Tuesday, January 3, 2012

Mitt Romney's Health Care Dilemma

Tonight, Mitt Romney promised his Iowa supporters that as president, his first act would be to pursue the repeal of "Obamacare." Romney's dilemma is plain: The Affordable Care Act  is also modeled after the Massachusetts Act Providing Access to Affordable, Quality, Accountable Health Care championed by then Governor Romney. In particular, Romney opposed mandated participation by employers in health insurance, insisting on individual mandates.

Romney's reasoning followed what was then traditional Republican logic: Requiring individuals to take responsibility for their health care eliminated free riding whereby the costs of uncompensated care are absorbed by the insured. Now, to be sure, there is plenty of free riding in American health care, and it goes beyond uncompensated care. For example, large companies use bargaining power to negotiate more favorable rates with insurers, who then pass the loss onto small businesses, the self-insured, and the uninsured. Moreover, since the self-insured do not receive a health insurance tax break, they subsidize the insurance of people with employer-provided insurance.

Senator Charles Grassley (R-IA) introduced employer mandates as an alternative to the Clinton attempt health care reform. According to Paul Starr in his book Remedy and Reaction, many Republican politicians supported individual mandates as recently as 2009. Since then, the party's desire to defeat President Obama and the ascendance of its libertarian wing has trumped a policy that has roots in the Eisenhower administration. As a result, Mitt Romney has been forced to repudiate a policy that he successfully effected in Massachusetts and that he once believed would help him run for president. If he can thread that needle, more power to him.