What's Wrong With RomneyCare?

RomneyCare, Gov. Mitt Romney‘s “revolutionary” healthcare initiative, was introduced earlier this year to applause from the mainstream media, Senators Hillary Clinton and Teddy Kennedy, and Families USA—all wild at the idea of universal healthcare in Massachusetts. Such endorsements were not the best of signs for conservatives, but they were certainly eye-catching, especially with the hunt for future presidential talent on. And many Republicans were wondering whether RomneyCare was the conservative solution to the problem of uninsured Americans that the party was looking for.

Almost immediately after the bill creating it was signed into law, the Wall Street Journal ran an op-ed, which claimed that, under RomneyCare, “the state is forcing people to buy insurance many will need subsidies to afford, which is a recipe for higher taxes and more government intervention down the road.” Not so, said Romney. Despite the potential weight of RomneyCare on the public purse—likely to be exacerbated by the plan’s focus on signing up the 20% of Massachusetts’ population that is eligible for Medicaid, but not enrolled—Romney said he would not need to raise taxes to pay for the program.

Of course, he was right. RomneyCare has not even been fully implemented yet, and a cost overrun of $151 million in 2007 alone is already in the cards, perhaps because the RomneyCare financial model assumed the wrong number of uninsured in Massachusetts (the Census Bureau puts it at 748,000, but RomneyCare assumes only 500,000). But any needed hike in taxes won’t be pushed through by Romney—he’ll be out of office when the bill comes due, and when extra federal dollars will likely have to be allocated to Massachusetts to help cover the shortfall between RomneyCare’s cost and its budget.

Yes, RomneyCare is reliant on federal funds. So imagine if, as Romney hopes, it is replicated in other states. Even if we do not have federally-mandated universal healthcare a la HillaryCare, we could easily end up with that option’s badly behaved little brother—”state-specific” universal healthcare, funded in large part, and at greater than current levels, by the federal government.

That matters because it means more government intrusion into personal healthcare choices. Government will end up funding healthcare at a higher level, and in exchange, making mandates about the kind of coverage you must have, and who may treat you (RomneyCare mandates that individuals must purchase HMO coverage; PPO coverage, often better and more flexible, is not allowed). Moreover, government will end up dictating to businesses and requiring them to incur potentially great costs: RomneyCare mandates that employers with more than 10 workers must assume ultimate financial responsibility if employees or their immediate family members need expensive medical care, and that if such businesses do not insure their employees, they must pay a $295 per uninsured employee fee to subsidize healthcare costs. This threatens employment levels and discourages small businesses from growing.

Ultimately, the entire specter of government engagement in the realm of healthcare hits at a fundamental question. Is healthcare and health itself primarily an individual responsibility, the product of individual choices made in consideration of private matters, or is it a benefit to be assured by the government, without regard to the wishes of the individual?

Only an individual can know what their objectives are in terms of health and how best to ensure that they are met. For example, someone with a rare and difficult-to-treat illness may wish to carry PPO insurance, rather than HMO insurance. PPO insurance generally affords access to a wider range of physicians and treatments, yet RomneyCare bans taking it out. Alternatively, someone earning $30,000 a year—too much to be eligible for state-subsidized insurance under RomneyCare—might want to buy cheap, basic coverage, instead of insurance costing around $3,600 annually for an individual and $11,000 annually for a family, plus 10%-14% annual inflation on premiums. But buying cheaper, more basic insurance is not possible—RomneyCare didn’t change Massachusetts’ rules mandating coverage for chiropractic treatment and acupuncture, or allowing purchase on the day of diagnosis, which make insurance there so expensive, compared to less regulated states.

This is the big problem with RomneyCare. It represents an interventionist, big government approach toward what is a highly personal matter, and does virtually nothing to reform burdensome insurance regulation that is responsible for the problem of underinsurance.

Romney disagrees with this characterization. He claims that his plan (and make no mistake, he claims it as his), which is already costing more than intended, imposes criminal sanctions on individuals who do not buy what may be a totally unsuitable product, mandates significant costs and imposes obligations on businesses, and results in government guaranteeing healthcare as a virtual right, is a good, conservative initiative. He contends that there’s nothing wrong with forcing people via government diktat to purchase health insurance, because states already force people to carry car insurance. But he ignores that it is not standard to require drivers to carry insurance for damage to themselves or their own cars—only for harm done to others. This may be stupid, but so is driving a Yugo, and yet we don’t mandate that everyone drive a BMW, do we?

Romney also contends that, since hospitals are required to provide treatment for the uninsured irrespective of their ability to pay, underinsurance is a grave risk and government already is in the position of footing the bill for something that should be a matter of individual responsibility. Yet, as the Wall Street Journal’s “RomneyCare” op-ed notes, the cost of covering the care of uninsured patients is low, and uses a very small proportion of governmental medical budgets. Plus, the uninsured that benefit from emergency-room treatment can always be pursued as debtors, just like people who default on loans.

It is a shame that Romney could identify no more market-friendly options to curb the problem of under-insurance. Surely, in a state where insurance must cover rather exotic treatments, un-mandating coverage for chiropractic treatment and acupuncture as well as in vitro fertilization, could and should have been pursued first. This would have enabled cheaper policies to be marketed in Massachusetts, the number of uninsured to be cut, and for Romney to have legitimately claimed responsibility for meaningful, market-friendly reforms in the realm of healthcare—something RomneyCare effectively prevents.