The Truth About RomneyCare
Now that Mitt Romney has shown himself politically vulnerable after Iowa, more people are taking a closer look at his claims about the “RomneyCare” health care plan he helped create as Massachusetts governor. In this interview from April 2010 which recently recirculated last month, Romney attempts to draw some distinctions (as well as acknowledge similarities) between his RomneyCare plan and the national ObamaCare plan. One of the alleged virtues of RomneyCare over ObamaCare is that Romney’s plan does not contain “price controls,” whereas ObamaCare does. But how does this stack up against reality?
Romney’s claim may have been technically true at the time the plan was enacted. But according to the New York Times, this was a deliberate choice on the part of Romney and the Massachusetts lawmakers when they passed the law in 2006. They aimed for “universal coverage” first, and decided to worry about controlling costs later. In other words, they knew that costs would be a problem but chose to kick the can down the road. It’s like borrowing money from a loan shark then saying, “At least I don’t owe him any money right now!”
But even before Romney’s 2010 claims, the state had already implemented some price controls. As Michael Tennant notes, “Requiring insurers to cover those with pre-existing conditions at the same rates as healthy individuals – another feature of the Massachusetts law that Romney praises — surely qualifies as a price control.”
Similarly, requiring insurance companies to provide numerous mandatory benefits (including lay midwives, orthotics, and drug-abuse treatment) and then denying insurers’ requests for rate increases to cover their increased costs is another form of price control.
Yet another price control considered (but ultimately not implemented) was a proposal to compel doctors to accept patients covered by the state’s “Affordable Health Plans” at government-set payment rates or else lose their state medical licenses.
And because costs continue to rise faster in Massachusetts than in the rest of the country, the state is planning to ban paying hospitals and physicians for actual services rendered and instead implement mandatory “bundled” or “global payments.”
Under this system, doctors and hospitals would band into large networks or “accountable care organizations” (ACOs) and receive a fixed fee for taking care of a patient’s medical needs for that month (or year). If the providers spent less than their fee, they would keep the remainder. If their costs exceeded the fee, they would eat the difference. Another variation would be to pay providers a fixed fee per each “episode of care” (such as a heart attack or a hip replacement surgery), regardless of how few — or many — unforeseen complications arose. Either way, such mandatory caps on payments for medical care are an overt form of price control.
In theory, “bundled payments” are supposed to encourage doctors to work together to minimize unnecessary tests and treatments. However, in practice they will have two serious negative consequences.
First, “bundled payments” will create a powerful incentive for providers to skimp on care. The ACO administrator might ask a doctor, “Do you really need to take Mrs. Smith to surgery now for her heart problems — or can she get by with just medications for a little while longer? And does she really need the high-end antibiotic that kills 99% of bacteria? Or can we get away with the cheaper drug that works 85% of the time? We’ve already burned through her fee for this year, so anything else you do for her comes out of our pockets!”
Second, they will create an incentive for providers to avoid the sickest patients. As one physician describes:
Young healthy patients who may need a day or two in the hospital for their pneumonia will be readily admitted as there will be a high likelihood of profitability with the ensuing bundled payment. Pneumonia patients with diabetes or with HIV who will likely need long admissions and expensive medications will become hot potatoes. Community hospitals will find reasons to transfer high utilizers to other facilities. Perhaps they need an endocrinology consultation. Perhaps they need an infectious disease specialist. Bundled payments will create an incentive to avoid treating obese patients, cancer patients, and other patients with chronic diseases.
Dr. Stewart Segal calls such patients “ACO lepers.” Instead of being rewarded for caring for the sickest patients, many doctors will avoid them or send them to other providers as quickly as possible. Bundled payments thus reverse the incentives for physicians, rewarding them for not practicing medicine. And it will be the sickest, most vulnerable patients who will suffer the most under such a system.
Finally, if “global” or “bundled” payments fail to control costs sufficiently, Massachusetts has a backup plan. The Beacon Hill Institute recently noted, “A Special Commission on Provider Price Reform has come up with recommendations that, in effect, put the insurance companies in the business of imposing price controls on hospitals.” One way or another, more price controls are coming to Massachusetts.
In conclusion, Romney’s claim that the Massachusetts plan didn’t include price controls may have been technically true at the time the law was passed. But he helped create an unsustainable system that has quickly and predictably led to price controls — with still more to come. Hence, Romney’s claim is disingenuous if not downright misleading.
You can’t have a health care marketplace free of any controls unless you put a price tag on a human life.
Because right now, none of us put a fixed price on our lives. None of us are going to say to the doctor “That treatment is too expensive, I guess I’ll just die instead.”
As a result, the supply-demand curves for health care are highly inelastic. Demand does not drop off as the price of health care treatment increases. We all want to live rather than die, cost be damned.
Competition can lower the price of a lot of acute illness. For example, the use of generic drugs rather than brand name drugs offers lower prices. But for life-threatening chronic illness there often is no inexpensive treatment available. If your liver fails, your only hope of survival is a liver transplant, cost be damned.
In the 1990s, HMOs tried cost controls, some of which (like capitation) were severe. Today, more and more of them (like Blue Cross) are demanding much higher co-pays for treatments and tests at teaching hospitals that they consider too expensive.
As a society, we are going to have to start making some tough choices here. All our citizens can’t have the absolute best, most state of the art, treatment regardless of cost. We can’t have that with any other aspect of a society: Energy, transportation, technology. And we can’t have it with health care either.
Get used to it.
“None of us are going to say to the doctor “That treatment is too expensive, I guess I’ll just die instead.”’
Too few of us would say that for self-control to be the solution, certainly.
brutal, but true.
The interesting thing is that society was much better at facing the stark reality you describe before we had so many life-saving treatments. As medical technology has improved by leaps and bounds, expectations have increased even faster. That is the key issue that underlies everything else.
To me, it’s clear that this factor has been deliberately multiplied and exploited by the marxists and their ruling class allies to regain the control they demand over the population.
One other point about this topic: my impression is that the increase in life spans primarilly resulsts from a handful of practices that aren’t particularly high-tech. The practices include better nutrition, cleanliness in hospitals, better pre-natal care, and a handful of drugs like aspirin and antibiotics. It would be intersting to see how many weeks or months each of the 500 or so major treatments currently available adds to the average person’s life. Does anybody doubt that the 80-20 rule applies, and that many of the most expensive treatments have minimal impact, on average, on the average lifespan? Of course, if you are the guy with cancer, as sinz says, cost is no object.
Moreover, does anybody doubt that lifestyle changes are the area that has the most promise to improve people’s lives (with some possible exceptions like geriatric research and genetic research and manipulation). Yet the people who demand heart transplants at taxpayer expense aren’t willing to control their own diet or stop smoking or using drugs.
What a set of dilemmas.
“What a set of dilemmas.”
Indeed. Albeit what a wonderful thing it has been to watch the evolution of medical technology that has served to enrich our lives both in quantity & quality, there are too many instances where financial resources go to help “save” lives in cases where illness & injury are to such a degree that a more sensible approach would be towards supportive & palliative care. As an RN, I have seen the evidence of this up close.
Too true about the inelastic demand to stay alive. But I think its an overly pessimistic view to deplore how much it costs to keep a person alive. Todays expensive treatment will be come tomorrows routine and affordable outpaitent procedure. Or at least that is the spiel I gave someone contemplating a DNR agreement. It is just not correct to view health care as a static system. If anything the costly end gasme patient is sacrificing their comfort for better care for their grand kids.
What’s wrong with putting a price tag on human life, particularly if it would actually allow a free market in health care? Is it that everyone would generally be worth a different amount, and that amount would change from time to time? If so, how does ignoring that fact help solve the problem?
Well, to beging with, us poor people would take to guns and start threatening doctors who refused to save our lives because we couldnt raise 10 grand. Seriously, a kidney is one thing but a car accident?
The free market allows a more efficient distribution of resources than a single payer system. That means more people will get better care for less money. Does that mean putting a price tag on human life? Yes.
Your option means fewer available services and lower quality health care being available. If you want to whine about pricetags on human life and fairness go ahead. But be honest about it. You want a poorer healthcare system so you can have “fairness” and don’t really care that we all get less for it.
That and you want bureaucrats making decisions because that floats your boat.
What you’re saying ISMW is that health care is a “right.” One only has the right to seek health care, but it’s a mistake to think one has the right to demand something of another with no intent in mind to pay for it. This line of reasoning might as well say we all have a right to a car, a house, food, etc. The fact that so many people believe that health care is a “right” is helping to encourage these boneheaded programs such as Romneycare & Obamacare.
Like it or not, there is a price tag on a life. Right now that price is set by the government through it’s control of the healthcare and insurance industries.
Ask yourself this, who would you rather set the price for your life, a bureaucrat in Washington or you?
“Putting a price tag on human life” is a rather blunt way of saying the following which many people would argue: Health care is a commodity in that its delivery requires the time, skills & resources of the people who render it. NTS, these things have value & must be compensated in some form, whether it comes from private or public funding. I really don’t believe that there will ever be reasonable “price controls” until free-market forces are allowed to play a major role. IOW, people need some sort of insurance policy to help them cope with the enormous expenditures associated with intensive or long-term care needs, with the people themselves kicking in for procedures they can more readily afford. Bottom line? Expand major-medical, catastrophic type plans with relatively high deductibles. When it comes to those times patients rack up a bit of debt, most (if not all) facilities are very good about the allowance of interest-free payment plans.
So Romney lies about one of the few things he steadfastly supports? Who’s surprised at the man who will otherwise say anything to be elected?
What else does he steadfastly support and believe? Two things that leap immediately to mind, gun control and cutting carbon.
Who is the fool who supports this man?
There is one main difference between Romney care and Obama care that no one ever points out. Romney was a Republican in a Democratic state, and he gave the people what they wanted. (I know, I have family who lives there.) Obama gave the people of the US what they didn’t want.
We should be looking at Romney care for the future results of Obama care. For example, many Mass. residents go to Maine to find a doctor because the waiting list is so long in Mass.
Maine has its own version of Romney care and it’s bankruptng the hospitals. (As in not getting paid for services because the state is broke.)
The people of Mass. got what they wanted. Will they learn from that or will they continue to tinker with something that can never work? Unfortunately, once in place, programs never go away even if there proponents admit it doesn’t work. (Think ethanol).
Dirigo plan was a fail right from the start really.
Mass introduced a new MMIS system in 2010ish. The cutover compounded problems…(reconciling (state)payments vs enrollment) to the four MassHealth plans. And ACO’s are relatively new but a trend with O care too.
Sorry for the spelling errors. I always see them after the post. (Need more coffee out here on the left coast).
It would seem that ObamneyCare is aimed at killing off the least among us. That would be African Americans and the elderly (disproportionatly women). Does that make it a)racist, b)sexist, and c) age discriminatory? What humanitarians!!!
The entire concept of insurance (protection), is convoluted. I can only think this institution was born in the mind of a gangster. Scare people into buying protection from a future disaster. Between the Attorneys, Insurance Co’s, and crazy leadership (Law) is where the money is being divided. The middle men, the money handlers, that in fact do nothing except decide money issues with nothing at stake other than your money. They are scum, a parasitic lot no different than a gangster. So… they use a pen instead of a sword (graft), pirates in a suit and tie. This is the the reason for skyrocketing prices, not medicine itself or R&D.
Insurance companies make all their profit on the backs of the suffering, minor or major tragedy makes no difference.
Ironic that they (Insurance Co’s) portend to lower your risks in life, while they intend to take no risks, with your money. They want you to risk your monies and they won’t take any risks with it. What great racket!
This, finally!
I’ve been grown to never think of “safety”, “insurance”, “protection” as absolute concepts, they are only relative values. We are all going to die in one way or another so you know you can go on as much as you can, until certain point.
Buying the health insurance scam is like going to a Casino to get rich
Another Great article that ought to be in the WSJ, too! On a side note, I think that Rick Perry ought/will be the GOP cnadidate for President.
I’m just happy to see a discussion that doesn’t focus on the individual mandate.
Conservatives should prepare themselves for SCOTUS to rule in favor of the mandate. They are going to call it indistinguiahable from a tax, and the Constitution allows taxation.
Besides, the mandate isn’t the biggest problem with Obamneycare. The far bigger problem, as the article points out, is government controlling people’s lives, through price controls and all the other diabolical bureaucracies and death panels. THAT’s what the argument should be about, rather than depending on the high-risk strategy of hoping 9 ancient men and women say a mandate isn’t a tax.
– about SCOTUS ruling, but conservative (Hoover Institution) constitutional law professor Richard Epstein expects the court will use the Commerce Clause, following a trend from recent years.
Romney is a chickenshit smuck. He wants to be commander in chief of the armed forces of the United States, but when he had his chance to participate in the Vietnam War, he got a draft deferment to be a missionary, to rough it in France, spreading the Mormon word of god to the secular children of the Enlightenment and the French Revolution. No wonder he likes under the cover price controls and biological cost shifting, it worked for him.
BTW, I am so looking forward to seeing the republicans run on War With Iran (WWI). Cause thats what the country needs now, a new economic crisis.
Great post, you expose the dark secret of health care: in order to control prices we must, to some degree, ration services. The question becomes whether we want hose “rationing” decisions to be made by for-profit insurance companies or “government bureaucrats”. Seems like a choice between the devil and the deep-blue-sea to me!
Brutus – Almost, under the CURRENT system rationing must occur as their are NO real incentives to reign in costs, we will have to ration or go bankrupt and adopt the healthcare of Zimbabwe. Insolvent nations don’t get first world healthcare, it’s get better or die. Look at what happened to healthcare in Argentina in 2001 when their currency hyper-inflated away into infinity.
At the moment the United States has the MOST expensive healthcare in the world, we pay almost DOUBLE what the next country pays and even then not everyone is covered.
That puts us at an enormous competitive disadvantage with our rivals in other first world countries, let alone China, and is a significant reason the “jobs” are not showing up, if you cannot control costs, hiring or starting up a new business becomes to risky to attempt.
The best system is 100% user pays, as described in previous posts and on other forums, a tax free Health Care Account combined with medical disaster insurance with coverage of ~ $2-5 million with a deductible of $10,000 or so.
You pay out of pocket for ALL your medical bills (and medications ect) with the disaster coverage available in the advent of medical crisis – car accident, cancer, heart attack…
This is the ONLY way the INCENTIVES will be put back into alignment.
Indeed. If people were forced to pay for most of their more simple health care needs, they would become sharp consumers & stop flooding the system with rather nonserious complaints, thereby putting a drain on the system. Facilities routinely dole out untold millions of dollars’ worth of care for which they don’t get one dime. Due to this they are forced to hyperinflate the prices they charge for care. Otherwise they would not be able to function.
No matter how you put it the word heartless is going to be used, but at some point just because you can keep someone alive dose not mean you should. At what point do we consider quality of life in the treatment process. I heard a statistic that 80%-90% of all health care expenditures are used in the last year of life. The singer Etta James who is 73 and suffering dementia and late stage terminal leukemia develops pneumonia and is hospitalized put on heavy sedation and a ventilator in ICU for a two weeks, is this realy the best allocation of health care resources.
Everyone who is ever alive ends up dead at the end, maybe its time to have a rational discussion about what constitutes reasonable and what is excessive in end of life treatment.
It’s an amazing thing to contemplate how our approach to our four-legged family members contrasts with that of one another. Our animals, by & large, are treated more realistically in the face of terminal illness & death: Supportive, palliative care with death handled with dignity. Seriously.
Many surveys of Massachusetts show that a majority of its citizens and doctors are happy with their state health reform. Dr. Hsieh points to the reason why: who wouldn’t like a system that provides a service and ignores the cost? I suspect they will like the system up until the time they have to actually pay for what they are getting…either through even higher prices, longer waits, or restriction of care.
Romney-care has led to the deterioration of medicine in Massachusetts. One of my friends suffered an iatrogenic stroke, i.e., caused by medical treatment, at Massachusetts General, which used to be a top hospital. The bad treatment which led to his stroke was a direct consequence of Romney-care.
“Romney-care has led to the deterioration of medicine in Massachusetts.”
And he’s still proud of it!
“And he’s still proud of it!”
This surprises me not. I got a first-hand look at what Bain is all about when it (along with another investment company) overtook the company hubby just recently retired from. This company was extraordinary in the way it treated its upper management (all levels of employees, actually). It’s products are of exemplary quality. Unfortunately this company got to be too big for its britches (too many sister chains, spreading its fruits of success way too thin). Just a few years have passed since Bain & the other company have been in charge & now it’s just another typical, run-of-the-mill company in many aspects, with stock options gone & other bennies gone.
Paying doctors and hospitals based on outcomes instead of the number or length of treatments is a conservative idea for reform. The payments are based on performance. This article uses twisted logic to rename such a thing as a “price control”. This is a liberal article complaining that higher payments aren’t continually made for TRYING to provide care instead of having a system which is actually based on results.
The three words applicable to medicine are Good, Quick, and Cheap. You can have any two. As for the concepts of rationing and “death panels”, please refer to the people who have been doing this longer than we have. In the UK they have an entity called the National Institute of Clinical Excellence, yes NICE. They use a statistical creature called the Quality Adjusted Life Year to determine how mucch you are worth.
Bobcat – That’s because our 4 legged friends use 100% USER PAYS healthcare. Look at the prices for major surgery for pets compared to that of a person as well. My dog had stomach/intestine surgery to correct a blockage 2 years ago. He made a full recovery but the TOTAL cost was ~ $8,000 incl medications, after treatment care and checkups.
How much would a human cost?, $100,000?, more?
Our pets are getting far better and far more cost effective healthcare than we are.
Not sure what a procedure such as that would cost for a human, but based on what my hysterectomy cost ($10K), your cited price of $100K sounds a bit high. As for pet care expenses, some do have pet health care insurance.
Your point is well taken though in that the fact that we take most of the responsibility for our pets’ care unlike the case of our own, & it does make a difference. Taking more responsibility for the financial obligations for our health care needs would serve to drive prices down.
Regardless of the wisdom of health management by government, I see a huge distinction between State government and Federal government getting involved in healthcare plans. The Federal government has no business in this. Twisting the Constitution into meaning healthcare has something to do with Interstate commerce is a joke. If a State wants to try this, go for it.