MITT ROMNEY'S HEALTHCARE PLAN

I have spent the last several hours poring over Mitt Romney's health care proposal. Preliminarily, I seriously question the figure that I keep hearing that there are 45 million uninsured Americans. I believe that number to be extremely high, and would suspect that the number is closer to 35 million. Admittedly, even that figure is much too high. So, with that caveat, what does Governor Romney propose?
Basically, according to the Boston Globe, his plan consists of four parts:

1. The federal government must create an environment in which private health care insurers can expand;

Romney doesn’t really say how he proposes to accomplish this. For example, what kind of tax incentives, or business credits does he propose to offer to make private health care insurance a profitable business for the major insurance companies?
Republican administrations are traditionally inclined to be friendly to businesses. That is certainly not a bad thing. But it would seem to me, that the major objective in creating a business friendly environment is to find a way to get health care costs under control. That certainly doesn’t mean that I am implying that socialized medicine is the way to go. Nothing could be further from the truth. I favor a free market because I believe that competition will drive health care costs down in a fair and meaningful way. But, as long as hospitals charge $25.00 for a single aspirin and $30.00 for a band aid, it will be impossible for insurers to be competitive at lower rates. The same thing holds true for doctors.


2. The federal government will help states lower premiums by deregulating the insurance industry:

Absent any more information than this, it is impossible for me to comprehend what the Governor is talking about. Deregulating the insurance industry as a general proposition would be a major mistake in my opinion. If Mr. Romney is thinking of deregulation of the insurance industry regarding the types of medical plans they can offer and the circumstances under which they can offer them, I would certainly favor that. In a free market competition is the key. The insurance industry can become competitive without completely deregulating the industry.


3. Make tax changes - so that everyone can use pretax dollars to buy coverage;

Of course tax changes must be made. But, in my opinion, Mr. Romney makes the same mistake that so many politicians make. If the idea is to provide a way to make healthcare insurance available to everyone, then tax changes won’t work. Most people who do not have healthcare coverage don’t have it because their priorities are such that healthcare insurance is not a top tier priority. Giving these people a tax break, and making pretax dollars available to buy coverage will not work unless they can be convinced that healthcare insurance must be a top priority, not a luxury. What makes more sense to me than giving individuals tax breaks is to give those kinds of tax breaks to businesses as an incentive for them to provide affordable health care for their employees. Businesses are much more likely to take advantage of such a tax incentive, especially if there is a carrot and stick approach taken. For example, if they do not provide a plan for their employees at a competitive rate, perhaps not only will they not get a tax break, they will pay a higher rate of tax, or some sort of penalty for failure to do so.

4. Medicaid program should be overhauled - the goal should be to provide states with block grants so they can create an insurance program freed from federal mandates and that are tailored to their individual state needs.

Well, of course Medicaid needs to be overhauled. Mr. Romney will probably not like the overhaul that is needed. There are a lot of able bodied people receiving Medicaid who are simply taking advantage of the system. They need to be cut from the program. Experts estimate that Mr. Romney’s proposals will cost approximately 6 billion dollars. Giving states block grants so they can create their own program is not the answer. You will end up with 50 wildly different programs, and most of them will have no resemblance to what Mr. Romney wants to see. Finding a way to make health insurance available at an affordable cost for even the poorest of Americans is the answer.

According to the Boston Globe, Governor Romney wants to continue the existing system of employer provided coverage. Romney says it only needs modified to expand coverage to the uninsured. Another point made by Romney is that health care costs will be tax deductible once the person enrolls in a plan. Also, no one would be penalized for failure to buy insurance nor would it sanction businesses that do not provide it for their employees. Individual states could set such rules, but the federal government would stay out of regulations. In order to help drive down health costs Romney says there would have to be changes in medical liability and more information provided to consumers so they could shop for better quality and prices.

Any program that is offered must have penalties for not taking advantage of it. Offering a program that will have no penalty for individuals and no sanctions for businesses is a toothless tiger. Letting the states set those kinds of rules will only create chaos. Everyone knows that our medical liability system is deeply flawed, but so far Congress has been unwilling to fix it. Mr. Romney has a lot of work to do to come up with a viable, consumer friendly system.