The underlying idea is to wipe out one of the main fiscal tent poles of the existing health care system, and use the resulting revenues to finance billions of dollars in subsidies to buy insurance on the existing private market. The result, according to experts, would likely be a significant increase in the number of uninsured Americans, in an economy where, for better or worse, employers would likely no longer provide their workers with health care coverage.
The fact that the government excludes employer-sponsored insurance from taxation is the reason most people get their insurance through their workplaces. Companies are also able, unlike most individuals, to pool risk, so that sick as well as healthy people can be covered without distorting premiums for everybody. The result is a mix of perverse incentives that keep people tied down to jobs they don't like, and leave self-employed people and many others to fight it out in the under-regulated individual market, where insurers can deny people coverage based on their pre-existing medical conditions, rescind coverage from individuals who get sick and skew premiums based on everything from age to geography.
"Obamacare" sought to mitigate those distortions by regulating the individual insurance market in a way that creates a safety net for the uninsured, the self-employed, laid-off workers and workers at firms that decide, over time, to stop offering health care benefits. It subsidizes insurance for these people and requires insurers to end discriminatory practices, and in return requires everybody to carry coverage. It finances this system in part by limiting -- not eliminating -- the tax exclusion for employer-provided benefits.
Romney, by contrast, suggests he would eliminate this tax exclusion, leading employers to drop benefits, and leaving workers to buy insurance on their own with tax credits. Analyses of McCain's similar plan in 2008 suggest it would cause the number of uninsured Americans to spike by millions.
That's because neither Romney nor McCain's plans allow individuals to pool risk in insurance exchanges, require insurers to sell insurance to all comers without price-discriminating against sick people or fight the adverse selection problem by requiring both sick and healthy people to enter the pool. Romney isn't calling for those reforms -- because though they would solve the problems with his outline, they would also add up to "Obamacare."
The market reforms would come on top of Romney's better-understood plans to phase out traditional Medicare and replace it with a system, similar to "Obamacare," that would provide seniors subsidies to buy heavily regulated private insurance; and to turn Medicaid into a block grant program, run by individual states without federal requirements.
At a background briefing for reporters at the White House on Monday multiple senior administration officials claimed not to have read the Times story, nor were they familiar with its description of Romney's health care reform framework, they said. Though it's likely to be overshadowed on the campaign trail by the fight over "Obamacare" and its close cousin "Romneycare," the ideas suggest that Obama will be well armed when the country's health care system takes center stage later in the election cycle.