« BACK  |  PRINT

RS

MEMBER DIARY

Romneycare Failing, Obamacare Will Follow

We already have a model of how Obamacare will fail: Romneycare

It is surprising that the national debate on Obamacre has thus far excluded any real examination of the state wide healthcare program signed into law in 2006 by Governor Mitt Romney of Massachusetts. But maybe the fact that Romneycare, a system closely resembling Obama’s policies, is failing on several levels serves as a reason that Democrats want to pretend that system doesn’t exist when debating their own programs.

The Wall Street Journal had a July 11 editorial that looked a little closer at Romneycare and found the whole thing wanting, suggesting that Obamacare might be “dead on arrival” if Romneycare is reviewed.

The Massachusetts law, which was championed by former GOP Governor Mitt Romney, imposed an individual mandate, requiring nearly all residents to buy health insurance or else pay a penalty. (The exceptions are those who qualify for the state’s public program.) This was supposed to cover everybody and save money too. We’ve written before about how costs have exploded, but it also turns out that consumers have other ideas.

Once again, it appears that human reactions makes monkeys out of the central planners. So what happened?

Well, the returns are rolling in, and a useful case study comes from the community-based health plan Harvard-Pilgrim. CEO Charlie Baker reports that his company has seen an “astonishing” uptick in people buying coverage for a few months at a time, running up high medical bills, and then dumping the policy after treatment is completed and paid for. Harvard-Pilgrim estimates that between April 2008 and March 2009, about 40% of its new enrollees stayed with it for fewer than five months and on average incurred about $2,400 per person in monthly medical expenses. That’s about 600% higher than Harvard-Pilgrim would have otherwise expected.

The individual mandate penalty for not having coverage is only about $900, so people seem to be gaming the Massachusetts system. “This is a problem,” Mr. Baker writes on his blog, in the understatement of the year. “It is raising the prices paid by individuals and small businesses who are doing the right thing by purchasing twelve months of health insurance, and it’s turning the whole notion of shared responsibility on its ear.”

This is the key thing that out-of-touch economists and power hungry central planners never, ever seem to get. People will not just stand still and allow others to tax them to death, or decide for them how they will live their lives. When they see opportunity to “game the system” or when they have any chance at all to make out over the government they will do it.

It always happens. The rules are only so strong as they are until people figure a way around them. This is why less government is better because there are fewer rules to spend so much energy getting around and people can get on with the business of living their lives.

As an example, we can look at the simplicity of the U.S. Constitution. Clocking in at a mere ten pages (including the Bill of Rights and minus the letter of transmittal) it is the very model of simplicity and directness. On the other hand, the new EU Constitution amounts to some 300 pages and is widely viewed as a mess.

With the many failures of Romneycare, that template serves to show that Obamacare will follow the same dismal path.

As my friend Tom Blumer said on his Bizzyblog entry:

If the failures of state-run health care in Massachusetts were more widely known, the clear and imminent failure of what might become ObamaCare would be drop-dead obvious. That would seem to explain the statist solutions uber alles establishment media’s disinterest.

Obamacre is Romneycare on a national scale and at a correspondingly larger level of failure.

Cross posted at HealthcareHorseRace.com.

(Also H/T Thea Shoemake)

Get Alerts