Commentary

Romneycare Gets the Flu

When Mitt Romney signed into law the nation’s most far-reaching state health- care-reform proposal in April 2006, it was widely expected to be a centerpiece of his presidential campaign. Then-Massachusetts Gov. Romney bragged that he would “steal” the traditionally Democratic issue of health care. But he seldom mentions his plan on the campaign trail - he simply calls for greater state experimentation, with little or no reference to what he did in Massachusetts.

And for good reason. Even as other states (including New York) look at implementing similar plans, Massachusetts is finding that the package is failing to meet its goals.

The plan was supposed to do two things: achieve universal health-insurance coverage and control costs. As its final components take effect, the reality shows it has done neither.

One key feature was an unprecedented requirement for everyone in the state to get health insurance. With the final deadline for that mandate just two weeks away, some 200,000 to 400,000 Massachusetts residents have failed to comply.

This includes the overwhelming majority of those with incomes too high to qualify for state subsidies. And this is on top of the 20 percent of the state’s uninsured who were exempted from the mandate because buying insurance would be too much of a financial burden.

So it’s now clear that the state won’t get anywhere close to universal coverage.

Massachusetts has done better at signing people up for subsidized coverage. No surprise: People are all too happy to sign up if others pay the bill - and Romney extended subsidies well into the middle class - a family of four earning $63,000 per year qualifies.

That “success” here translates to failure on another front: The cost of the program has exploded; it’s running $150 million above the original projection for this year alone.

[T]he answer lies with giving consumers more control over their health-care spending while increasing competition in the health- care marketplace.”

Nor has the reform succeeded in holding down other costs. Insurance premiums in the state are expected to rise 10 to 12 percent next year - double the national average. While many factors surely contribute to that jump, one reason is that the new bureaucracy that the legislation created - called “the Connector” - has been adding new regulations and mandates.

For example, the Connector’s governing board has prohibited deductibles of more than $2,000 and required that all policies sold in the state add prescription-drug coverage.

There are important lessons here, and not just for Mitt Romney. The health-care plans advocated by all three leading Democratic ‘08 candidates - Hillary Clinton, John Edwards and Barack Obama - are substantially the same as Romney’s Massachusetts plan. All are variations of a concept called “managed competition,” which leaves insurance privately owned but forces it to operate in an artificial and highly regulated marketplace similar to a public utility.

All their plans include an individual mandate (for children only in Obama’s case, for everyone in Clinton’s and Edwards’ plans) plus increased regulation, a government-designed standard benefits package and a new pooling mechanism similar to the Connector. There’s no reason to believe that these plans will be any more successful than Romney’s.

No one can deny that the US health-care system needs reform. Too many Americans lack health insurance and/or are unable to afford the best care. More must be done to lower health-care costs and increase access to care. Both patients and providers need better and more useful information. The system is riddled with waste, and quality of care is uneven. Such government health-care programs as Medicare and Medicaid threaten future generations with an enormous burden of debt and taxes.

But, as Massachusetts has shown us, mandating insurance, restricting individual choice, expanding subsidies and increasing government control isn’t going to solve those problems. Rather, the answer lies with giving consumers more control over their health-care spending while increasing competition in the health- care marketplace.

Romney may finally be learning this lesson. What will it take before Sens. Clinton, Obama and Edwards learn theirs?

Michael Tanner is director of health and welfare studies at the Cato Institute and author of Leviathan on the Right.