RomneyCare vs. ObamaCare

OP-ED | Robert Kuttner

June 28, 2011|By Robert Kuttner

(associated press)

REPUBLICAN PRESIDENTIAL candidate Tim Pawlenty was right. While he backed away from the nice term he coined — ObamneyCare — the health reforms enacted by then-governor Mitt Romney in 2006 and President Obama in 2010 have much in common, although both would deny it.

Their main strength is that more people get insured. In Massachusetts, the percentage is up to 98 percent, the highest in the nation. Obama projects that about 95 percent of people will be insured nationally in a decade. But both Romney and Obama punted on crucial issues of cost and deeper systemic reform.

At their core, both plans depended on a deal with special interest groups. In Massachusetts, Romney needed and got buy-in from the powerful hospital, insurance, and corporate lobbies. To win that support, he could not fundamentally change the way they did business. Instead, private insurance companies got more customers thanks to the individual mandate, hospitals kept their beds full, and corporations that failed to insure employees paid only a token penalty of $295 per worker.

Because free-riding corporations were not effectively taxed, Massachusetts had to divert money from the free-care pool that finances safety-net hospitals. And because serious cost containment was not part of the original package, premium costs in the Commonwealth have risen far faster than nationally — by 10.3 percent in 2009, the most recent year available, according to a June 2011 state report

An experimental “global payment’’ approach recommended by a state commission and now being tested by Blue Cross would save costs by giving medical providers an overall budget, rather than paying procedure by procedure. But that experiment might not save costs if implemented statewide.

At the federal level, interest group politics also dictated the design of Obama’s Affordable Care Act. The administration enlisted the collaboration of the insurance and drug industries, rather than pursuing savings at the expense of industry profits, such as federal bulk purchases of drugs. In the end, Obama did alienate the insurance lobby by paying for much of his new program by reducing subsidies for the privatized version of Medicare, a big profit center for insurers.

The administration places great hopes for cost savings in a new commission that will disseminate best practices and try to reduce unnecessary spending. But even with the Affordable Care Act, the administration projects that total health spending relative to GDP will be higher in 2021 than in 2011.

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