Romney's healthcare plan may be more revolutionary than Obama's
Instead of getting coverage at work, more Americans would shop for it on
their own. That would mean more choices — and more risk.
By Noam N. Levey, Washington Bureau - Los Angeles Times
April 23, 2012
WASHINGTON — As he pushes to "repeal and replace" President Obama's
healthcare law, former Massachusetts Gov. Mitt Romney has turned to proposals
that could alter the way hundreds of millions of Americans get their medical
In public, Romney has only sketched the outlines of a plan,
and aides have declined to answer questions about the details. But his public
statements and interviews with advisors make clear that Romney has embraced a
strategy that in crucial ways is more revolutionary — and potentially more
disruptive — than the law Obama signed two years ago.
The centerpiece of
Romney's plan would overhaul the way most Americans get their health coverage:
at work. He would do so by giving Americans a tax break to buy their own health
plans. That would give consumers more choices, but also more
Critics and independent analysts say the impact would probably
leave a larger number of Americans without insurance.
healthcare experts say changes along those lines would bring the benefits of
competition to healthcare and that basic restructuring is needed.
are significant changes that should be made," said Dr. Scott Atlas, a senior
fellow at the Hoover Institution who is advising the Romney
Romney's plan follows a lead set by President George W. Bush,
who unsuccessfully pushed for a healthcare overhaul. It adopts proposals long
championed by conservative healthcare experts.
It also sharply contrasts
with Romney's last foray into healthcare reform. As governor of Massachusetts,
Romney successfully pushed a law that guaranteed coverage for all state
residents and included a requirement that people buy insurance — an individual
mandate similar to Obama's.
Romney moved away from that plan during the
Republican primaries and has shown no signs of returning to it. Indeed, his
emerging plan would make it all but impossible for any state to follow
While offering consumers more choices, Romney's
plan would give companies strong incentives to stop providing insurance to
workers. It also would overhaul the 46-year-old Medicare and Medicaid programs
for the elderly, poor and disabled.
The plan could swell the federal
deficit; a similar plan backed by Sen. John McCain (R-Ariz.) during the 2008
presidential campaign would have cost more than $1 trillion over 10 years, on
par with the price tag for the Obama healthcare law.
Romney now regularly
criticizes Obama's healthcare law as government overreach and an attack on
American free enterprise.
"It's easy to forget how often candidate Obama
assured us under 'Obamacare,' nothing in our insurance plans would have to
change," Romney said recently at the National Rifle Assn. annual
But unlike Obama's healthcare law, Romney's plan could
fundamentally change the rules for the more than 150 million Americans who get
insurance through their employers. These workers get a large tax break because
their health benefits are not taxed. Businesses that provide insurance also get
a break because their contributions to their employees' health plans aren't
In place of that system, Romney would give Americans a tax break
to buy their own health plans, regardless of whether their employers offered
"This gets greater consumer choice so that people can buy what
they want, not just what their employer wants to give them," Romney said last
year while explaining his plan at the University of
Conservative healthcare experts offer several reasons for such
a change. The main one is that the tax law needs to be revised to bring
free-market competition to the healthcare system.
"It is absolutely
essential if you are going to reform the health insurance market to change the
tax treatment of health insurance," said Robert Moffit, a senior fellow at the
Heritage Foundation. "It is the 800-pound gorilla in the healthcare
Moreover, the current system effectively discriminates against
Americans who do not get health benefits at work. They must buy coverage on
their own and do not get the same tax break.
Many experts think the
current system also pushes up healthcare costs because it gives employers an
incentive to provide generous health benefits, which are tax-free, rather than
pay higher wages, which would be taxed.
Romney would make a parallel
change in Medicare — giving seniors the ability to shop for their own health
plans with vouchers rather than use the existing government-run program. That
proposal, which resembles a budget plan proposed by Rep. Paul D. Ryan (R-Wis.),
would represent the biggest change to the federal entitlement program since its
creation in 1965.
Supporters argue that with Medicare, as with insurance
for working-age adults, free-market competition would lower costs. But the shift
could force seniors to pay thousands of dollars more for their care, according
to analyses of similar proposals by the nonpartisan Congressional Budget
The third leg of Romney's plan would convert the Medicaid program
for poor and disabled Americans into a series of block grants to
The budget office estimates such a move would cut hundreds of
billions of dollars from the healthcare safety net and force major new limits on
care. It would also effectively make another Massachusetts experiment
impossible. Romney's plan as governor depended on a 20% bump in federal aid that
the state received.
Conservative healthcare experts think that scaling
back government and letting more people shop for their own coverage would drive
down prices. Insurers would be freed from regulation and consumers would get an
incentive to pick lower-cost options, they say.
But this approach is
largely untested on the scale Romney has discussed. Critics say it would put the
health insurance of millions of Americans at risk.
For example, if
workers had the ability to shop anywhere for a health plan, and if companies no
longer got tax breaks, some employers would likely stop providing health
coverage. That might be fine for young, healthy workers who could buy plans on
their own. But older or sicker workers would lose the protection they now
receive by buying insurance within a group. If young adults opted to buy
low-cost plans that provided limited benefits, prices could rise sharply for
middle-aged workers who are more likely to have chronic health
Under the McCain plan, more than 9 million fewer people would
have received health benefits through their jobs, according to an estimate from
the Lewin Group, a healthcare consulting firm.
Giving tax breaks to all
Americans to get health insurance also can cost a lot.
"It is basically
impossible to do this in a way that doesn't cost money," said Gail Wilensky, a
former Medicare and Medicaid administrator who has advised several GOP
When Bush offered his plan, he proposed to pay
for it in part with more than $400 billion in new taxes on American workers and
businesses. Romney has not said whether he plans to include any new taxes in his
The Romney campaign declined to answer a series of detailed
questions about how his healthcare plan would be financed, how many people would
be affected and how it would affect medical bills, healthcare providers and sick
Americans without health coverage.
"He will continue to fill in the
details as the campaign progresses," spokeswoman Andrea Saul said.
Copyright © 2012, Los Angeles Times