Months after the GOP primary came to an end, Mitt Romney finally grew comfortable touting his Massachusetts health care law, even though he couldn’t really use it effectively as an asset on the campaign trail.
“[D]on’t forget — I got everybody in my state insured,” Romney said in an interview three weeks ago. “One hundred percent of the kids in our state had health insurance. I don’t think there’s anything that shows more empathy and care about the people of this country than that kind of record.”
But there’s a tragic plot twist in this father-son reunion tale. Though he clearly takes pride in the accomplishment — and as recently as 2008 had hoped to run for president as a candidate uniquely suited to take the program nationwide — the national health reforms he is now promising to enact in 2013 would deeply, perhaps fatally, undermine his greatest achievement in public life.
Like the Affordable Care Act, Romney’s Massachusetts law relies on adequate federal funding to provide subsidies, and an individual mandate — to pull younger, healthier people into the insurance risk pool and hold premiums down. Romney’s promised reforms as President — specifically his support for deep cuts to Medicaid and his call to allow individuals to purchase insurance across state lines — threaten that foundation.
“If Romney block grants Medicaid, the question with our Commonwealth Care system is just the money question. Would he give us the money we need to make that work?” says Jonathan Gruber, an MIT health care expert who helped design the Massachusetts law.”[For] the rest of our market, it essentially would unravel what the mandate would do. We’d be back to where we were before the mandate.”
Unlike the ACA, the Massachusetts law has two separate markets — one for people living under 300 percent of the poverty level and thus qualify for insurance subsidies; one for people above that threshold.
The subsidized pool is called Commonwealth Care. For that market to work, Massachusetts relies on the federal government, via Medicaid, to cover half the cost of the generous subsidies it provides to lower income individuals. If Romney were to block grant Medicaid and cut its spending as dramatically as he’s signaled he would, Massachusetts would slowly lose those dollars.
“[I[n the long run we would lose the federal money that makes this program possible,” Gruber said. “Remember that the feds pay for half of our program. It isn’t clear if the state would be willing to pay 100% of the costs if the feds pull this funding.”
“I’m not sure how viable that plan would be if they block granted Medicaid,” said Timothy Jost, a health care expert at Washington and Lee University law school.
That’s one of two spears Romney is pointing at his own health care law. The other is aimed at the individual mandate.
So what’s the threat there? If Romney signs a bill allowing people to purchase insurance across state lines, he’ll compromise the integrity of the mandate, or pre-empt it altogether, causing his own law to unravel.
“A lot would depend on what the actual legislation said,” says Samuel Bagenstos, a professor of law at the University of Michigan who knows the Massachusetts reforms well. “The legislation could be written to preempt any state mandates. If not it would still encourage or facilitate the unraveling of the Commonwealth Care system.”
If a federal law allowing the purchase of insurance across state lines pre-empted the individual mandate in Massachusetts, Romneycare would begin to come apart away.
“Some of the proposals in the past have often been specifically aimed at pre-empting state mandates,” Jost said. “That’s the main driver of selling across state lines is you don’t have to comply with state mandate. It’s a huge cause for concern.”
But even if the state-lines law was silent on the individual mandate, the consequences for Romneycare could still be quite damaging.
Here’s why.
Most new entrants into the Massachusetts insurance markets receive subsidies. But a substantial number of them pay the full cost of their premiums — half in a system called Commonwealth Care, the other half directly from private insurance carriers.
If out of state insurers — free to discriminate against people with pre-existing conditions — began selling insurance to people in Massachusetts, young, healthy people currently in the Commonwealth Care system could jump ship leaving older, sicker people stuck with skyrocketing premiums.
“People who didn’t have pre-existing conditions would buy insurance from states that didn’t mandate coverage of people with pre-existing conditions,” Bagenstos said. “Even if you have an individual mandate in Massachusetts, it’d no longer require people without pre-existing conditions to be in the same pool as people with pre-existing conditions.”
Gruber agrees with this analysis.
“There are no subsidies in this market, so young healthies would have every incentive to exit,” he said. “We could end up back where we were before the mandate — a market that just has old and sick [people paying] incredibly high prices.”
But John McDonough, a Harvard health policy expert and another architect of Romney’s Massachusetts law takes a less grim view.
“It would depend on how such a law was written and how it would affect all state insurance mandates, not just those in Massachusetts,” he wrote in an email. “An individual who purchased a policy across state lines would still be legally subject to the requirements of the MA health reform law with it’s ‘minimum creditable coverage’ requirements … unless the ‘states’ rights’ supporting President Romney and Congress chose to override such state requirements and prerogatives.”
Absent an explicit pre-emption, he suspects that the Commonwealth Choice system would survive — because, he noted, allowing the sale of insurance across state lines “is the silliest and most uninformed health policy idea I’ve seen in about 30 years. Just dumb.”
He illustrated with a hypothetical.
“OK, I can buy a health insurance policy from Blue Cross Blue Shield of Alabama, lucky me!” he writes. “But with what providers in Massachusetts does BCB of A have contracts to pay for services? None.
And if they come to Partners Health Care or to Boston Medical Center or any other, and ask for a contract, what incentive do the providers have to give them any kind of a break? Zero. And that’s what accounts for nearly all the cost of the premiums.
So the out of state plans, if they have contracts, will pay the premium rate for the services their enrollees have, meaning their premiums will be higher than anything currently prevailing in the Massachusetts market. And how many Massachusetts residents will want to pay super high premiums for Alabama BCBS? Nobody.
Which is precisely why, when Georgia opened up their market for out of state plans earlier this year, no one showed up to play.
Romney’s spokesman and policy director did not respond to a request for comment. If he’s elected, Romney could simply oppose any legislation that undermines his prior legacy. But his zealous quest for the nomination, and his selection of Paul Ryan as a running mate, have aligned him with policies which do just that.
