Journal’s Romneycare Attack Misses the Mark

May 12th, 2011 at 1:19 pm David Frum | 23 Comments |

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Today’s Wall Street Journal savagely criticizes Mitt Romney’s health care record.

Let’s try to reverse-engineer the editorial to see what the editors believe Romney should have done instead.

When Mr. Romney took office in 2003, the state was already enforcing public utility-style regulation of insurers for premiums and multiple benefit mandates. The resulting distortions were increasing rates fast, along with the natural increases from good but expensive Massachusetts medicine.

In other words: rate regulation of insurers is bad. Using regulation to hold rates down causes rates to go up instead.

The conceit was that a universal reform would cover everyone and all but pay for itself by reorganizing the state’s health-care finances

Universal coverage: bad. Universal coverage will force costs up.

In the name of personal responsibility, Mr. Romney also introduced the individual mandate, first in the nation, requiring everyone to buy coverage or else pay a penalty. Free riders, he said, transferred their own costs to others, either through higher premiums or taxes. This is the same argument the Obama Administration is now using to justify the coercion of the individual mandate in the federal courts.

Individual mandates: bad. The “free rider” argument only conceals state coercion.

The people who don’t buy coverage though they can afford it aren’t really a major fiscal problem …. People who are priced out of coverage require subsidies—so in practice the logic of the individual mandate is that it is a government mandate too.

Subsidies to cover private health insurance for those who cannot afford it: bad. They cause government to grow.

Entitlements automatically grow and grow, and then the political class begins to make decisions that used to be left to markets and individuals.

Political decisions about health coverage: bad. Instead the decision about who should not be covered should be left to markets: if the market does not assign you enough money for coverage, you should not have coverage.

The only good news we can find is that the uninsured rate has dropped to 2% today from 6% in 2006. Yet four out of five of the newly insured receive low- or no-cost coverage from the government.

A decline in the number of the uninsured is good if and only if they receive no public aid. Then it becomes bad.

The assumptions encoded in the Journal editorial make nonsense of the Journal‘s conclusions.

Once government takes on the direct or implicit liability of paying for health care for everyone, the only way to afford it is through raw political control of all medical decisions.

Mr. Romney’s refusal to appreciate this, then and now, reveals a troubling failure of political understanding and principle. The raucous national debate over health care isn’t about this or that technocratic detail, but about basic differences over the role of government. In the current debate over Medicare, Paul Ryan wants to reduce costs by encouraging private competition while Mr. Obama wants the cost-cutting done by a body of unelected experts like the one emerging in Massachusetts.

But of course the Paul Ryan plan for Medicare does feature a mandate – which is supposedly bad, according to the WSJ. And the Romney plan for Massachusetts did encourage private competition – and yet somehow failed to control costs, which shouldn’t happen according to the WSJ.

The WSJ wants to argue that “it’s not so much the money as the principle of the thing.” But of course the real evil as diagnosed by the Journal is precisely the money. So long as less money is spent, as Ryan proposes, then mandates cease to be a problem for the WSJ. If more money as spent, as occurred under Romney, then private market competition ceases to be an important benefit for the WSJ.

Put bluntly, it’s not a very attractive argument.

And it’s an argument that Mitt Romney could decisively refute today if he wished. He would begin: “Unlike the Wall Street Journal, I do not think that leaving millions of people uninsured is a good way to hold healthcare costs down.” You could even describe such an argument as “no apologies”.


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23 Comments so far ↓

  • Frumplestiltskin

    “Unlike the Wall Street Journal, I do not think that leaving millions of people uninsured is a good way to hold healthcare costs down.”

    You gotta be careful David, you will just get more and more Democrats and independents to fall in love with you when you continue to insist on talking so rationally.

    Here is Cohn over at TNR:
    “Now, John McCain also had party orthodoxy problems on taxes, immigration, and other issues in 2008. But he resolved those by ditching all his unorthodox positions, a luxury he had because the national press corps that decided he was a principles maverick who would never act out of political expediency.
    Romney doesn’t have that luxury. Indeed, his second-largest problem is a reputation as a pure phony — incurred the last time around in his transition from blue state moderate to acceptable conservative circa 2008 — he has obviously decided that a McCain-like flip-flop would be deadly. So he has nowhere to go.”

    I don’t agree with this, I still think Romney will stress States rights and how Republicans can not be in favor of innovative state solutions to health care problems if they ALL (in all 50 states) have to adhere to a strict no government involvement at all solution, which means no solution for health care at the Federal or state level. What next, do we have to go down to the County level?

    • Sinan

      Frum continues to prove that a conservative that acts and sounds like yesterday’s Republican party is so strange to modern conservatives that he actually sounds like a Democrat. The problem is, David is like Ike, he is rational, reasoned and wants to do right by the people. That is a sin for which the GOP cannot find a preacher to absolve. They should try considering something a bit more germane. The further right you go, the more folks start to look like they are left.

  • jnail

    David, well put. Poor Mitt though is too busy rushing to the right side of the Republican clown car to fight for what has been a successful, but flawed “experiment”. If just one of these clown candidates would stand for something they have done in the past they MIGHT have a chance in 2012 – albeit a slim one.
    Why the R’s seem to think that the Independent voters will go for right wing/social agendas over solving real national problems is beyond me.
    They still do not get that 2010 was about “jobs” as they harped (and have done zero on) and about not killing “Granny” which they now have flipped on and have been hammered for.
    Standing for some sort of policy and principal is required. Complaining about big govt. and the nanny state and trying to regulate other people’s bodies and sexuality just won’t cut it outside the primaries.
    Mitt may have been their best hope but his new healthcare pandering kills him.

  • Frumplestiltskin

    Sorry, that was Chait, here is Cohn (though I must admit I love David’s post above better and will cross post it there):
    As you may have heard, Mitt Romney will be giving a health care speech from my backyard today. OK, he’s not literally speaking from my backyard. He’s speaking at the University of Michigan medical campus, which is about a mile from my house.

    But I still feel like he’s a guest and, well, I would like to be a gracious host. So let me take some time this morning to defend him from a vicious attack in the form of Wall Street Journal editorial.

    “Obama’s Running Mate” is the headline. As you might guess, it’s a screed about the health care plan Romney signed in Massachusetts and how it compromises his ability to attack President Obama over the Affordable Care Act. The similarities between the two plans, at least when it comes to making insurance coverage nearly universal, are real. So are the political problems they create for Romney, given the conservative electorate’s current antipathy towards “Obamacare” and anything that looks like it.

    But the most revealing sentence in the Journal editorial is this one:

    The only good news we can find is that the uninsured rate has dropped to 2% today from 6% in 2006.

    Yes, and the only good news in foreign policy lately is that American forces finally killed Osama Bin Laden.

    Seriously, reducing the number of people without health insurance, to the point where nearly everybody has it, is a very big deal. It means many fewer people now face the prospect of medical or financial catastrophe because of illness, a prospect that is very real for tens of millions of Americans but decidedly rare in the rest of the developed world.

    For the record, some surveys suggested more people in Massachusetts (as many as 10 percent of residents) had no insurance before Romneycare took effect. Then again, the baseline isn’t really important here. The change is. Reducing the proportion of residents without coverage by about two-thirds, as all of the surveys suggest happened, is no small feat when it happens during a recession and at a time the number of people without coverage nationally is rising.

    Not only does that mean Massachusetts has prevented a lot of unnecessary suffering. It also means the state has pumped money into its economy, producing what the economists would call an automatic stabilizer.

    Now, I am the first to concede that insurance coverage alone is not the same as access to health care. But, as I’ve written many times in this space, studies have shown very clearly that reform has increased access to care. And while the Journal, among others, has argued that the Massachusetts plan has produced waiting lines and exploding costs, the evidence so far doesn’t back up those claims.

    Of course, the Journal’s objection to Romneycare is partly philosophical. That comes through early in the editorial, in a passage making the case against the dreaded individual mandate:

    The people who don’t buy coverage though they can afford it aren’t really a major fiscal problem—unless the goal of the individual mandate is to force them to subsidize others.

    Actually, a major goal of health care reform is precisely that: To spread the cost of medical care across society. The thinking goes like this: Serious medical problems frequently reflect bad luck, in the form of genetics, accidents, or exposure to some outside hazard. Forcing the victims of such misfortune to bear the financial burden of medical care individually is not something a decent society allows to happen.

    If the alternative requires forcing the healthy to subsidize the sick and the rich to subsidize the non-rich, so be it. Medical catastrophe, after all, can visit anybody. Contributing to the cost of care is in virtually everybody’s self-interest. Journal editorialists may object to this line of thinking, but it’s the same underlying philosophy as Social Security, a program that rightly enjoys robust support.

    To be clear, Romneycare has plenty of flaws, just like the Affordable Care Act does. But it’s been successful at its primary goal of making health care more accessible. That Journal opinion writers and like-minded conservatives find that inconsequential tells you more about their values than it does about Romney.

  • Elvis Elvisberg

    Why are you evaluating a WSJ op-ed for its rational argument? They’re only intelligible as blasts from the Conintern about who conservatives are supposed to resent most today.

    In case folks didn’t know, everything the WSJ professes to believe about health care costs is false.

    In 2007, the total spending for health care accounted for 16% of the country’s GDP, the highest share among the OECD and almost double the OECD average

    On a per capita basis also the U.S. spent the highest with a total of $7,290 which is two-and-half times the OECD average

    The public share of health care expenditure in the USA (45%) is less than any other OECD country

    Despite spending the most, the U.S. provides health care coverage for only the elderly, disabled and some of the poor people

    In comparison, the same amount is enough to provide universal health care insurance by the government for all citizens in other OECD countries

    35% of total health care expenditures is done by private health insurance which is the highest in OCED

    As Frum points out, the WSJ’s talking points all evaporate when brought into contact with reality.

    • Churl

      A sentence in the WSJ article that Mr. Frum missed in his fisking:

      “There’s a lot to learn from the failure of the ObamaCare model that began in Massachusetts, which is now moving to impose price controls on all hospitals, doctors and other providers.”

      Let’s see: impose price controls while significantly increasing demand on a system that has little excess capacity.

      Sound economics, I guess.

      • ottovbvs

        Let’s see: impose price controls while significantly increasing demand on a system that has little excess capacity…Sound economics, I guess..

        Every other industrial society that has universal healthcare systems and is paying half what we are for them has price ceilings. Yes that’s it. Sound economics. Not that you’d recognize sound economics if they bit you in the butt.

        • Churl

          There’s Otto with that butt thing again. Last time it was strings in mouse butts, who knows where this stuff gets on with him.

          Of course what Otto misses is that we are planning significant increases in demand on a system operating near capacity that bears high fixed costs and cannot be expanded quickly and imposing price controls at the same time.

          The other countries of which Otto speaks had quite a few years to implement their systems. We plan on doing it by 1 January 2014.

          We’ll see how this works out.

        • ottovbvs

          The other countries of which Otto speaks had quite a few years to implement their systems. We plan on doing it by 1 January 2014.

          I use the biting in the butt metaphor because it’s singularly appropriate in your case particularly when it comes to economics. To start with the US healthcare system is not operating seriously near capacity or why are hospital systems being forced to close or merge, or spending a fortune on marketing? The second thing you need to know about economics is that when a demand exists it’s invariably satisfied. And January 2014 is three years away.

          The other countries of which Otto speaks had quite a few years to implement their systems. We plan on doing it by 1 January 2014.

          And it isn’t even true like most of Churl’s claims. Britain went from an insurance based system to a single payer on a single day. When Churl is not innacurate he’s usually childishly simplistic.

    • Sinan

      That chart is devastating evidence that our system is absurd.

  • think4yourself

    It’s too bad that the businesses that secretly support health care reform and the WSJ cannot stand up and be counted. There is really an economic argument for expanding healthcare and subsidizing it for those who do not currently recieve it. The first part is that having all healthcare funded through business means that businesses who don’t provide healthcare have a cost advantage over those who do (especially international companies). Second, the more people who have access to healthcare, the more healthy people you have and the greater productivity of your workforce. This both benefits business and stimulates economic recovery.

    Too bad the WSJ won’t recognize that.

  • msmilack

    Well said but I have a question:

    what are Romney’s core principles? I feel unable to pinpoint “who is the real Romney?” And it worries me that he is so dependent on delegating important decisions to teams of other people though that worked for him at Bain. However ,what worked at Bain, where the bottom line is profit, does not necessarily work in government where the bottom line is looking out for the welfare of all the people. I find it difficult to trust him.

  • valkayec

    I quit reading the WSJ after it was bought by Murdock. Prior to the purchase, I thought it’s editorials were enlightening and, yes, moderate. After the purchase, they became the print version of Fox News. It’s unfortunate that such a fine business journal has been destroyed.

    That said, I’ve read portions of the Journal piece, besides the ones Mr Frum quotes. The whole article is pure malarky and spin. Interesting too that back when ACA and the mandate was a GOP idea, the Journal was mum. Just goes to show how far the Journal has sunk towards becoming just another partisan rag.

    • ottovbvs

      I thought it’s editorials were enlightening and, yes, moderate.

      Are you serious. The WSJ ed page has been crazy for fifty years which is about how long I’ve been reading the Journal. Anything that appears on the WSJ ed page is almost certain to be completely mendacious. Murdock (it’s Murdoch btw) has made no difference to the ed page but show shows signs of destroying the reporting which is much more serious.

      • armstp

        Otto,

        The WSJ has gotten way more far-right since Murdoch took over. In addition, they now slant all the news and not just the editorial page to the far-right. They use common tactics like what to emphasis, using headlines which present only oneside of the story, etc. etc.

        Many of the business news reporters at the Journal have become disgusted and the reputation as a decent newspaper has dropped.

        I let my subscription laps, as the paper is now useless. You cannot get a real good objective feel for what is going on in the economy and the business community any more from the Journal.

        • ottovbvs

          The WSJ has gotten way more far-right since Murdoch took over.

          I thought I just said that? Or was there some lack of clarity in this sentence?

          Murdock (it’s Murdoch btw) has made no difference to the ed page but shows signs of destroying the reporting which is much more serious.

          I was originally commenting very specifically on the oped page which has always had a completely separate ed staff and editor. Valkayec’s claim that the ed page was ever moderate is nonsense. There is nothing whatever new about extreme nuttiness on the ed page, Bartley the long time previous editor was completely off his rocker as his endless publishing of claims that Hillary Clinton murdered Vince Foster made very clear. Gigot the current editor is no better. When it comes to reporting the WSJ was the best in America and possibly the world (it’s only rivals were the FT and Die Zeit). That has undoubtedly changed since the Murdoch acquisition which is why I’ve allowed my sub to lapse and now only read in train stations or airports. He did exactly the same to The Times and Sunday Times in the UK, destroyed them as serious newspapers. I’ve long considered him to be one of the most pernicious influences in western society.

      • valkayec

        So, okay otto, I spelled the name wrong. I apologize. However, the WSJ was always a business pub so it was natural for it to have a right of center viewpoint. But it wasn’t radical the way it is now. I agree with armstp completely.

        • Bunker555

          The Wall Street Urinal has become as nutty as the National Review. They both want to appeal to the TeaCon and TeaJihadist subscriber base and have dumbed down their analytical pieces.

          Give Murdoch credit for slick “marketing” –> Giving customers what they want.

        • ottovbvs

          But it wasn’t radical the way it is now.

          With all due respect you can’t have been reading the WSJ oped page (which is what you were talking about) for 50 years as I have. Viz:

          Prior to the purchase, I thought it’s editorials were enlightening and, yes, moderate

          It’s always been crazy for as long as I can remember, Michael Kinsley who worked there called it Stalinist in the Bob Bartley era which lasted for about 25 years.

  • torourke

    David,

    I agree that the WSJ was a harsh, but you are simply wrong for saying that Ryan’s Medicare proposal includes a mandate. No it does not. Who is the person in Ryan’s program that is being forced to purchase a private product (from a company that undoubtedly lobbied for the bill that is forcing him to do so)? The person who pays the Medicare tax on wages? The elderly person whose visit to the doctor has been paid for by Medicare? How is premium support (which is like the prescription drug bill as far as I can tell) similar to a mandate? Paying a tax and then receiving a benefit from that tax is quite a bit different from being forced to purchase something and then being penalized for not doing so. Different Constitutionally and policy-wise.

    • Jim in DE

      TO, I think you’re making a distinction without a difference. Seniors are not mandated to purchase private insurance under the Ryan plan; they are just mandated to pay 1.45% (or more, for wealthier Americans come 2013) of their wages for life over to the federal government to get the chance to receive vouchers — oops, I mean personalized care golden tickets — to buy insurance in their retirement years. Likewise, Americans are not mandated to purchase private insurance under Obamacare, they are just mandated to pay a fine on their tax return — which gets paid over to the federal government — if they choose not to do so.

      • torourke

        Jim,

        Thanks for the reply, but I think you’re engaging in a bit of sophistry here.

        “TO, I think you’re making a distinction without a difference. Seniors are not mandated to purchase private insurance under the Ryan plan; they are just mandated to pay 1.45% (or more, for wealthier Americans come 2013) of their wages for life over to the federal government to get the chance to receive vouchers — oops, I mean personalized care golden tickets — to buy insurance in their retirement years.”

        That mandate to pay 1.45% of their wages is called a tax Jim. Congress has the power to tax, not to compel someone to purchase a private product. And you’re simply wrong about the vouchers. Ryan has since shifted to a plan of premium support plan similar to the prescription drug bill.

        “Likewise, Americans are not mandated to purchase private insurance under Obamacare, they are just mandated to pay a fine on their tax return — which gets paid over to the federal government — if they choose not to do so.”

        Oh, so the individual mandate is not a mandate to do anything! It’s more like a tax–how clever! Except that President Obama derided the notion that the mandate was tax, Congress explicitly avoided calling the penalties for enforcing the mandate a tax, and when Democrats conducted a Congressional fact-finding review to bolster the constitutionality of the mandate, not once in their findings did they mention Congress’s power to tax.

        I’ll ask it again Jim. Who in the analogy to Ryan’s Medicare plan is one who is forced to purchase a private product they may not want?

        • Jim in DE

          See, here’s the thing … I agree with everything you said. And from a Constitutional standpoint, sure, parsing words and looking at legislative history and getting forced into arguing what’s a tax and what’s not a tax, that’s all important. (And by the way, I’m not prepared to argue that the individual mandate in the ACA is Constitutional. I’ve had some misgivings on that front since its enactment. I’ve argued that they should replace it with a more market-friendly solution, like what (I believe) Japan does … no mandate, but allow insurers to charge back premiums with interest for new applicants who didn’t have insurance previously.) And from a stupid politics standpoint, it was of course important for Obama and the Dems to argue that it wasn’t a tax.

          But you also said that the two “mandates” — the one we all acknowledge in ACA, and the one some of us are arguing exist in the Ryan plan — were different policy-wise. I disagreed with that statement, and I don’t know that you’ve convinced me onto your side.