August 29, 2012

The Moral Case for Romneycare 2.0

How about some reforms that actually lower costs and improve quality care?

Since 2010, when the Affordability Care Act was signed into law, the American mainstream media has insisted that President Obama’s bill provides the most at-risk Americans, low income families and seniors, with better health care. And that must mean, by any logic, better access to doctors, more access to the modern tools of diagnosis and treatment, and ultimately better health outcomes. That poor Americans benefit greatly from the ACA, and that seniors will be more secure under the president’s law, has seemed so obvious to the left-leaning news outlets that this fact has yet to be critically examined by them.

President Obama’s ACA law purports to provide new health coverage to upwards of 16 million low income Americans by way of Medicaid. We already see in the wake of the Supreme Court decision that many, if not most, states simply cannot be burdened with massive increases in their Medicaid outlays, regardless of the promise of financial support from the federal government (itself a financially unsustainable funding source).

 the moral case for romneycare 2.0 by scott atlas  
 Photo credit: Austen Hufford

But President Obama’s assertion about new insurance for the poor and all it brings is, in fact, a grand deception. We know that 55 percent of primary care physicians and obstetricians already refuse all or most new Medicaid patients (about four times the percentage that refuse new private insurance patients), and only half of specialist doctors accept most new Medicaid patients. Clearly, granting poor people Medicaid is not equivalent to providing access to doctors.

Another sham, one less well understood by voters, is the implication that pushing millions more patients into Medicaid offers good quality health care. Owing to Medicaid’s restrictive guidelines for diagnosis and treatment, Medicaid patients experience more deaths, longer hospitalizations, and more serious complications from major surgery, cancers, heart disease, interventional procedures, transplants, and AIDS than patients with the same illnesses and health status but with private insurance—objective conclusions proven by medical scientists in the world’s top peer-reviewed medical journals like Annals of Surgery, Cancer, Journal of Heart and Lung Transplantation, and the American Journal of Cardiology. These are outcomes so shamefully poor that, when comparing patients with the same risk factors and status, Medicaid patients at times fared worse than those with no insurance at all.

Health reform should be founded on the understanding that low income Americans and Americans at risk are no different from the rich. These most vulnerable Americans want choices and autonomy, not government paternalism, when they and their families need medical care.

An Alternative Vision

Americans must realize that there is an alternative vision at hand, a plan for health-care reform that provides new freedom and opportunity for all Americans, especially the poor. According to this alternate vision, reforms would expand access and accelerate the excellence of America’s health care, rather than restrict its access and punish innovation. Solutions would directly address its exploding cost, rather than double down on the ineffective policies of more price fixing, higher taxes, and ever increasing bureaucracies, strategies modeled on systems of other countries beleaguered by unconscionable waiting lists for care and worse health outcomes.

An alternative plan, guided by honesty, would be committed to personal empowerment, based on a steady confidence in free market innovation and a certainty that individual Americans understand what’s best for themselves, rather than relying on unaccountable government panels and appointed bureaucrats.

What should guide leadership in health-care reform? That all Americans deserve the opportunity to exercise freedom and personal choice in pursuit of health. This is the cornerstone of Governor Romney’s vision of health-care reform.

Governor Romney understands that the high cost of American health-care excellence, not the quality of care, is the true crisis at hand. And despite the media’s silence about the truth on this issue—that the ACA fails, by all estimates, to reduce the costs of America’s health care—it is our most vulnerable, the poor and seniors, who will ultimately suffer the most from the failure of our leaders to address this situation. As the Obama administration celebrates the constitutionality of its law, the fact is that the costs of the ACA represent an unsustainable burden to the taxpayer, to employers, and to the American economy, threatening in particular low income Americans and those employed by small businesses now incentivized to drop coverage.

Rather than ignoring fiscal realities and serving up false promises, Governor Romney will leverage the power of competition and information transparency in reducing price. The Romney reforms will focus federal regulation of health care to benefit individual Americans. He will tear down government barriers to competition and choice, like the archaic rules that protect state insurance monopolies and prevent families from seeking better insurance value across state borders. He will cut unnecessary regulation, so consumers can buy cheaper coverage they actually want, rather than what they are forced to buy.

Governor Romney will expand consumer-driven health insurance with health savings accounts for all Americans, less expensive coverage that makes sense for tens of millions, improves health with wellness programs, and saves hundreds of millions of dollars overall, the very coverage that is now under siege by President Obama’s new limits on contributions, actuarial requirements, and bloated coverage mandates.

Governor Romney is committed to saving assistance programs critical for the most vulnerable Americans. Instead of pretending that Medicaid coverage actually means access to doctors and good quality health outcomes, Governor Romney wants to undo the federal restrictions to states on how to use that money, so low income beneficiaries will have the same choices, flexibility, and access to the medical advances that privately insured Americans enjoy.

And for seniors, those Americans who need health care far more than any other segment of society, Governor Romney will not hide from the fact that Medicare is financially unsustainable, by all estimates, spiraling into bankruptcy, with an unfunded liability of almost $38 trillion and a hospital insurance trust fund that will become insolvent in 2024, according to the 2012 Medicare Trustees Report. Governor Romney understands what will happen with Medicare under the ACA—namely, that it will be cut until it provides no coverage whatsoever—given that two-thirds of hospitals already lose money on Medicare.

An increasing proportion of doctors are already not accepting Medicare patients, as demonstrated in the 2008 HSC national tracking survey, which reported that more than 20 percent of primary care doctors were not accepting new Medicare patients (compared to their not accepting 4.5 percent of privately insured patients) and about 40 percent of primary care doctors and 20 percent of specialists refused most new Medicare patients. By 2019, Medicare cuts under the Obama law will be so draconian that payments will become even lower than Medicaid, a system by which doctors already lose money and most refuse to accept patients.

“Saving” Medicare?

Yet, despite these well-documented facts, our president and his supporters maintain that the way to “save” Medicare is to markedly reduce payments to doctors and hospitals and empower a new panel of bureaucrats charged with cutting payments even further. Beyond overtly cutting payments for care, the Obama law creates a wholly unaccountable, government-appointed 15-member Independent Payment Advisory Board, which has the unprecedented power to further reduce payments to doctors, policies that the Secretary of Health and Human Services is required to implement.

And while the president’s supporters defensively point to language that prohibits specific and overt “rationing,” this is implausible deniability, since all evidence points to the de facto rationing that will result from the IPAB’s mission of cutting payments to doctors and hospitals.

Instead of falsely promising an illusion of security and undeliverable health-care access by virtue of government-defined insurance, Governor Romney’s plan will instead save Medicare and improve coverage by allowing recipients, particularly low income seniors, to use the government support for private insurance. Instead of being restricted to the federal government’s insurance coverage, seniors under the Romney-Ryan plan would have the option to use the government’s fixed-dollar contribution and choose from private insurance plans.

A fixed-dollar contribution means that an individual has the opportunity to save money by choosing a less expensive plan, one tailored to their own needs. Their plan would present American seniors with the option of private insurance, instead of traditional Medicare. But giving seniors the choice is an idea that President Obama and his supporters find unacceptable and threatening. Rather than allowing government panels to limit medical options, Governor Romney’s commitment is that seniors deserve the right to decide, with their doctors, how and when to pursue advanced medical care.

As opposed to President Obama’s preference for government centralization, Governor Romney trusts capitalism, the choices of individual Americans, private ownership, and individual empowerment. Governor Romney’s plan would introduce fiscally sound tax reforms to end tax discrimination against individuals whose employers don’t offer insurance. He will promote portability and increase coverage options through deregulation, rather than empowering the government via the ACA’s massive government-defined essential benefits. With Governor Romney’s reforms, individuals—low income Americans as well as higher income citizens—will be able to choose coverage they value and then own it independently of their employer.

Unless it is repealed, the ACA will proceed to destroy the unsurpassed choice, access, and proven excellence of U.S. health care, rolling back the clock on specialty care and medical technology and giving the government overwhelming authority over health-care decisions. While President Obama considers the bill a great achievement, his plan fails to address the single most important problem with America’s health care and the biggest threat to the future of our people—cost.

Beyond its detrimental fiscal consequences, the plan is seriously flawed on the most basic moral grounds. While the president’s supporters do their best to control the message, it becomes even more urgent that all Americans, especially America’s most vulnerable, realize that an alternative choice is at hand.


Scott W. Atlas is the David and Joan Traitel Senior Fellow at the Hoover Institution and senior fellow by courtesy at the Freeman Spogli Institute for International Studies at Stanford.

Atlas's research interests are domestic and global health care policy, particularly the role of government in pricing, quality, access, and innovation. He lectures throughout the world on MRI advances and key economic issues related to technology innovation. Atlas has been interviewed on television, radio, and other news media, including BBC Radio and the Lehrer News Hour, and in newspapers such as England’s Financial Times, Brazil’s Correio Braziliense, Italy’s Corriere della Sera, and Argentina’s Diario La Nacion. His most recent book, In Excellent Health: Setting the Record Straight on America’s Health Care (Hoover Institution Press, 2011), gives evidence of the high quality and access found in the US health care system relative to those of other countries and suggests free-market reforms to reduce costs and maintain quality and consumer choice. Atlas, who has received numerous awards and honors, has been a member of the Nominating Committee for the Nobel Prize in Medicine and Physiology for several years.

Atlas received his BS from the University of Illinois Urbana-Champaign and his MD from the University of Chicago.


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