Health Care for Everyone?

Health Care for Everyone?
We've found a way.

BY MITT ROMNEY
Tuesday, April 11, 2006 12:01 a.m. EDT

BOSTON--Only weeks after I was elected governor, Tom Stemberg, the
founder and former CEO of Staples, stopped by my office. He told me,
"If you really want to help people, find a way to get everyone health
insurance." I replied that would mean raising taxes and a
Clinton-style government takeover of health care. He insisted: "You
can find a way."

I believe that we have. Every uninsured citizen in Massachusetts will
soon have affordable health insurance and the costs of health care
will be reduced. And we will need no new taxes, no employer mandate
and no government takeover to make this happen.

When I took up Tom's challenge, I assembled a team from business,
academia and government and asked them first to find out who was
uninsured, and why. What they found was surprising. Some 20% of the
state's uninsured population qualified for Medicaid but had never
signed up. So we built and installed an Internet portal for our
hospitals and clinics: When uninsured individuals show up for
treatment, we enter their data online. If they qualify for Medicaid,
they're enrolled.
Another 40% of the uninsured were earning enough to buy insurance but
had chosen not to do so. Why? Because it is expensive, and because
they know that if they become seriously ill, they will get free or
subsidized treatment at the hospital. By law, emergency care cannot be
withheld. Why pay for something you can get free?

Of course, while it may be free for them, everyone else ends up paying
the bill, either in higher insurance premiums or taxes. The solution
we came up with was to make private health insurance much more
affordable. Insurance reforms now permit policies with higher
deductibles, higher copayments, coinsurance, provider networks and
fewer mandated benefits like in vitro fertilization--and our insurers
have committed to offer products nearly 50% less expensive. With
private insurance finally affordable, I proposed that everyone must
either purchase a product of their choice or demonstrate that they can
pay for their own health care. It's a personal responsibility
principle.

Some of my libertarian friends balk at what looks like an individual
mandate. But remember, someone has to pay for the health care that
must, by law, be provided: Either the individual pays or the taxpayers
pay. A free ride on government is not libertarian.

Another group of uninsured citizens in Massachusetts consisted of
working people who make too much to qualify for Medicaid, but not
enough to afford health-care insurance. Here the answer is to provide
a subsidy so they can purchase a private policy. The premium is based
on ability to pay: One pays a higher amount, along a sliding scale, as
one's income is higher. The big question we faced, however, was where
the money for the subsidy would come from. We didn't want higher
taxes; but we did have about $1 billion already in the system through
a long-established uninsured-care fund that partially reimburses
hospitals for free care. The fund is raised through an annual
assessment on insurance providers and hospitals, plus contributions
from the state and federal governments.

To determine if the $1 billion would be enough, Jonathan Gruber of MIT
built an econometric model of the population, and with input from
insurers, my in-house team crunched the numbers. Again, the result
surprised us: We needed far less than the $1 billion for the
subsidies. One reason is that this population is healthier than we had
imagined. Instead of single parents, most were young single males,
educated and in good health. And again, because health insurance will
now be affordable and subsidized, we insist that everyone purchase
health insurance from one of our private insurance companies.

And so, all Massachusetts citizens will have health insurance. It's a
goal Democrats and Republicans share, and it has been achieved by a
bipartisan effort, through market reforms.

We have received some helpful enhancements. The Heritage Foundation
helped craft a mechanism, a "connector," allowing citizens to purchase
health insurance with pretax dollars, even if their employer makes no
contribution. The connector enables pretax payments, simplifies
payroll deduction, permits prorated employer contributions for
part-time employees, reduces insurer marketing costs, and makes it
efficient for policies to be entirely portable. Because small
businesses may use the connector, it gives them even greater
bargaining power than large companies. Finally, health insurance is on
a level playing field.

Two other features of the plan reduce the rate of health-care
inflation. Medical transparency provisions will allow consumers to
compare the quality, track record and cost of hospitals and providers;
given deductibles and coinsurance, these consumers will have the
incentive and the information for market forces to influence behavior.
Also, electronic health records are in the works, which will reduce
medical errors and lower costs.

My Democratic counterparts have added an annual $295 per-person fee
charged to employers that do not contribute toward insurance premiums
for any of their employees. The fee is unnecessary and probably
counterproductive, and so I will take corrective action.
How much of our health-care plan applies to other states? A lot.
Instead of thinking that the best way to cover the uninsured is by
expanding Medicaid, they can instead reform insurance.

Will it work? I'm optimistic, but time will tell. A great deal will
depend on the people who implement the program. Legislative
adjustments will surely be needed along the way. One great thing about
federalism is that states can innovate, demonstrate and incorporate
ideas from one another. Other states will learn from our experience
and improve on what we've done. That's the way we'll make health care
work for everyone.

Mr. Romney is governor of Massachusetts.