Opinion

The Great Debate

Romney’s second shot at healthcare reform

By Jim Stergios and Josh Archambault
April 3, 2012

Americans believe in second chances. The oral arguments before the Supreme Court last week were a rare opportunity to dispassionately re-examine the divisive healthcare debate of two years ago. What happens if, after the smoke clears, we get a second chance at healthcare reform?

We’ve long known that healthcare will be a central theme in the 2012 presidential contest. The High Court’s deliberations and June decision only reinforce that reality for President Obama and Governor Romney.

Unlike with the Patient Protection and Affordable Care Act (PPACA), the constitutionality of Governor Romney’s Massachusetts law has never been seriously questioned. States, not the federal government, have police powers, allowing them to require purchases (car insurance, taxes and licensure) and to pass wide-ranging public health laws and public safety laws. The Bay State law enjoys broad popular support.

In contrast, the case before the Supreme Court was brought by the majority of states. Regardless of what the Court decides, the PPACA will continue to polarize the country.

President Obama may cite Romney’s Massachusetts reform as inspiring his efforts, but there are profound differences in the size, reach and financing of the two laws. Elected just six months after the law’s passage, Romney’s successor, Democratic Governor Deval Patrick, has obscured some of those differences by taking a big government approach to implementation.

Where Romney sought an open marketplace for individuals to purchase benefit plans ranging from catastrophic to generous, Patrick has drastically limited choices and mandated minimum coverage levels beyond private-market norms.

Even with poor implementation, the Massachusetts law has yielded some positive results, including broadening insurance coverage, especially for minorities, and decreasing premiums for individual purchasers of insurance.

Candidate Romney must, however, do more than defend decisions made in Massachusetts as “a state solution to a state problem.” The governor should articulate a broader vision that respects and leverages the strengths of our federal political system. Its main points should look something like this:

Political settlement requires respect for the states. The imposition of an unknown, nationalized program on the entire country has led to 26 state attorneys general acting as plaintiffs in the Supreme Court case and broad popular opposition. The “PPACA approach” will not gain political settlement even if it passes Court muster.

The country would do well to learn from our last major federal entitlement reform: the Welfare Reform Act. In 1996, building on President Reagan’s strategy, President Clinton granted waivers to 43 states to experiment with various welfare reforms but still held them accountable for results. Governors John Engler of Michigan, Tommy Thompson of Wisconsin and Bill Weld of Massachusetts catalyzed state innovation and produced empirical evidence about what worked — and what didn’t.

Already by 1996, the public was comfortable with key elements of the federal reform proposals because they had seen them at work in their home states. Romney should propose another “great experiment,” setting out clear goals and granting states the flexibility to innovate based on their unique market structures and populations.

That vision stands in stark contrast to the Obama administration’s misinterpretation of Massachusetts’ health law, crafted to address the unique needs of a small, high-income state constituting 2 percent of the U.S. population, but nevertheless imposed on the entire country.

Cover the 2 million to 4 million Americans with pre-existing conditions who may be denied affordable insurance when between jobs. Only a small fraction of those with pre-existing conditions are between jobs. The federal government can easily address this problem by funding high-risk pools administered by the states.

States are best positioned to determine eligibility and penalties for insurers that try to push ineligible individuals, such as people with unhealthy lifestyles who do not have a diagnosed disease, into the publicly subsidized pools. Past state experiences strongly suggest that such high-risk pools can do the job at a cost of roughly $150 billion to $200 billion over 10 years, not the $1.75 trillion to $2.5 trillion required by the ACA.

Encourage individuals to seek high-value plans by being active healthcare consumers. Central bureaucracies control costs only by diminishing innovation and the quality of care. A better path is to break the federal tax preference for individuals purchasing health insurance through their employers. Rather than penalizing individual insurance purchasers, we should let all consumers control their healthcare dollars.

The prejudicial tax advantage enjoyed by those with company insurance can only be changed over time. Romney should channel refundable tax credits to small-business employees and individuals purchasing insurance on their own who are most disadvantaged under the current system.

Convert Medicaid into a per capita block grant. With broad authority over Medicaid, states can lift more people currently eligible for Medicaid into the mainstream market. States aligning regulations on benefits and premium assistance with refundable tax credit policies will give non-elderly, non-disabled enrollees the ability to choose among plans rather than be merely passive recipients of Medicaid services. The result is better coverage for the poor and reined-in costs.

If we get a second chance at the healthcare debate, we’d better get it right. These four policies – vibrant experimentation akin to what we saw with welfare reform, a right-sized plan to deal with pre-existing conditions, a level playing field for health insurance purchasers, and a thoughtful Medicaid block grant – are practical alternatives to a healthcare policy doomed to fail either in the court of law or in the court of public opinion.

Comments
13 comments so far | RSS Comments RSS

Insurance based healthcare costs about 30% more than
non-insurance based healthcare, due to additional adminstrative fees, profit taken by shareholders of insurance companies, large top executive pays, etc.

More importantly, as long as healthcare is controlled
by insurance companies, whose mission statement is to
make profit, i.e., increase what they can charge and
deliverable with as little cost as possible, the American
healthcare cost will continue to soar out of control.

That’s the fundamental reason why I oppose to Obamacare,
and would be pleased that the Supreme Court will overturn it. Now that’s a very different reason from the considerations for personal freedom, or constitutional concerns.

Posted by jo5319 | Report as abusive
 

By George [Romney], I’ve got it! Give each state a choice:

1. Institute RomneyCare exactly as currently enacted in Massachusetts; or

2. Receive no Federal dollars for anything beyond the bare minimum of the Federal government’s obligations, such as Social Security payments to any seniors and salaries to any Federal employees/officials whose misfortune it is to live in recalcitrant states.

It’s beneficial, any way you slice it. If all states pick option 1, all citizens receive health insurance coverage. If all states pick option 2, Federal revenues might actually exceed Federal expenditures. If more or less 50/50, the citizenry can argue about the subject for another century or so, thereby bequeathing to future generations ample job opportunities in punditry.

Posted by TobyONottoby | Report as abusive
 

matthewslyman –

Please rise, while I sing your national anthem!

God save our gracious Queen,
Long live our noble Queen,
God save the Queen:
Send her victorious,
Happy and glorious,
Long to reign over us:
God save the Queen.

O Lord, our God, arise,
Scatter her enemies,
And make them fall.
Confound their politics,
Frustrate their knavish tricks,
On Thee our hopes we fix,
God save us all.

Thy choicest gifts in store,
On her be pleased to pour;
Long may she reign:
May she defend our laws,
And ever give us cause
To sing with heart and voice
God save the Queen.

Posted by TobyONottoby | Report as abusive
 

There are several flawed assumptions in this argument: 1., that the Republicans care at all about uninsured Americans or have the slightest intention of helping them; 2., that all states have a high-risk insurance pool (I’m from Georgia, we don’t have one, because our *Republican* legislators oppose it) and 3., it offers no suggestion for how President Romney would create high risk insurance pools for states whose legislators have decided they’re not getting one — what would Romney do? Force them? Federal intervention again!

Why don’t Republicans just admit that they don’t care about the sick? When you offer suggestions only when it looks like your opponents are about to pass reform, and the last-minute plan you do offer is laughable, your apathy is crystal clear. Republicans only talk about health care when they’re trying to destroy any attempt to improve access.

Posted by zero0000 | Report as abusive
 

By the way, I believe that my modest proposal has been well tested already. Under the Canada Health Act, provinces are politely requested to provide health insurance to their citizens, but each province is free to opt out, in which case, the province receives a polite note from the Federal government, regretting that no “cheque” from the latter to the former has been enclosed.

Posted by TobyONottoby | Report as abusive
 

Your suggestions are, quite frankly, worthless. Americans don’t need health insurance, they need health care. Insurance is simply legalized gambling. That’s OK for accident insurance as a way to stand up to your legal obligations in case of an accident. That’s not such a good approach for health care as it means that nobody does anything until something is broken.

A good first step in energizing this debate would be to have companies add the net value of the health insurance they offer their employees to their W-2s and have them pay taxes on it. That would wake up a lot of people in a hurry.

Posted by majkmushrm | Report as abusive
 

I propose a hybrid system of nationalized health care and private sector.

1. Have a public hospital system that will take care of everybody. Clearly, this system has to be done the same way as other countries’ nationalized health care which is government determines the compensation of doctors and other expenses in the public hospital. I believe Canada for ex caps it at about 500k/year per doctor, so a similar cap might be appropriate.

2. Every doctor works under the public hospital system for some year (5-10) before they are given license to work in the private sector.

System 1 ensures people won’t be left hopelessly on the street.

System 2 ensures free-market dynamics which helps innovation, researches and lower cost, and that doctors are not “enslaved” by the governments as many complained.

People without money goes into the first system. People with money go with the second system.

Doctors can still make money in system 2 since they get through a lot of suffering in med school. This is a decent compromise.

In case of overflow of demand in system 1 (this will happen), and there is a long waiting list, (I read people have to wait for months in Canada because of the high demand) people can always spend money to get instant care in system 2.

Another way to reduce stress on the system is medical travel. I believe one non-trivial reason health care costs so much in the US is because rich people all around the world come to the US to get the best care. These deep pockets greatly increase demand thus lead to higher price. Medical travel to other countries for medical treatment will reduces stress on the US system.

This is very similar to the education system of public and private schools. It makes a lot of sense to me.

Posted by trevorh | Report as abusive
 

trevorh -

Unless Canadians radically changed their constitution, I’m going to assume that health care remains a provincial responsibility there. Thus, there is no Canadian system. There’s one system for NL, one for NS, one for PEI, one for NB, one for QC, one for ON, one for MB, one for SK, one for AB, and one for BC. (I think the feds are ultimately responsible for the territories, though.) Efficient, eh? But a good model for America, where the various states aren’t so fond of each other, and where the relationship between each state and the national government could use counseling.

Americanizing the Canadian approach would require that health care be made entirely the responsibility of the states, which of course is constitutionally impossible. Threatening the states with loss of federal funds if they don’t fulfill that responsibility, however, should be perfectly constitutional, and would be well suited to the American spirit.

It then becomes necessary to judge what constitutes a sufficiently adequate system to qualify a state’s receiving federal money for just about anything, from bridges to nowhere to courthouse cannons. RomneyCare, such as Massachusetts currently “enjoys,” the two-tiered system you suggest, and several others could, and probably would, be deemed adequate. But I wouldn’t hold my breath waiting for anything worthy of the name “system” to come about: It just invites suffocation, which can be very expensive if it leads to a hospital visit.

Posted by TobyONottoby | Report as abusive
 

A needed actions to reduce cost is create more doctors and other highly trained health workers, generic drugs and hospitals (a place to work under close supervision). Since everyone wants doctors highly trained technically, the main thing is reduce the cost of becoming one, free tuition (at schools that agree to add other fees) and other perks. Subsidized building of hospitals, generic drug research. Government run alternatives to privet health insurance and trust busting in insurance and limit all government payments to hospitals where there are medically trained government inspectors checking the suitability of treatment and charges before payment.

Economics 101 says more consumers (insured sick) means higher prices unless there is more supply (doctors, hospitals, drugs etc.).

Posted by SamuelReich | Report as abusive
 

Plan Catch-22.5: The simplest, quickest way to ensure that all Americans receive all the necessary inpatient hospital care and outpatient services to promote, preserve, or restore their health!

Step 1: Re-institute the military draft;

Step 2: Draft everyone is not currently a benefits-eligible veteran, or is not, by virtue of active duty status, already on track to become one;

Step 3: Honorably discharge all excess personnel; and

Step 4: Administer everyone’s health care through the VA.

Shouldn’t take more than a couple of weeks to get it done. There’s already a web page that explains your Medical Benefits Package, my fellow veterans-to-be – va.gov/healthbenefits/access/medical_ben efits_package.asp -“Your comprehensive VA Health Benefits includes all the necessary inpatient hospital care and outpatient services to promote, preserve, or restore your health.”

Posted by TobyONottoby | Report as abusive
 

One of the major problem why the healthcare is so expensive is due to the way legal system is regulating the healthcare. The doctors are scared/dreading of one mistake that may jeopardize their career/life. Results in unnecessary treatments, admin costs, etc.

Not saying to allow doctors run free and wild. But lower the legal issues, the consents are signed by patients EVERY TIME, value that… reduce the care providing costs, Doctors will still make millions as they are doing now.

Posted by DCTech | Report as abusive
 

DCTech -

I hope you’re not implying that medicine should be regulated. (Except by the VA.)

Posted by TobyONottoby | Report as abusive
 

DCTech -

I hope you’re not implying that medicine should be regulated. (Except by the VA.)

Posted by TobyONottoby | Report as abusive
 

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