Romney Can't Withstand Obama's Kiss of Death

March 7 (Bloomberg) -- The 2012 presidential campaign is finally stirring to life, with would-be Republican candidates Haley Barbour and Mike Huckabee musing about whether Mitt Romney should be disqualified by similarities between Massachusetts' Romneycare and Obamacare.

As if on cue, President Barack Obama defended his health- care overhaul in remarks to the nation's governors by associating it with Romney's, an embrace the former Massachusetts governor surely could do without.

How Americans perceive Romney's health legislation is shaping up to be an important influence on whether he sinks or swims in his expected second bid for the presidency. Since Republican primary voters will be driven by a desire to repeal Obamacare, Romney needs to make a convincing case that what he did in Massachusetts is different -- maybe even a model for how to change what Obama enacted nationally.

The irony is that Romney is right about this: Obamacare will be much easier to repeal precisely because Massachusetts went first and failed so miserably.

If Romney can't make that case, his road to the Republican nomination will make an Everest climb look like a Sunday stroll. The facts suggest he has a steep path ahead of him.

Romney's 2006 remake of health care in Massachusetts represented an attempt to provide universal health coverage without a full government takeover of the industry. Its central feature is an individual mandate, requiring all citizens to purchase health insurance if they can afford it. Those who don't face steep fines. Sound familiar?

The rationale for the mandate was that it would end the free-rider problem posed by uninsured people relying on emergency care (which by federal law must be provided) in lieu of health coverage.

Connecting the Uninsured

The plan established subsidized health coverage through a so-called connector, for people who don't make enough to purchase insurance but are not eligible for Medicaid. Because the newly insured could then afford to see doctors in their offices, the plan promised to reduce health spending, since a doctor visit is much cheaper than a trip to an emergency room.

Governor Romney did veto certain sections of the bill, including a fee for businesses that don't provide insurance to employees, coverage for "special status aliens" and the creation of a public health advisory council to determine what benefits must be included in insurance plans. Each of his eight line-item vetoes was overridden by the legislature. Romney subsequently proclaimed that even with a legislature that was 85 percent Democratic, he still got 95 percent of what he wanted.

Romney has insisted that the Massachusetts plan is "entirely different" from Obama's. A comparison of the two plans uncovers key similarities.

Legal Lynchpin

Both plans impose government-designed purchasing exchanges that augment government control of health care and include the individual mandate, which has become the lynchpin of Republican legal challenges to Obamacare.

By contrast, the differences on which Romney hangs his presidential viability strike me as few and relatively minor. They include the fact that the 70-page Massachusetts bill, unlike its much lengthier federal counterpart, didn't raise taxes on individuals and businesses or authorize trillions in new spending.

Nor can Romney rest his laurels on quantifiable results.

On the plus side, the implementation of Romneycare has increased the percentage of insured Massachusetts residents to an estimated 97 percent, but these gains have come at a tremendous cost to taxpayers and patients. About 75 percent of the newly insured have coverage that is largely or completely subsidized by taxpayer money through the state's Medicaid and Commonwealth Care programs, according to figures compiled by the Commonwealth Health Insurance Connector Authority.

Longer Waits

Another troubling repercussion of the new program has been its effect on the quality of medical care. The average wait time for new patients to see a primary-care physician has risen to 53 days, according to the Massachusetts Medical Society, which represents doctors. That has led to increased emergency-room visits.

In addition, insurance premiums have increased, suggesting that curing the free-rider problem brought no net cost savings. This is likely because the previously uninsured are seeking care much more often now that their insurance can foot the bill.

Romney often emphasizes that the biggest difference between his reform and Obama's is that his applied only to the people of Massachusetts (as if somehow that's a governor's choice). He adds that the way to fix America's tough problems is to let states experiment and innovate and learn from each other.

Failure on Display

The irony is that Romney is right about this: Obamacare will be much easier to repeal precisely because Massachusetts went first and failed so miserably.

To his credit, Romney was humble about the reform when he pushed it, recognizing early on that such complex legislation would have to be revised after its effects became clear.

"Will it work? I'm optimistic, but time will tell," Romney wrote in a 2006 Wall Street Journal op-ed. "Legislative adjustments will surely be needed along the way."

I suspect the hyper-competent Romney would have fixed problems as they emerged if he hadn't stepped down after one term at the start of 2007. Regardless, the right fixes haven't been enacted, and the Massachusetts overhaul is looking like an unmitigated disaster.

The Massachusetts experience shows us how bad it would be for the U.S. if Congress doesn't repeal Obamacare. When it does go down, Romney will indirectly be responsible. Being the first to drive off a cliff, however, hardly qualifies one for the White House.

Kevin Hassett is the Director of Economic-Policy Studies at AEI.

Photo Credit: Flickr user Sidereal/Creative Commons

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About the Author


Kevin A.
  • Kevin A. Hassett is the State Farm James Q. Wilson Chair in American Politics and Culture at the American Enterprise Institute (AEI). He is also a resident scholar and AEI's director of economic policy studies.

    Before joining AEI, Hassett was a senior economist at the Board of Governors of the Federal Reserve System and an associate professor of economics and finance at Columbia (University) Business School. He served as a policy consultant to the US Department of the Treasury during the George H. W. Bush and Bill Clinton administrations.

    Hassett has also been an economic adviser to presidential candidates since 2000, when he became the chief economic adviser to Senator John McCain during that year's presidential primaries. He served as an economic adviser to the George W. Bush 2004 presidential campaign, a senior economic adviser to the McCain 2008 presidential campaign, and an economic adviser to the Mitt Romney 2012 presidential campaign.

    Hassett is the author or editor of many books, among them "Rethinking Competitiveness" (2012), "Toward Fundamental Tax Reform" (2005), "Bubbleology: The New Science of Stock Market Winners and Losers" (2002), and "Inequality and Tax Policy" (2001). He is also a columnist for National Review and has written for Bloomberg.

    Hassett frequently appears on Bloomberg radio and TV, CNBC, CNN, Fox News Channel, NPR, and "PBS NewsHour," among others. He is also often quoted by, and his opinion pieces have been published in, the Los Angeles Times, The New York Times, The Wall Street Journal, and The Washington Post.

    Hassett has a Ph.D. in economics from the University of Pennsylvania and a B.A. in economics from Swarthmore College.

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