A Second Hand Conjecture

As governor of Massachusetts, Mitt Romney oversaw the implementation of state-wide universal health care, something that he touts as a major accomplishment on his campaign website. In fact, after signing the legislation into law, Romney penned a an Op-Ed for the Wall Street Journal extolling the virtues of the health care plan, even going so far as to hold it out as a model for other states to follow:

And so, all Massachusetts citizens will have health insurance. It’s a goal Democrats and Republicans share, and it has been achieved by a bipartisan effort, through market reforms.

[…]

Will it work? I’m optimistic, but time will tell. A great deal will depend on the people who implement the program. Legislative adjustments will surely be needed along the way. One great thing about federalism is that states can innovate, demonstrate and incorporate ideas from one another. Other states will learn from our experience and improve on what we’ve done. That’s the way we’ll make health care work for everyone.

Of course, many think Romney’s “accomplishment” is nothing to write home about, especially during a Republican primary race:

One of the hallmarks of Mitt Romney’s tenure as Massachusetts’ governor was the implementation of state-wide mandatory health insurance. Everyone who didn’t have health insurance would get it — or else. The state would subsidize insurance for those who lacked, and if that didn’t work, they’d fine you for having the gumption to go without.

I didn’t fault Romney for going along with the plan. With the Democrats holding 85% of the legislature and having a full head of steam for the idea, there wasn’t much he could do. He chose to “ride the tiger” and step out in front of the plan, trying to at least steer it a little instead of getting steamrolled by it.

I do fault him for touting it as one of his proudest accomplishments, however, because it’s turning into precisely the kind of disaster so many expected.

What kind of disaster you ask? Well let’s judge by Romney’s own expectations, as critiqued by Cato’s Michael Cannon:

Mitt Romney goes beyond spin in his attempt to differentiate his Massachusetts health care reform law from Sen. Hillary Clinton’s proposed reforms [“Where HillaryCare Goes Wrong,” September 20].

Romney claims “the reforms I led in Massachusetts…[did] not raise taxes or increase spending.” False. The Massachusetts law requires residents to purchase health insurance, requires many residents to purchase more coverage than they want, and imposes similar mandates on employers – all tax increases. Had Massachusetts not implemented the law, government spending would have been (at least) $385 million lower.

Romney notes that Clinton would “expand government insurance” by letting Americans enroll in the Federal Employees Health Benefits Program. He then writes that the Massachusetts law “instead allowed the uninsured to choose a private insurance product from one of the many private insurance companies.” The contrast is false. Clinton would open to all Americans a government program through which federal employees currently purchase coverage from private insurers. Romney created a “Connector” that allows all Massachusetts residents to do the same thing. Romney’s Connector is no more or less “government-run” than Clinton’s proposed FEHBP.

Romney claims his law resulted in “less regulation.” Though it did eliminate the Commonwealth’s “any willing provider” mandate, on balance Romney’s law increased government regulation. In addition to the individual and employer mandates, it created new requirements that consumers purchase drug coverage, prohibited many high-deductible plans, and added a new layer of government bureaucracy to Massachusetts’ already overburdened health insurance market.

But now comes the real kicker — the price tag:

Spending on the state’s landmark health insurance initiative would rise by more than $400 million next year, representing one of the largest increases in the $28.2 billion state budget the governor proposed yesterday.

The biggest driver of the cost increase is projected growth in the number of people signing up for state-subsidized insurance, which now far exceeds earlier estimates.

State and federal taxpayers are expected to bear nearly all of the additional cost.

Although the price tag for the initiative is ballooning, the governor yesterday reaffirmed the state’s commitment to ensuring that nearly every resident is covered….

This year the state is expected to exceed the initial budget for the health insurance initiative by about $245 million, and next year’s budget would boost spending by another $400 million.

So “free” health care is quite expensive. We all knew this already didn’t we? That the costs have ballooned and will continue to do so is no surprise. The biggest knock on universal health care from conservative and libertarian types is how much revenue must be expropriated from the public in order to pay for it. Of course, when attacking such schemes, rarely is it ever considered that “the public” who receives the health care is any different than “the public” whose tax dollars go to pay for it. But look where the money to cover Massachusetts budget shortfall will come from:

To fund the overall increases, the state is counting on getting about half from the federal government. But officials have just begun negotiations on how much Massachusetts will actually receive.

[Governor Deval] Patrick said he is optimistic about federal support, but acknowledged that “nothing is certain.”

Separately, the state is counting on $5 million in revenue from businesses that don’t provide insurance for their employees, down from the $24 million included in this year’s budget that has not materialized.

This should make you mad. Very mad.

It’s one thing for Massachusetts to tax itself silly and undergo all sorts of legislative stupidity. But it is quite another thing altogether when that state expects tax dollars from the citizens of other states to subsidize its folly. But that is exactly what is going to happen.

Indeed, this is just what I predicted would happen back when Wisconsin announced its plans to institute a similar health care plan. John Stossel had written an article urging them on, reasoning that one state’s failure would discourage other states from letting the same happen, and providing a prime example for why universal health care would be a disaster on a national level:

That’s why America needs ‘Healthy Wisconsin.’ The fall of the Soviet Union deprived us of the biggest example of how socialism works. We need laboratories of failure to demonstrate what socialism is like. All we have now is Cuba, Venezuela, North Korea, the U.S. Post Office, and state motor-vehicle departments.

It’s not enough. Wisconsin can show the other 49 states what ‘universal’ coverage is like.

I feel bad for the people in Wisconsin. They already suffer from little job creation, and the Packers aren’t winning, but it’s better to experiment with one state than all of America.

McQ seconded Stossel’s “give ‘em enough rope” theory, on the reasonable conclusions that a tangible failure provides a better argument than a theoretical one. But, as I said then:

… there is no way in Hades that Congress, and particularly Democrats in Congress, and even more particularly Democrats from Wisconsin, will let the system fail on its own. Accepting for the moment that “Healthy Wisconsin” will suffer all the rather predictable problems noted by Stossel and McQ (which, in fact, I do), the state does not live in a bubble. If the federal government was willing to bail out Chrysler and S&L banks, its certainly not going to sit idly by while an entire State goes down the tubes. Should it? Absolutely. Will it? Absolutely not.

This is precisely what is happening with respect to Massachusetts and Mitt-Care. So, I’ll offer the Bay State the same advice that I gave the Dairy State:

So, instead of saying “go for it, Wisconsin!” I would instead encourage the purveyors of this plan to explicitly waive any federal assistance, now or in the future, to make that waiver binding on all future actors for the State, and to make it applicable to either requests for or offers of assistance. In other words, I would say to Wisconsin “put YOUR money where your mouth is, and put it in writing.”

One final thought: it is sadly ironic that the site of one of America’s most defining moments, where citizens rebelled against the tyranny of taxation without representation, is now set to indirectly tax the rest of the country for its own budgetary foibles.

Again, this should make you mad. And quite frankly, it should be reason enough not to vote for Mitt Romney.

[HT: Jay Tea]

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Technorati Tags: Economics, Massachusetts, Mitt Romney, taxation, universal health care, Wisconsin

Tags: Economics, Massachusetts, Mitt Romney, taxation, universal health care, Wisconsin

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