Romney's Health-Care Plan

At the Republican debate in New Hampshire earlier this month, presidential hopeful Mitt Romney gave himself a gentle pat on the back for the health-care system he helped create in Massachusetts. "A lot of people have ideas about health care and improving health care. We took the ideas and actually made them work," he said. At an earlier stop on the campaign trail he called the plan "a good model for other states."

But at a Washington luncheon a few months earlier, addressing supporters, Romney sounded less convinced that his ambitious restructuring of the health-care system in Massachusetts had met its objectives. While he reassured them that his bipartisan plan works "in a Republican way," he added that he wanted to make it "work more like a market and less like a regulated utility."

Whether or not Massachusetts's new system, which requires all residents to have insurance, is a success or is authentically "Republican" depends on whom you ask. But to those involved with the plan, Romney's calculated ambivalence toward the program he championed seems as motivated by partisan politics as it is by the plan's effectiveness to date. While he has seemed eager to take credit for its successes, he has glossed over some of the less successful aspects of the plan.

John McDonough, executive director of Health Care for All, an advocacy group, believes Romney's statements about the health plan tend to shift strategically. "When (Romney) is favorably disposed to talk about it, you'd think he did it all by himself. That is absolutely not true," says McDonough. "When he's not feeling good about it he acts like he had very little to do with it. He did. I could show you where his fingerprints are on that bill, and there are many of them."

Jim Mongan, CEO of Partners HealthCare and an influential voice when legislators were drafting the law, sees the former Massachusetts governor as an ideological innovator. The plan centers on an individual mandate, putting the onus on residents—not employers or the state—to insure themselves. "He kind of turned the debate on its head," Mongan says. "He took a conservative approach to a liberal end. This was Romney's innovation: his ability to rethink that debate. It was creative, two-step thinking."

The plan has had mixed results. While there's no doubt that the program has helped to boost the number of insured residents in Massachusetts, some complain that the premiums are too high for those who don't quite qualify for subsidies and that the program favors insurers over individuals.

The landmark plan, which went into effect in July 2007, requires that all Massachusetts residents obtain insurance from public or private agents. Low-income residents, defined as those who earn 300 percent of the poverty level or less, qualify for partial or total subsidies. People who earn more pay varying amounts based on their age, occupation, and location. (Under a prior state law, pre-existing conditions aren't considered a factor in determining what the insured will pay.) People can either sign up through their employers or purchase plans through the "Health Connector," a state-run vendor of private policies.

Before signing the bill, Romney vetoed several provisions, including one that requires businesses with more than 10 employees to offer an affordable insurance program and contribute toward employees' premiums or pay penalties. The Massachusetts legislature overrode his veto on that provision. But Mongan says Romney still made his point. "The governor, presumably with his eyes on the presidential race, did not want to support any additional taxes on employers." (The plan is not funded by a tax increase for residents, either, but by other sources of state revenue and federal funds.)

Since the plan aims for near-universal coverage, people who can afford insurance but don't sign up face losing a personal tax exemption. This penalty will increase sharply in 2009, from $219 per uncovered individual to almost $1,000 in some cases. But unsubsidized and some subsidized premiums remain far too expensive even for some middle-class residents, not to mention the working poor, says Stuart Altman, a health economist at Brandeis University, so it's unclear how they will manage.

Dianne Bridges, a self-employed graphic artist, is among them. She has put off getting insurance because she says the premiums designed by the state for her income level are too high and she finds it upsetting that the government would mandate people to purchase a private product and then penalize them for not being able to afford it. "I can't afford the insurance and I can't afford the penalties. I need to pay my bills," says Bridges. "Who do they the think they are to steal hard-earned money from me because I can't afford a specific product?"

Ron Norton, 47, earned almost $40,000 last year as an adjunct professor but doesn't get benefits at work. "When Gov. Romney unveiled the plan, he talked about $200-a-month policies," he says. But Norton would have to pay $234 for a high co-pay and deductible. A worthwhile plan would cost around $400, he says. "I can't be handing over this much money to an insurance company." He intends to start searching for a job with benefits.

Some of those who qualify for subsidized health care sound more positive about the plan. Security guard James Farioli, 61, of Springfield, signed up for Commonwealth Care last summer—just in time for heart surgery, which didn't cost him a penny. Because Farioli earns about $20,000 per year, his health care is completely covered by the state. Compared to the $413 per month he was paying for private insurance, the state plan is an amazing value. "I couldn't afford the [private] insurance. What little savings I had was depleted over health care," he says. "If it weren't for this health-care coverage, I'd be in trouble."

Richard Kwan, 50, who is unemployed and on Commonwealth Care, said he's also pleased with the prescription benefits. "It's very easy to use," he says. "Overall the experience is great."

The number of people who have signed up for state-run subsidized coverage has exceeded the original estimates. Initially, the state figured on 135,000 people, says Dick Powers, a spokesman for Health Connector, but so far 169,000 have joined. As a result, the program may exceed its budget by almost $150 million in 2008. Yet only 16,000 more have signed up for the unsubsidized health plans, and almost 200,000 people remain uninsured—many of them near or below the subsidy threshold—in a program that was touted as "near universal."

Still, about 300,000 more Massachusetts residents are insured today than were covered in 2006. (In addition to the state plans, some are insured through federal programs like Medicare.) Businesses haven't balked at the fees or left the state, as some critics had warned. And insurance companies say that while they're not raking in significant profits, their bottom lines are edging upward.

"There was a big debate about whether it could be done," says Drew Altman, president and CEO of the Henry J. Kaiser Family Foundation, a national health-care nonprofit. "Well, it's actually happening. It didn't blow up."

Whether it will be a good model for other states remains to be seen. At least nine other states, including Connecticut, Colorado and Iowa, have been considering universal health-care plans, and several others are aiming to at least cover children. But there are challenges in replicating the Massachusetts program, a state where most of the uninsured are young and relatively healthy. Also, the number of residents lacking insurance is much larger in some other states. In budget-strapped California, for example, where a similar initiative is being hotly debated, there are more uninsured people (roughly 7 million) than there are residents of the entire state of Massachusetts. Jamie Court, president of the Foundation for Taxpayer and Consumer Rights, a consumer advocacy group, believes the big premiums and limited benefits already evident in Massachusetts have diminished the chances of a similar plan being approved in California. "Massachusetts has proven to be not just a laboratory, but a mad lab. That's how we're looking at it in California," says Court.

Seven months in, it's still too early to draw any conclusions about the ultimate success of the Massachusetts experiment. Yet Romney continues to tout the plan on the national campaign circuit. Though he routinely characterizes it as "universal" and "private," in fact it has left a large swath of the population either uncovered or covered by state and federal funds. Though he says the plan didn't cost the state extra money, more people than expected have asked for subsidies—which could drive up the price tag. Yet in chatting with supporters after the New Hampshire primary, Romney put health care on par with his greatest economic achievements as governor. "We did get health care on track for all of our citizens in our state, balanced the budget all four years, and rebuilt our rainy-day fund," he said.

So far, his health care plan has not received that much scrutiny outside his adopted home state. But if his victory in Michigan helps propel him to greater heights in the race for the Republican nomination, his program could undergo a thorough examination.