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Romney’s problematic claims of reducing health care subsidies (Fact Checker biography)

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Steve Gooch/AP

“The state was giving over $1 billion away in free health care, much of it to people who could’ve paid something but were just gaming the system. You won’t be surprised that a lot of Democrats thought we should give them even more. I took on this problem and hammered out a solution that took a bad a situation and made it better — not perfect, but it was a state solution to our state’s problem.”

— Former Massachusetts Gov. Mitt Romney, announcing his candidacy in New Hampshire, June 2, 2011

Romney’s campaign clarified his statement for us, saying it described how he reduced the amount of healthcare payments coming from the state’s uncompensated care pool as opposed to from insurance. We looked at the outcomes of the Massachusetts Health Care Reform plan — ie, “RomneyCare’ — to find out whether the program worked as he intended.

Keep in mind we’re testing how well Romney’s comments hold up to scrutiny, but are not making a judgment about whether his healthcare-reform plan is good or bad.

The Facts

The number of higher-income Massachusetts residents without insurance fell from 5.2 percent before “RomneyCare” to 2.9 percent in 2007, according to a report by Sharon K. Long, a professor at the University of Minnesota School of Public Health. The study concluded there was no evidence of residents using state-subsidized insurance when they could afford their own plans, so there doesn’t appear to be a big problem with people abusing the program.

But these numbers gloss over an important fact: the number of Massachusetts residents using private insurance has remained roughly unchanged, suggesting the same is true for the people who can’t or just plain won’t buy a private plan.

In 2010, 34.9 percent of state residents were either uninsured or using public insurance plans, according to a report from the Massachusetts Division of Health Care Finance and Policy. (See page 36 of the report).

If one of the goals of RomneyCare was to reduce the state’s burden of subsidizing health care, it failed. Romney’s plan instead shifted much of the so-called free-rider costs to a pair of government agencies called MassHealth and Commonwealth Care, which provide free and reduced-price insurance.

The Kaiser Family Foundation offered the following assessment of what happened with the costs of the uninsured after the reforms took effect:

“Health centers experienced a significant reduction in the number of uninsured patients, but these reductions were more than offset by gains in the number of patients with insurance, particularly MassHealth and the new Commonwealth Care program.
“Many of the newly insured patients in fact were health centers’ previously uninsured patients; that is, to a considerable degree, health center patients remained in place while their source of financing shifted from uncompensated care funding to patient-related revenue.”

Romney campaign spokeswoman Andrea Saul said the governor’s reform program still made the free-rider situation better, because some people using Commonwealth Care pay at least a portion of their premiums.

“This is good in and of itself — promoting personal responsibility and ownership — and it also means that people are being asked to pay what they can afford, which reduces the free riding problem,” Saul said. “Frankly, there is no dispute that the Massachusetts health-care reforms took the problem of uncompensated care and made it better.”

This slight uptick in personal responsibility may be commendable, but that has been accompanied by a rising cost of state-subsidized health care.. The price tag for Commonwealth Care alone rose 31 percent between 2008 and 2009. The state budgeted for another increase of about 7.3 percent, or $880 million total, in 2010.

Add that to the $475 million the state spent on its Health Safety Net program (which reimburses hospitals for those who have no insurance at all), and Massachusetts has continued “giving over $1 billion away in free health care.”

It’s worth noting that state spending on residents who don’t have any form of insurance has dropped by 36 percent, while the demand for uncompensated care has fallen 48 percent. The reform plan made things better in that regard, but the fact remains that Massachusetts still subsidizes much of those costs through other programs like Commonwealth Care.

As for Romney’s comment that Democrats wanted to give more money to free riders, his campaign pointed out that House leaders in 2003 proposed $90 million in emergency funding for the state’s uncompensated care pool, which was running out of money.

However, once Romney pitched his health-care reform plan two years later, Senate Democrats had a competing plan with “a ‘free rider surcharge’ on employers and employees who ‘game the free care pool,” according to the Globe (the article is behind a paywall). Both parties, then, were trying to lower the cost of uncompensated care at that point.

The Pinocchio Test

Romney deserves credit for giving Massachusetts the lowest rate of uninsured in the nation, but he failed to acknowledge that his state remains saddled with equal or greater costs for those who can’t or just plain won’t buy insurance.

Romney also suggested that the 2003 proposal to re-charge Massachusetts’s uncompensated-care pool was somehow part of the broader 2005 discussion about health-care reform. But in reality, Democrats were on board with his idea of addressing uncompensated care.

Overall, the former governor earns three Pinocchios for his remarks.

Three Pinocchios

(About our rating scale)

NOTE: Aspects of this column, but not its overall rating on Romney’s statement, were changed on Nov. 4 in response to thoughtful comments from Massachusetts officials. You may read their original critique here.

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