverage or even an individual mandate, but he will say that his new healthcare plan will require every Bay State citizen to have health insurance.

“People are either going to buy insurance or pay for their own care. They’re not going to say, ‘I got care and you, Mr. Taxpayer or you, Ms. Premium Payer, you’ve got to pay for me,” Romney said in an address to The Heritage Foundation in Washington, DC Thursday.

The speech marked Romney’s second appearance at the conservative think tank in the past five months and was widely viewed as the national launch of the policy destined to become the centerpiece of his 2008 White House bid.

Upon entering office in 2003 Romney inherited two significant problems: the rising cost of health insurance premiums and nearly 500,000 uninsured Massachusetts residents. Romney spent much of his time Thursday explaining how to insure the uninsured, believing that reducing or eliminating the large number of uninsured will help contain healthcare costs. It very well may. But that’s only the destination. How do you actually get there?

Romney and his team began their “Commonwealth Care” program with Medicaid. The goal: move the 106,000 Medicaid eligible but un-enrolled citizens into the program. This would curtail wildly expensive “free care” visits. The remedy was embarrassingly simple: A new computer program allowed hospitals to determine whether a patient qualified for Medicaid. If so, they were enrolled immediately.

As Romney notes, early returns are promising, “In the last 12 months we’ve gotten 77,000 people to enroll, isn’t that something? We’ve gone after them, marketed to them, and signed them up.”

Despite this influx of new users, the growth rate in Medicaid expenditures was limited to a modest 3.4 percent. Romney credits increased preventative care and access to prescription drugs.

The second prong of the plan is “premium assistance” for the working poor. Romney calls this population “eminently insurable” because they are mostly young, healthy, single males and their employment rate is near 80 percent. Romney’s reforms would require individuals to purchase private insurance with low co-pays and no deductibles. Individuals would, however, pay monthly premiums based on a sliding income scale in pre-tax dollars. This is a break from previous policy that required individuals to pay for health insurance with post-tax dollars.

Romney’s bet: If more people have insurance then healthcare providers will have lower, more predictable costs that allow for the provision of affordable coverage.

Finally, Commonwealth Care will require uninsured individuals earning more than $54,000 to have a proscribed minimum level of insurance. This will be accomplished through a sort of managed-care system with deductibles ranging from $250 to $1,000 and co-pays as high as $40.

Romney calls this aspect the “personal responsibility principle,” meaning, according to his plan “all citizens will have access to health insurance they can afford” and therefore “should be insured or have the means to pay for their own care.” That’s the catch: you can choose not to have health insurance, but only if you prove you have the financial means to cover your expenses, which could mean having up to $10,000 in a government health expenses account. Otherwise, failure to comply will lead to the potential loss of tax exemptions and even wage withholdings.

This is serious, ambitious stuff. And some conservatives think it smells an awful lot like government-funded, single-payer health care.

Sally Pipes, president of the Pacific Research Institute, called Romney’s plan an attempt to pour “political capital into creating a new state healthcare bureaucracy, further regulating health insurance, forcing individuals to spend their money on a government designed product, and increasing spending by $200 million.”

Romney, obviously, disagrees. “This is a plan that gets everybody insured with private health insurance that doesn’t require new taxes, doesn’t require state government or the federal government to take over healthcare like HillaryCare and instead says we can have a private, market-based system … [that] works,” he said.

Something is getting lost in translation, namely a revenue source.

Romney notes that Massachusetts currently spends nearly $1 billion annually on healthcare for the uninsured. Commonwealth Care, he contends, would instead use this money to help individuals pay premiums and to lower costs for middle-income earners.

“One of the things we have to come to grips with is that we’re already paying for these people’s care today; it’s already happening,” said Timothy R. Murphy, Massachusetts’ Secretary of Health and Human Services, in an interview. “We’re navigating the vagaries of the federal tax code to at least allow people to buy insurance on a more cost-effective basis.”

Still, is mandatory health insurance the solution? Isn’t this a remarkable extension of government power over individuals?

Sort of, Romney argues, but he believes government is working to prevent “free-loaders” from draining the system and to provide individuals with choices in the marketplace. Call it a forced free-market approach.

But assuming that Romney’s plan is indeed a free-market approach, one still wonders what will happen when the inevitable corrections are made by a governor who shuns free-market principles. It’s easy to envision the plan being hijacked by universal health care zealots eager to make America a super-sized Canada.

Murphy says that’s all the more reason for urgency. “I think it’s critical to do the things that the governor has articulated to put this infrastructure in place,” he said. “When you do that and we’re able to prove out the case that this type of approach makes sense, it’s hard to say, ‘Let’s go back.’”

He’s right. It’s a giant, irreversible leap. The question is: In what direction?

Steve Muscatello is a Townhall.com columnist.
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