Faith-Based Health Insurance Reform

I had the opportunity yesterday to meet with Tim Murphy, Massachusetts secretary of health and human services, to discuss Governor Romney’s Massachusetts health care reform.  Secretary Murphy, who is smart, knowledgeable and personable, clarified a great many questions about the plan.  Unfortunately clarity was not reassuring.

Secretary Murphy essentially confirmed that the concerns I raised in my recent Briefing Paper were correct.  But he said we shouldn’t worry about them.  For example, there were questions about whether the Massachusetts Health Connector, the new government agency that operates as a clearinghouse for the individual and small group health insurance markets, would have the power to limit the insurance plans it would offer.  The Heritage Foundation had insisted it had no such authority.  However, Secretary Murphy confirmed that it did.  He believed, however, that this would not be a problem for two reasons: 1) he had faith that the board would not abuse its power and would offer a wide range of plans, and 2) if a future board did attempt to limit the type of available plans, people could choose to buy plans outside the connector.  He was confident that the Connector would not squeeze out an independent market in small group and individual insurance, although he admitted that the Connector would not be competing on an even playing field.

He also said that we shouldn’t worry about new mandated benefits driving up the cost of the mandatory insurance policy, because voters would object to rising costs and resist any new mandates.  He said that if the program’s cost rises too much voters will demand that the program be cut back.  And he admitted that the plan was a form of managed competition, but believed that they had devised the right incentives and penalties to make it all work.

In essence, this is a faith-based health insurance program.  Governor Romney has set up a program that depends on future insurance providers, legislators, governors, and voters all behaving in exactly the way he expects.  For example, legislators will never respond to special interests by adding new mandates and regulations.  Voters will react to rising costs not by asking for increased subsidies but by cutting back on the program.  (Can anyone recall the last time voters did that?).  Businesses won’t drop health insurance coverage and let taxpayers pick up the tab.

Maybe Governor Romney and Secretary Murphy are right, though I wouldn’t hold my breath.  But shouldn’t we wait and see what happens before other states or the federal government rush to copy it?  The Heritage Foundation has announced a major effort to convince other states to adopt Massachusetts-like reform.  California, Louisiana, Maryland, Michigan, Wisconsin, and the District of Columbia are reportedly considering it.  Lawmakers in those states should think twice about going down this road toward more government control of the health care system.