Is Romney's Healthcare Plan Conservative?These undesirable economic consequences are the direct result of attempting to treat health care as a right that must somehow be "guaranteed" to everyone. Instead, health care and health insurance are commodities that must be created by producers and traded by voluntary consent with consumers to their mutual self-interest. The Massachusetts problems are the predictable results of the entitlement approach to health care. When the government divorces the provision of medical goods and services from the free market, costs go up, quality goes down, and honest consumers and patients will no longer be able to purchase the care they need.
...Massachusetts was the first state in the country to impose an "individual mandate," which requires everyone in the state to have health coverage or face some significant penalties. Most employers -- those with 11 employees or more -- also face a mandate: Provide health insurance or pay a fine.
The criticism from other Republicans highlights one of the controversial aspects of the Massachusetts plan, which the state's Democratic legislature wanted in the legislation: Should conservatives support the government’s requiring people to buy health insurance?
The conservative Heritage Foundation does -- or at least providing some indication that an individual can pay his medical bills. Heritage analysts even played a role in developing the Massachusetts plan and is now selling it to other states. But most other conservative groups vehemently oppose both an individual and employer mandate, and it must be emphasized that Romney has not included the individual mandate in his presidential reform proposal.
Democrats Point to Massachusetts Model
Massachusetts' individual mandate has initiated a national discussion among many state elected officials, including California Gov. Arnold Schwarzenegger, who also supports an individual and employer mandate. Plus, Democratic presidential candidates New York Sen. Hillary Clinton and former North Carolina Sen. John Edwards have included an individual and employer mandate in their proposals, pointing to Massachusetts as a model.
Defenders claim that without the individual mandate, some people will remain uninsured. And when the uninsured get medical care, they can't pay for it, so those costs are shifted to those who have health insurance, driving up the cost of coverage. Therefore, the reasoning goes, by forcing all citizens to be "responsible" for their own costs (i.e., having health coverage), that will actually lower the cost of health insurance for everyone.
Since conservatives support personal responsibility, these defenders conclude, supporting an individual mandate is a conservative principle.
But this argument ignores some other important conservative principles: one being that we don't like the government's micromanaging our healthcare.
Romney and others like to respond by noting that almost every state requires people to buy auto insurance. True enough, but the auto insurance mandate has been so unsuccessful that millions of Americans buy uninsured motorist coverage to protect themselves against uninsured drivers. The fact is that the auto insurance mandate is seldom enforced in most states, and when it is, the penalties are usually minor.
Not so with the Massachusetts mandate. Those who don't get coverage will face a $219 fine (tax?) for the first year (2008), but that fine will go up to at least $150 per person per month in the following year, according to the Boston Herald.
And that's why some of the other Republicans were chiding Romney: An annual $1,800 for each uninsured person can be a significant penalty on a lower-income family of three or four. So significant, in fact, that the state recently decided to exempt 20% of the low-income uninsured from the mandate.
One reason for that exemption was the cost of the plan. On the plus side, the uninsured are signing up in droves, faster than anticipated, although mostly for the subsidized part of the program. As a result, it appears the plan will have nearly a $150-million budget shortfall.
But wait! The whole justification for forcing everyone to have coverage was to avoid cost-shifting from the uninsured to the insured. And if you exempt 20% of the uninsured, haven't you just undermined the whole effort?
Moreover, expanding the health insurance pool apparently isn't lowering insurance premiums, as supporters have claimed it would. The Boston Globe recently reported: "Striving to hold down costs to taxpayers, a state panel [i.e., the Connector Authority, an unelected quasi-government body that governs the healthcare reform initiative] yesterday approved a range of changes for next year for the rapidly growing subsidized health insurance program. The changes will probably cut payments to doctors and hospitals, reduce choices for patients, and possibly increase how much patients have to pay."
The health plans are facing as much as a 14% increase -- higher than many health policies not associated with the Connector. So Commonwealth Care, the state-subsidized part of the Massachusetts reform initiative for modest-income workers, wants to cut healthcare provider reimbursements by 3% to 5%, according to the Globe.
Acting Like Medicaid
Said Connector Authority CFO Patrick Holland, "There's no justification to be paying more than Medicaid rates."
Wrong. At least one justification for paying more is that patients can actually see a doctor. Medicaid's low reimbursement rates are increasingly making it difficult for patients to see a doctor. The Connector wants to impose that burden on the Massachusetts plan as well. But, hey, if you're going to act like Medicaid, why not just call it Medicaid?
Several months ago, the Globe carried a story about Connector employees' salaries. Half of them made more than $100,000, and the head Connector made $225,000. I have been closely monitoring the papers to see how much their salaries are being cut in order to "keep the program affordable."
And I'm still looking.
The trouble with health insurance reform schemes is that the problems usually don't manifest themselves until a few years, maybe many years, into the new program. By that time the politicians who pushed them through have often moved on to higher office, maybe even President.
But the Massachusetts healthcare reform plan is quickly shedding any pretense of being a market-oriented solution or public-private "partnership" for covering the uninsured. Instead, it is becoming a demanding, heavy-handed, top-down program that demands people have coverage and fines them if they don't.
Mr. Matthews Jr., Ph.D., is a resident scholar for the Institute for Policy Innovation.
(Note: FIRM is not a partisan organization, and does not support any specific political candidates or parties.)