Saturday, April 24, 2010

The Truth Behind The Costs Of RomneyCare

In the national discussion on health care, the issue of cost is bound to come up. The idea of an individual mandate  has always been a controversial issue among conservatives and liberals. It is even controversial among conservatives as well.
The History of Individual Mandates 
In order to understand the current debate on the cost of individual mandates,  one has to understand that some conservatives supported that idea as an alternative to Hilliary Clinton's health care plan for the United States. It was the conservative think tank, Heritage Foundation who came up with the idea. Not all conservatives at the time liked it. The Cato Institute wasn't thrilled with the idea of individual mandates.
Yet, when Obama presented incorporated individual mandates into plan, it brought on universal opposition from conservatives. This has lead some people to believe that conservatives are flip flopping on the issue of individual mandates since they supported it in their opposition to HilliaryCare and are now opposed to RomneyCare, despite the fact that it was based on ideas presented by the Heritage Institute, in order to appear consistent in their opposition to ObamaCare.
While some conservatives are flip flopping on the issue of individual mandates, Mitt Romney opposed HillaryCare for the same reasons he opposed ObamaCare and encouraged the President not to rush the plan into law. Its the same reason Romney is calling for its repeal; each state should have the ability to craft a health care based on the circumstances that are unique to each state. This idea is known as federalism. Thus, the former Governor of Massachusetts has been consistent on his position of health care and individual mandates.
It should be noted that Mitt Romney has never, ever, supported the idea federal mandates. Just because Obama borrowed the idea from the conservative play book during their opposition to HilliaryCare or used  RomneyCare as a template for ObamaCare doesn't mean Obama ever had Romney's blessing or support. Here is Mitt Romney explaining that Obama had never reached out to him for advice: 
"He never gave me a call. Neither he nor any of his colleagues [gave me] a call to ask what worked and did not work, and how would they improve upon it and so forth. If what was done at the state level, they applied at the federal level, they made a mistake. It was not designed for the nation."  (Source)
Furthermore, just because a former employee of Mitt Romney's administration has been hired by the Obama Administration does not mean that it is evidence that Romney supports ObamaCare or that his plan is similar to Obama's. Moreover, it is not proof that Romney even approves of this man's decision to work for the Obama administration. Mitt has no control over how his former employees choose to peruse their careers. He is free to find whatever employment he likes. 
The Current Debate Over The Cost RomneyCare
In the current debate over national health care, many people think that we cannot afford ObamaCare and will point to RomneyCare as evidence of their claim.Those who argue against ObamaCare are partially right about what has happened in Massachusetts. America cannot afford nationalized health care.
Yet they are accusing the wrong man for why Massachusetts why is in financial trouble. Mitt Romney is not responsible for the rising cost of health care in Massachusetts.
A Brief Financial History of The Romney Administration (2003-2007): 
Before Romney unveiled RomneyCare to Massachusetts, he first had to make sure that the state was financially stable enough launch his ambitious health care plan. Getting the state in financial shape was a priority for him because when Mitt entered into office in 2003, he was a left with a massive deficit of approximately $3 billion.

However, Mitt Romney was able to balance the state budget for each year of his administration and got the state out of debt by implementing a mixture of aggressive reduction in the size and cost of government along with bold strategies to spur economic growth.

By 2005, Mitt Romney had a budget surplus of $1 billion and by the time he left office in 2007, he left the state had a $ 2 billion surplus.(Source) In contrast, President Obama did not work to make sure that America was in good financial shape before enacting ObamaCare. He simple went full spead ahead with his health care plan.
Having a budget surplus of $1 billion in 2005 allowed Mitt Romney to confidently to unveil his health care plan in 2006.When Mitt Romney introduced his health care plan on Beacon Hill, he made sure that his proposal wouldn't undermine all his hard work of whipping the state into financial shape. Thus, when his plan was presented, it was estimated to cost less than 1.5% of the state budget. (Source)
RomneyCare could not pass through the democratically controlled state legislature untouched. The democrats inserted eight additional items that made the health care proposal more expensive than Mitt Romney wanted. For example: 
Massachusetts mandates which medical coverage must be included in each insurance policy, including such things as an unlimited number of in vitro fertilization treatments. That inflates costs for everyone. And Massachusetts applies a $295 annual fee on employers for each uninsured employee, which has hurt the business climate in our state. Then-Gov. Mitt Romney's objection to both these measures was overridden by Democrats in the legislature. (Source.)
As explained in a previous post, these two amendments, along with the other six were vetoed by Mitt Romney. Yet the democrats overrode these vetoes. Romney tried to prevent from having extraneous costs inserted to his plan but he lost. That's how legislatives battles go. After unsuccessfully attempting to keep the democrats from modifying his original health care plan, he signed the health legislation on April 12, 2006. As explained before, when Governor Mitt Romney left office in 2007, the state had a $2 billion surplus.
If you just look at RomneyCare on its own, its was doing well. In 2009, Mitt Romney explained that
"When our bill passed three years ago, the legislature projected that our program would cost $725 million in 2009. At $723 million, next year's forecast is pretty much on target. When you calculate all the savings, including that from the free hospital care we eliminated, the net cost to the state is approximately $350 million." (Source)
 Discord Among Conservatives On Cost Of RomneyCare
Despite the impressive record of pulling Massachusetts out of a $3 billion debt, leaving the state with a $2 billion surplus while creating a state health care plan at the same time that was and still is financially stable, not all conservatives are united in their support for RomneyCare when it comes to the issue of cost.
For example, the Cato Insitute is not a fan of it. 
The Club for Growth has flipped flopped in their support for RomneyCare. They used to support it: 
"Governor Romney Deserves Credit For Proposing A Plan That Encourages Individually-Owned Health Insurance..." "Given these limitations, Governor Romney deserves credit for proposing (and to a lesser extent, enacting) a plan that encourages individually-owned health insurance and circumvents some of the inequities carved into the federal tax code." (The Club For Growth, "Mitt Romney's Record On Economic Issues," Press Release, 8/21/2007)
Now Club for Growth is against it. 
Yet, The Massachusetts Taxpayers Foundation likes it and published a report titled the "Massachusetts Health Reform: The Myth of Uncontrollable Costs." There are several fan over at the Heritage Institute such as Robert Moffit, Ph.D., and Edmund Haislmaier
Thus, individual mandates gets conservative support depending on who you ask. The same was true when conservatives were debating the merits of individual mandates during the national debates over HilliaryCare.
What do Massachusetts Think of RomneyCare?
Whether conservative think tanks support or oppose RomneyCare isn't important. What is important is whether or not the citizens themselves like RomneyCare. A poll in 2008 found this: 
Two years after the implementation of a health care reform law aimed at providing health coverage for nearly all Massachusetts residents, public support for the law remains high.
According to a new poll by the Harvard School of Public Health and the Blue Cross Blue Shield of Massachusetts Foundation, over two-thirds (69%) of Massachusetts residents support the law. Just over one in five (22%) oppose the law and approximately one in ten (9%) say they do not know enough about it to give an opinion. Since the law's passage in 2006, public support has increased slightly (69% in 2008 compared to 67% in 2007 and 61% in 2006)
Other signs of public support for the law include the following:
  • 77% support providing subsidized coverage
  • 58% support requiring individuals to have insurance
  • 71% say the law has been successful at reducing the number of uninsured in Massachusetts  
Two years later in 2010, another independent poll found that the people of Massachusetts continue to like Romney's health care plan:
A poll conducted this week by The Washington Post of 880 Massachusetts residents who said they voted in the special election found that 68 percent support the Massachusetts plan. Even among Brown voters, slightly more than half backed the 2006 law. (Source.)
The Truth About The Cost Of RomneyCare
If Mitt Romney's leadership or his health Care plan is not the cause for the current financial crisis in Massachusetts, what is the cause then? It boils down to two things: 
1) The down turn in the economy is hurting the state's ability to collect taxes:
Massachusetts, like other states, has grappled with more than two years of declining revenue as a result of the global economic downturn, which prompted Governor Deval Patrick to make midyear budget cuts four times last fiscal year and once already this year, in October.
2) The Democrats have mismanaged the Commonwealth:
Republican gubernatorial candidate Charles D. Baker Jr., who served as budget chief in the Weld and Cellucci administrations, released a statement yesterday calling the shortfall “just another example of Deval Patrick and Tim Cahill’s fundamental incompetence when it comes to the Commonwealth’s budget.’’
Cahill, the state treasurer, is an independent candidate for governor.
“In the face of the worst economic times since Governor Dukakis, their failure is intolerable,’’ Baker said. “Our state’s budget should be the top priority for the governor and the treasurer, yet time and time again unanticipated spending and rising costs catch both of them off guard.
“Their lack of leadership on the budgetary process is unacceptable, and the taxpayers and business owners of Massachusetts deserve better,’’ he said
3) Another  Health Care Program Unrelated to RomneyCare Is The Problem
Steven C. Panagiotakos, a Lowell Democrat and Senate chairman of the Ways and Means Committee, agreed with Gonzalez that the cost of the state’s universal health care law is unrelated to the latest budget crisis.
He said the latest shortfall is being driven by between $150 million and $200 million in rising costs for MassHealth, a program that predates the universal health care law.
The huge MassHealth program, 60 percent of which is paid for by the federal government, costs the state about $10 billion out of its $27 billion annual budget.
“For us to really control our budget, we have to be able to stabilize MassHealth expenditures,’’ Panagiotakos said. “It’s a huge chunk of our state revenues.’’
Source for #1-3.
It clear that RomneyCare is unrelated to the state’s budgetary problems. The source of the problem appears to be a program called MassHealth which was created long before RomneyCare was ever invented. 
Michael J. Widmer, president of the Massachusetts Taxpayers Foundation confirms this fact. He explains that RomneyCare has nothing to do with Massachusetts current financial crisis:
According to the administration, tax revenues have fallen $2 billion below the amounts the fiscal 2009 budget was built upon. And the Massachusetts Budget and Policy Center, a left-leaning budget think tank, says the problem has been compounded by permanent tax cuts put in place during the late 1990s.
Adding to these financial woes is an increase in the number of people relying on unemployment benefits as the result of losing their jobs, said Alan Sager, a professor of health policy and management at Boston University.  "The state would be facing a deficit no matter what," Sager said.
So, while the state may be broke, it has little to do with the health care program Mitt Romney put in place over three years ago. Instead, tax revenue shortfalls and a growing reliance on unemployment benefits due to layoffs have put a massive budget burden on the state
The facts are unalterable. Romney was a fiscial conservative who was able to balance the state budgets for every year of his single term as governor. He cut taxes, reduced spending and was able to create a financially sound health care plan in one of the most liberal states in America.
If Massachusetts is having  financial problems four years after Romney left them with a rainy day fund surplus of $2 billion, then facts lead us to conclude that it has something to do with the democratic leadership that is there currently. But we don't need to make any inferences about what has happened in that state. The evidence clearly demonstrate that the current problems in Massachusetts are due to the fact that the Democrats are not managing Mitt Romney's health care plan the way it was originally intended. 
Therefore, we can hardly blame Mitt Rommey or RomneyCare for the current problems. The problems lies completely with the Democrats who squandered the $2 billion surplus.


  1. I love the way you attached the flip flop label to the other conservatives in the party. Very well thought out blog. Lots of useful information.

  2. Fantastic post Jared. Please make a note that Masshealth is the states Medicare/Medicaid and SCHIP program. These are all FEDERAL PROGRAMS. Also, the states budget is affected by the overspending of the Patrick administration. They recently submitted a budget of $31.1 billion, which is 3 billion more than last couple of years.

  3. I'm glad to see this. Everytone from Mitt's conservative GOP rivals to Pres. Obama himself have been and will be attacking Mitt for RomneyCare. It's good to see the reord set straight.