MAY 12, 2011
Obama's Running MateMitt Romney's ObamaCare problem.Mitt Romney travels to Ann Arbor today to deliver what his campaign bills as a major address laying out his "2012 principles for health-care reform." These are likely to be sensible, but what we'll be listening for is how he explains his health-care principles of five years ago.
As everyone knows, the health reform Mr. Romney passed in 2006 as Massachusetts Governor was the prototype for President Obama's version and gave national health care a huge political boost. Mr. Romney now claims ObamaCare should be repealed, but his failure to explain his own role or admit any errors suggests serious flaws both in his candidacy and as a potential President.***
There's a lot to learn from the failure of the ObamaCare model that began in Massachusetts, which is now moving to impose price controls on all hospitals, doctors and other providers. Not that anyone would know listening to Mr. Romney. In the paperback edition of his campaign book "No Apology," he calls the plan a "success," and he has defended it in numerous media appearances as he plans his White House run.
Mr. Romney has lately qualified his praise, saying in a speech in New Hampshire in March that "our experiment wasn't perfect—some things worked, some things didn't, and some things I'd change." He's mostly avoided specifics other than retreating to the cover of state experimentation, but we can fill in the details based on interviews with Romney staffers as well as others present at the creation.
When Mr. Romney took office in 2003, the state was already enforcing public utility-style regulation of insurers for premiums and multiple benefit mandates. The resulting distortions were increasing rates fast, along with the natural increases from good but expensive Massachusetts medicine.
Mr. Romney applied the approach that succeeded when he was a Bain & Company business consultant: He convened an expert task force. His health-care commission immersed itself in data, crunched the numbers and came up with a technocratic solution.
The conceit was that a universal reform would cover everyone and all but pay for itself by reorganizing the state's health-care finances. Since 1985, Massachusetts footed most of the bill when the uninsured showed up for treatment through a $800 million fund for uncompensated care. That money, along with extra federal Medicaid dollars under a special waiver, would subsidize lower- and middle-income residents.
In the name of personal responsibility, Mr. Romney also introduced the individual mandate, first in the nation, requiring everyone to buy coverage or else pay a penalty. Free riders, he said, transferred their own costs to others, either through higher premiums or taxes. This is the same argument the Obama Administration is now using to justify the coercion of the individual mandate in the federal courts. Because the states have police powers under the Constitution, Mr. Romney's plan posed no legal problems. His blunder was his philosophy of government.
The people who don't buy coverage though they can afford it aren't really a major fiscal problem—unless the goal of the individual mandate is to force them to subsidize others. People who are priced out of coverage require subsidies—so in practice the logic of the individual mandate is that it is a government mandate too. Entitlements automatically grow and grow, and then the political class begins to make decisions that used to be left to markets and individuals.
Massachusetts took off on this entitlement trajectory after Mr. Romney signed the bill in 2006 and stepped down to run for President two years later. Let's go to the data, all of which are state-reported, in search of evidence of Mr. Romney's "success."
The only good news we can find is that the uninsured rate has dropped to 2% today from 6% in 2006. Yet four out of five of the newly insured receive low- or no-cost coverage from the government. The subsidies will cost at least $830 million in 2011 and are growing, conservatively measured, at 5.1% a year. Total state health-care spending as a share of the budget has grown from about 16% in the 1980s to 30% in 2006 to 40% today. The national state average is about 25%.
The safety-net fund that was supposed to be unwound, well, wasn't. Uncompensated hospital care rose 5% from 2008 to 2009, and 15% from 2009 to 2010, hitting $475 million (though the state only paid out $405 million). "Avoidable" use of emergency rooms—that is, for routine care like a sore throat—increased 9% between 2004 and 2008. Meanwhile, unsubsidized insurance premiums for individuals and small businesses have climbed to among the highest in the nation.
Like Mr. Obama's reform, RomneyCare was predicated on the illusion that insurance would be less expensive if everyone were covered. Even if this theory were plausible, it is not true in Massachusetts today. So as costs continue to climb, Mr. Romney's Democratic successor now wants to create a central board of political appointees to decide how much doctors and hospitals should be paid for thousands of services.
Mitt RomneyThe Romney camp blames all this on a failure of execution, not of design. But by this cause-and-effect standard, Mr. Romney could push someone out of an airplane and blame the ground for killing him. Once government takes on the direct or implicit liability of paying for health care for everyone, the only way to afford it is through raw political control of all medical decisions.
Mr. Romney's refusal to appreciate this, then and now, reveals a troubling failure of political understanding and principle. The raucous national debate over health care isn't about this or that technocratic detail, but about basic differences over the role of government. In the current debate over Medicare, Paul Ryan wants to reduce costs by encouraging private competition while Mr. Obama wants the cost-cutting done by a body of unelected experts like the one emerging in Massachusetts.
Mr. Romney's fundamental error was assuming that such differences could be parsed by his own group of experts, as if government can be run by management consultants. He still seems to believe he somehow squared the views of Jonathan Gruber, the MIT evangelist for ObamaCare, with those of the Heritage Foundation.
In reality, his ostensible liberal allies like the late Ted Kennedy saw an opening to advance their own priorities, and in Mr. Romney they took advantage of a politician who still doesn't seem to understand how government works. It's no accident that RomneyCare's most vociferous defenders now are in the White House and left-wing media and think tanks. They know what happened, even if he doesn't.***
For a potential President whose core argument is that he knows how to revive free market economic growth,this amounts to a fatal flaw. Presidents lead by offering a vision for the country rooted in certain principles, not by promising a technocracy that runs on "data." Mr. Romney's highest principle seems to be faith in his own expertise.
More immediately for his Republican candidacy, the debate over ObamaCare and the larger entitlement state may be the central question of the 2012 election. On that question, Mr. Romney is compromised and not credible.
If he does not change his message, he might as well try to knock off Joe Biden and get on the Obama ticket.This is hilarious! In today's WSJ, the most conservative opinion page in the nation. 
