“Because of Governor Romney's leadership, the number of uninsured in Massachusetts has been slashed in half over the last year. His conservative, free-market reforms have brought down the cost of health insurance premiums and made healthcare more affordable for residents across the state. For the first time in the history of the Commonwealth of Massachusetts, hundreds of thousands of the low-income uninsured citizens have access to a choice of different private health insurance plans. And all of this was accomplished without any new taxes”
Those who want to create a consumer-based health system and deregulate health insurance should view Romney's plan as one of the most promising strategies out there. I know, because I've been part of the Heritage Foundation team advising the governor and his staff on the design, which builds on some of my work with officials in other states.
The overall design has two basic parts: reforming the state's insurance market structure and reforming its uncompensated-care payment system...
The Romney approach is ... a state health-insurance exchange ... exactly what stock exchanges do for the buying and selling of securities. Like a stock or commodity exchange, Romney's health-insurance exchange would be a clearinghouse but never a product regulator.
The exchange would be a single place where a small employer could send its workers to buy coverage, paid for with a defined contribution from the employer. For workers, it would be a "marketplace" in which to choose the plans that best suited them and which they could keep as they moved from job to job. Furthermore, the exchange is designed to ensure that premium payments by both employers and workers can be made on a pre-tax basis.
Such an exchange offers numerous advantages. For example, a two-earner couple could combine contributions from their respective employers to buy and keep the plan they want, instead of being forced to choose one employer's plan while forgoing the subsidy offered by the other employer. Similarly, a worker with two part-time jobs could combine pro-rated contributions from each employer to buy coverage, while the government would have a single place to send subsidies for those who need extra help.
In short, the exchange is designed to work around the limitations of current federal law to achieve, in a single state, the basic objectives of conservative health reform — consumer choice of plans, true coverage portability, and the functional equivalent of individual health-insurance tax credits to help pay for coverage...
Mitt explains healthcare plan in Massachusetts 0:53
Mitt explains healthcare plan for country 1:17
(Florida Debate Comments)
Oct 21, 2007
Healthcare Views - Jan 2007 Funny but Factual
Edmund F. Haislmaier is a visiting research fellow in the Center for Health Policy Studies at The Heritage Foundation.
The Heritage Foundation is an influential conservative Think Tank in Washington, D.C. that was founded by Paul Weyrich, who also founded the Free Congress Foundation and co-founded the Moral Majority with Jerry Falwell. Paul Weyrich endorsed Mitt Romney in the 2008 Presidential Primary. Mr. Weyrich has since passed away. For a history of Weyrich's support click below:
Jim Talent, a Republican, who was a U.S. Senator from Missouri, stated:
Each candidate in the 2008 Presidential race will undoubtedly offer a health care plan... But only one candidate has actually done something, waded into the issue and emerged with a successful plan that does not resort to one-size-fits-all, government run "Hillary Care." That innovative candidate is former Governor Mitt Romney...
Massachusetts was afflicted with many of the same problems that plague the health care system across the country. There was no easy way to buy affordable insurance except through an employer. Without the employer option, it just was not feasible for many people to buy health insurance. As a result, they had to resort to emergency room care and the taxpayers ended up footing the bill. People choosing their health care provider could not get critical information about the cost or quality of care, and excessive state regulations reduced choices and drove up costs.
When Governor Romney decided to tackle the double-digit annual increases in health insurance costs, the average uninsured resident in Massachusetts had to pay $335 a month for private health insurance, which did not include coverage for prescription drugs and featured a $5,000 deductible. Moreover, the state was spending over $1.3 billion a year on "free care" for the uninsured.
Governor Romney actually got the Democrat-controlled legislature to enact a plan that addressed these problems. He took the time to understand what makes private health insurance markets work and transformed the market in his state from one that was government-controlled to one that allows competition to flourish.
Governor Romney's health care plan featured a number of reforms. First, his plan deregulated the overburdened Massachusetts insurance market to reduce the cost of private insurance, while giving consumers more choice from a broader range of plans. Second, the plan addressed the problems caused by the fact that many people could not get healthcare through their employers and could not afford it on the individual market. Third, he redirected the millions of dollars that were being spent on free emergency room care and used it instead to help those who truly were not able to afford private health insurance...
But Governor Romney's reforms did not stop at reducing the cost of insurance today. He also tackled a number of reforms that will help reduce the rise in health care costs over the long-term. His plan included medical transparency provisions that allow consumers to compare the quality of hospitals and providers, while tracking and recording the costs associated with the care they provide. The reforms also instituted measures to encourage the use of electronic health records, which will reduce medical errors and lower costs.
What's been the result of all these reforms? Although the reforms were signed into law just over a year ago, the changes are dramatic. The same uninsured individual whose choice was formerly limited to a policy with a $335 a month insurance premium with no drug benefits and a $5,000 deductible now can purchase quality private insurance, which includes coverage for prescription drugs, office and emergency room visits, and a $2,000 deductible, for $175 per month. Between July 1, 2006 and May 1, 2007, nearly 125,000 previously uninsured residents of Massachusetts got health insurance coverage...
All of Governor Romney's reforms are consistent with the goal of making private health insurance more available, flexible, and affordable. That is why many conservative organizations have hailed Governor Romney's health care reforms. The Heritage Foundation called it "one of the most promising strategies out there." Massachusetts Citizens For Limited Taxation said that Romney's plan was a responsible solution to America's health care challenges. And the Ethan Allen Institute praised Governor Romney's plan because of its focus on personal responsibility and choice.
The bipartisanship, innovation, conservative statesmanship and creativity he exhibited confirms my view that he is the kind of leader this nation needs.
Note: One inaccurate rumor about Romney's healthcare plan was that he decided to fund abortions with it. Information on his actions related to abortion, including the funding of abortion under this health care plan can be found here.
We need a leader — one who can work with a deeply divided Congress and a deeply divided nation.
Romney as governor of a thoroughly Democratic state actually managed to get things done during his tenure...
Among those accomplishments was health care reform — sure, call it Romneycare — but it works here for us and Mitt Romney has nothing to be ashamed of for having secured the best piece of legislation he could. And let’s not forget he did it with the threat of a universal health care bill headed for the ballot at the time and rising costs for treating the uninsured. It wasn’t as he would have crafted it, but it was a decent compromise...
Massachusetts' health plan charges a $295 fee per employee for employers who don't pay 1/3 of employee insurance premiums or get 25% of employees to sign up (see next section for references).
This fee is considered by some to be an incentive but not a mandate for employers to provide employee insurance, since some employers choose to just pay the fee instead of ensure employees get covered by insurance. Even at that Romney vetoed that fee, which was overridden by the legislature. (In fact Governor Romney vetoed 8 provisions of the health-care reform law, all of which were eventually overridden.)
By contrast, Obama's plan, which charges employers $2,000 per employee if employees are not covered (CNN.com), is considered by all a mandate that employers must provide insurance, since the charge is so high that an employer will not opt out.
This is one of just many differences between the two plans. Other big differences include that Obama's plan introduces new taxes while Romney's plan did not, and even bigger, was that Romney's plan was intended to address the specific situation and needs of one state, with the philosophy that states could each determine their own strategies and plans, and was so bi-partisan that the senate passed it unanimously and the house passed it with all but two votes in favor of it (NewsMax), while Obama's plan was a partisan plan forced on all states, passing 56-43 in the senate, and 220-207 in the house along party lines. (MSNBC.com)
The biggest difference however, is in what Romney vs. Obama sought. Romney sought a free-market plan that didn't charge fees to individuals, even if they chose to not buy health insurance, but the legislature did not give individuals that option without a fee. Obama sought a government run healthcare system (referred to as socialized medicine), but the public prevented congress from giving him that option.
When Obama didn't get his preferred approach, it is said that he patterned a plan after Massachusetts. If that is the case, it is a bastardized version of Massachusetts plan as noted here- 4 Important differences, and completely misapplied: The Massachusetts government was already paying providers for the charges accrued from the uninsured so it made sense to consider a more efficient way to cover those costs, but the federal government was not already paying for all the healthcare costs of all the uninsured in the nation. Massachusetts needed to improve their system to keep eligible for hundreds of millions of dollars in health-care aid from the federal government, but the federal government was not losing trillions in world aid if they did not come up with a universal coverage plan.
Also, ''two federal judges have declared Obamacare unconstitutional (in all or in part), and, by double-digit margins, Americans support Obamacare’s repeal.''
Romneycare has never been ruled or considered illegal, and as noted, has a high approval in Massachusetts.
And so it goes. In fact National Review noted this about the differences:
''The difference is that Romney’s plan did not raise taxes on individuals or businesses, didn’t cut Medicare, didn’t include “public options” or raise spending by a trillion dollars, and it didn’t impose insurance price controls. Romney’s plan made no attempt to take over health care. The Massachusetts legislation was a scant 70 pages long, compared to Obamacare’s gargantuan 2,000-page maze of regulation...''
The federal version is such a monstrosity, that the Heritage Foundation noted:
“The level of bureaucracy embodied in the Patient Protection and Affordable Care Act is beyond anything previously attempted. There are scores of new federal agencies, boards, councils, commissions, panels, and programs. Depending on how they are identified and counted, the estimates vary. The most recent estimate is 160.”
In fact, Heritage notes that the main parentage of Obamacare was not the one-state Massachusetts healthcare plan, but Hillarycare.
The following key elements give centralized federal control, which Romneycare did not:(Massachusetts Care did have state-level mandates and subsidies)
“Unappealing Centralized Control. Both the Clinton plan and Obamacare sought to concentrate decision-making on health care financing and delivery in Washington. Both included
• a highly prescriptive federal definition and control of the content of “acceptable” health insurance benefit packages;
• individual and employer mandates to purchase federally approved health insurance plans;
• multi-year Medicare cuts to finance the expansion of health care coverage;
• centralization of federal control of health insurance markets, manifest in federally designed health insurance exchanges in the Obama version and geographically based “regional alliances” in the Clinton version;
• federal control of health care financing, characterized by taxpayer subsidies and premium rate regulation in the Obama version...”
“On April 12, 2006, Governor Romney signed into law landmark legislation ensuring that every resident of Massachusetts would have access to affordable, portable, quality private health insurance – without higher taxes, an employer mandate or a government takeover of health care.”
“On a Sunday morning in February 2006, Romney personally taped handwritten notes to the doors of senate president Robert Travaglini and house speaker Salvatore DiMasi, begging them not to let this opportunity die... The bill that emerged from the legislature two weeks later was different in many respects from what Romney had initially proposed... There were far too many requirements placed on insurance companies for Romney's tastes, and he used his line-item veto on the bill's stipulation that employers who don't cover their workers pay $295 per employee each year into a fund to subsidize coverage. The lawmakers easily overrode it”.
“The premiums are paid with an employee's pre-tax dollars — that saves money on withholding taxes for the employer and for the employee. If employers don't either pay at least one-third of the premiums, or get 25 percent of the employees to sign up, they'll have to pay a penalty (the state calls it a "fair share contribution") of $295 per employee per year.”
“Furthermore, to allow people to go without health insurance, and then when they do fall ill expect someone else to pay the tab for their treatment is a de facto mandate on providers and taxpayers. Romney proposes to take that option off the table, leaving only two choices: Either buy insurance or pay for your own care. Not an unreasonable position, and one that is clearly consistent with conservative values.
“But beyond that, the Romney administration got downright Libertarian in figuring how to make it work. Under Romney's plan anyone opting to not buy insurance would be required to deposit $10,000 in an (interest-bearing) escrow account with the state. If they didn't pay their medical bills, the providers stuck with their bad debts could apply for that money. But what if they won't buy insurance and refuse to put $10,000 in escrow with the state? The answer is that they aren't allowed to claim the personal exemption tax-break on their state income tax, and any tax refunds due them are deposited into the escrow account until the $10,000 limit is reached.
“Having first proposed the creation of more and better health-insurance choices and more rational and efficient subsidies, Romney essentially says, "You will be free to choose, but your choices will have consequences."
“A conference committee of the Massachusetts legislature is now hammering out the details of the final legislation.”
Note: The Legislature did not accept Romney's proposal, but instead passed a bill that fined individuals who refused to get insurance an amount equal to half the cost of a policy, up to a maximum that equaled $76/month ($912/year) in 2008, but typically would have turned out to be $57.50/month, half of a $115/month policy. (see below)
“Beginning Jan. 1, 2008, individuals who fail to purchase health insurance will lose a portion of their state tax refund equal to 50 percent of an affordable health insurance premium. Penalties will be assessed for each month without creditable coverage.
“Of the state's approximately 500,000 uninsured, about 100,000 are eligible for Medicaid. Another 200,000, who are making less than 300 percent of the federal poverty level, but are not eligible for Medicaid, will receive premium assistance on an income-based sliding scale for policies with no deductibles. Another 200,000 individuals with incomes above 300 percent of the poverty level will be able to purchase reduced-cost policies in the private market. Premium assistance will be financed by directing a portion of the $1 billion currently being spent by state government on the uninsured.”
“Massachusetts now spends about $1 billion a year to provide emergency health care for at least 500,000 uninsured citizens. About 200,000 of those are young people, predominantly male, who are making enough money to buy health insurance but figure they don't need it. They would be required to buy a relatively inexpensive health insurance policy, with higher deductibles and co-pays--that's where the ''mandate'' comes in.”
“For 2008 and beyond, the penalty increased to 50 percent of the average cost of a health insurance plan in the geographic region in which the person lives, up to a maximum of $912. People can file for hardship exemptions from the mandate that are reviewed on an individual basis. In addition, roughly two percent of state residents are not subject to the mandate because it has been determined that insurance coverage will not be affordable for them.”
In 2007, a single person with no dependents making over 3 times the poverty level would be earning over $30,630/year, and if their employer did not provide health insurance coverage, they would pay approximately $115/month in pre-tax dollars for health insurance:
“The program provides subsidized health coverage for individuals with income below 300 percent of the federal poverty level ($30,630 for an individual).”
“Finally, residents of Massachusetts now have an avenue to purchase insurance with pre-tax dollars, leveling the playing field between the individual market and employer sponsored health plans, and bringing the monthly premium paid by the average uninsured resident in the state to as low as $115 a month.”
“The early signs of success are undeniable. First, over half of the uninsured in Massachusetts now have health insurance because of Governor Romney's reforms. This includes over 160,000 people who have purchased private health insurance in reformed markets that feature a variety of plans with cheaper premiums and more generous benefits.”
“The Massachusetts program has already managed to lower the rate of uninsured in the state to 3.3 percent compared to the national average of 16 percent. Since it began two years ago, 440,000 formerly uninsured residents out of a total population of about 6.4 million have gained health care coverage.”
Reports indicate Massachusetts healthcare costs were over $1.3 billion and going up by double digit percentages before the healthcare reform:
Aug 21, 2007: “When Governor Romney decided to tackle the double-digit annual increases in health insurance costs, the average uninsured resident in Massachusetts had to pay $335 a month for private health insurance, which did not include coverage for prescription drugs and featured a $5,000 deductible. Moreover, the state was spending over $1.3 billion a year on "free care" for the uninsured.”
In the two above articles, the information available or used was from two years earlier. The 2007 article was reporting 2005 expenditures and the 2005 article was reporting approximations of the 2003 expenditures.
The uncompensated health care funds spent in 2005 was $1.38 billion, the amount spent in 2004 was $1.25 billion (Mass.gov - pg 17), and the amount the year before (the year Governor Romney took office) was about a billion dollars as the previous article stated, or more precisely, approximately $1.1 billion as the next article indicates. The $1.1B to $1.25B to $1.38B increases amounted to over a 13% increase followed by a 10.3% increase.
The 2006 expenditures were over $1.48 billion, a little less than a double digit increase, but the health care reform law started taking effect in the last 3 months of that pay Pool fiscal year (PFY2006) which accounts for the increases being less that year (see previous link).
“Comparatively speaking, the health-care situation in Massachusetts wasn't all that dire when Romney took office: the state's percentage of uninsured among its nonelderly (13.2%) was smaller than the national average (17.8%), and it had a better safety net, thanks to a $1.1 billion fund the commonwealth had established to reimburse hospitals and health centers that provided medically necessary care to people who couldn't pay for it.”
(After the new healthcare plan went into effect, costs transitioned from paying for uninsured to subsidizing poor with policies. The resulting costs of paying for the uninsured dropped drastically, while the costs of subsidizing poor with insurance policies quickly rose.)
“Taxpayer-funded "free care" is falling at double-digit rates, because the Romney reforms no longer allow people to let others pay for their health care if they can afford their own health insurance. Those who previously couldn't afford health insurance now have the help they need to get access to affordable, quality, portable private coverage. And, as he promised, Governor Romney did all this without raising taxes and without a government take-over of health care.”
(By 2008 the new healthcare plan costs were nearly half a billion dollars, or $469 million, while the uncompensated care costs paid through a fund with the healthcare reform that was called the Health Safety Net Trust Fund were only $354 million. By 2009, with over 97% of the people insured, the 2009 health reform budget represents nearly all the state's healthcare costs that originally went to pay for the uninsured.)
“As part of that [healthcare] reform, Section 30 of Chapter 58 required that, beginning on October 1, 2007, a new office would be responsible for the reimbursement of payments to Massachusetts hospitals that treat uninsured or underinsured patients. This new agency, the HSN [Health Safety Network], would operate differently from its predecessor...
“Funding for the Health Safety Net Trust Fund (“Trust”) will come from several sources...
“According to the Division, in 2008, the combined funding totaled $354 million, not including an additional $24 million from prior years’ residual balance.”
(The HSN fund went into effect in April 2008 as explained inside the previous link. Prior to that there was a transition period where the previous pay pool fund was being used, but its use was rapidly decreasing as previously noted.)
“Many citizens who could afford insurance, having learned that they could get care for free, were saying I'm not going to buy insurance, ... I can go to the hospital, and I'm going to get treated for free...
“We found in our state we were spending hundreds of millions of dollars a year giving out care to people, many of whom could afford to buy their own insurance. This free rider problem was a real issue... We got really three choices... First we could say to those people who could have afforded insurance but didn't get it and who let's say had a heart attack, we're sorry we're not going to treat you. That however goes against the Hypocratic oath and it's against federal law. You are required to treat those people. So that's really not an option. The next option was the one being exercized in my state. We had the taxpayers pay for them.
“We were spending hundreds of millions of dollars, we were basically mandating to the taxpayers, you've got to take care of these people...
“That's a big government approach. That government and taxpayers are going to give to people something that they should be able to get for themselves. And so we chose the last alternative, which is to insist on personal responsibility. And to say to folks who could afford to buy insurance, either buy insurance yourself, or pay your own way...
“The analysis of what the cost of the program would be was carried out by a group called the Massachusetts Taxpayers Foundation. They are an independent Think Tank funded largely by business interests. They looked at the Massachusetts health care system, after reform. And they concluded this: that the cost of the system is relatively modest. And that it costs less than 1% per year of the state budget... It cost less than 1% of the state budget.” (8 minutes into speech)
The state's healthcare costs were less three years after the reform than they were before, and the costs before were going up by double digits indicating the costs after the reform are much less than they would have been without the reforms.
In addition the state would have paid hundreds of millions of dollars more for their healthcare costs without the reform, because they retained $385 million/year in federal funding by implementing the reform, which they were otherwise going to lose.
Even at that, the legislature overrode Romney's vetoes, adding $145 million a year and growing in extra costs as noted below. Costs are also higher during a recession when more people will obtain subsidized care, and the new governor and legislature have sought new coverage and regulation, costing the plan even more (although eventually having to cut back on on some of their excessive coverage):
“Romney had vetoed the dental benefit saying 60 percent of employers in Massachusetts don't offer the benefit to their workers. He also said the provision was unsustainable because it would cost $75 million a year...
“Rep. Mary Rogeness, R-Longmeadow, defended Romney's veto saying the cost could jeopardize the success of the new law.
“The House overturned four of the vetoes during the afternoon and then returned in the evening to override the remaining four, including a provision to give MassHealth coverage to so-called "special status aliens,'' legal immigrants who have come with the sponsorship of an individual who agreed to be financially responsible for them.
“Romney said the law should take into account the financial status of the sponsor. The House overrode the veto by a 137-19 vote.” (That provision also cost an additional $70 million a year - Boston Globe)
“As governor, Mitt Romney did something significant to address a burning problem in his state. He helped bring medical insurance to the uninsured with a market-based approach that saved money for the taxpayers.”
“PERCENT OF NON-ELDERLY ADULT POPULATION WITH FAMILY INCOME LESS THAN 500% FPL [Federal Poverty Level] WHO SPENT 5 OR 10 PERCENT OF INCOME ON OUT-OF-POCKET HEALTH CARE COSTS:” (Chart shows drop from from 10% to 4% of Massachusetts population spending 10% or more of their income in healthcare expenses since reform, and a drop from 22% to 15% of Massachusetts population spending 5% or more of income on healthcare since reform. - slide #24 - 25th page)
“Although the reforms were signed into law just over a year ago, the changes are dramatic. The same uninsured individual whose choice was formerly limited to a policy with a $335 a month insurance premium with no drug benefits and a $5,000 deductible now can purchase quality private insurance, which includes coverage for prescription drugs, office and emergency room visits, and a $2,000 deductible, for $175 per month. Between July 1, 2006 and May 1, 2007, nearly 125,000 previously uninsured residents of Massachusetts got health insurance coverage.”
“The early signs of success are undeniable. First, over half of the uninsured in Massachusetts now have health insurance because of Governor Romney's reforms. This includes over 160,000 people who have purchased private health insurance in reformed markets that feature a variety of plans with cheaper premiums and more generous benefits.
“Second, the conservative, market-oriented reforms that Governor Romney instituted have made health insurance more affordable. Before Governor Romney's reforms, the average uninsured resident was paying $335 a month to obtain an insurance policy with a $5,000 deductible. Now, that same individual only pays $184 a month for a policy with a $2,000 deductible. Finally, residents of Massachusetts now have an avenue to purchase insurance with pre-tax dollars...”
Over about a 3 month period, 35,000 more people signed up for health insurance policies, and crossing into a new fiscal year, they started costing $9 more, about a 5% premium increase. In addition to obtaining much better coverage for much less, those policies have gone up less than 10% in a year after the reform while healthcare costs were going up in double digits (over 10%) a year before the reform:
“When Governor Romney decided to tackle the double-digit annual increases in health insurance costs, the average uninsured resident in Massachusetts had to pay $335 a month for private health insurance, which did not include coverage for prescription drugs and featured a $5,000 deductible.”
Massachusetts healthcare costs after the reform were going up by less than 10% a year for those paying for their own insurance (Commonwealth Choice plans), but would increase by 10% for those who were being subsidized with insurance policies that had no deductible and started out costing as low as $2/week for a family (Commonwealth Care policies):
“As part of an agreement to raise rates paid to the managed care plans participating in the Commonwealth Care program, enrollees will face premium increases of 10 percent. They will also face higher cost sharing for doctor's visits and other services. Although the premiums for the Commonwealth Choice [unsubsidized] plans have not yet been released, the Connector Authority Board has indicated that the increases will be less than 10 percent.”
In Massachusetts premiums for people paying for their own insurance (Commonwealth Choice plans) have been going up by less than 10% annually. This is in comparison to national healthcare premium costs of people paying for their own insurance, which are still going up by double digit percentages, which in the first of 2010 was an annual reported increase of 20%:
“About 14 million people under age 65 have coverage through the non-group or individual market... policyholders report that their insurers most recently requested premium increases averaging 20 percent.”