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Doug Holtz-Eakin on Romneycare

at 11:52 AM ET, 02/28/2012

If you want to see the difficulty Mitt Romney is going to have distinguishing his health-care plan from President Obama’s health-care plan, you should take a look at this post by Republican economist Doug Holtz-Eakin, who tries to do it for him. Holtz-Eakin writes:

The myth that the Massachusetts reforms are the same as Obamacare is built on a shaky foundation of facts. Yes, Massachusetts re-directed existing health spending to expand coverage. The resemblance ends there.

It really doesn’t. There are all sorts of ways to expand health-care coverage. You can create a single-payer system. You can give everyone a health-savings account. You can create a voucher system. You can end the exclusion for employer-based health insurance and convert it to a tax credit that anyone can use to buy health insurance. That last one, in fact, is what John McCain proposed in 2008, when Holtz-Eakin was his top economic adviser. So Holtz-Eakin knows full well there are many ways to expand access.

But Romney and Obama chose a very particular way: An individual mandate. Competitive exchanges where private insurers will compete. Regulation that bars private insurers from discriminating based on preexisting conditions and limits discrimination based on other risk factors. Subsidies. This is an unusual and rather new model. It’s designed to preserve the role of private insurers and retain the current system of employer-sponsored insurance. And it exists only in Massachusetts and in the Affordable Care Act.

You don’t have to listen to me on this. Jon Gruber, the MIT health economist who helped Romney design his health-care bill and provided outside assistance as Congress and the Obama administration designed the Affordable Care Act, says the two laws are “the same.” And as Wonkblog’s Sarah Kliff has reported, a bevy of states have hired former Romney advisers to help them implement the Affordable Care Act, as they’re considered the most experienced at creating this kind of health-care system. Back to Holtz-Eakin:

Massachusetts did not have $500 billion in new taxes on investment income, medical devices, health insurance companies, and “Cadillac” health-insurance policies. Massachusetts did not have a dangerous Independent Payment Advisory Board, misguided Patient-Centered Outcomes Research Institute, futile Center for Medicare & Medicaid Innovation, and myriad other agencies, boards and bureaucracies. Massachusetts did not rely on budget gimmicks like the CLASS Act, student loan “savings,” and mythical Medicare cuts to squeeze past the finish line.

This is accurate. If you take away the loaded language (“dangerous,” “futile,” “misguided,” etc.), it’s true that Romney’s bill paid for itself in different ways and included fewer efforts at delivery-system reform. In particular, it paid for itself by getting money from the federal government, and it did basically nothing to reform the underlying cost drivers in the health-care system. Whether you see this as a point for or against Romney’s reforms is up to you. It’s also worth noting that Romney does not consider the Affordable Care Act’s cuts to be “mythical.” On the campaign trail, he talks about them constantly and promises seniors he’ll repeal them.

More importantly, there is no evidence of bending the cost curve in Massachusetts. Health-care spending per capita in Massachusetts is 36 percent higher than in the other 49 states ($9,278 versus $6,815 in 2009). And there is nothing promising about the post-trajectory reforms. From 1991 to 2005, spending per capita grew faster in Massachusetts (5.9 percent) than elsewhere (5.6 percent); post-reform, the difference grew, as Massachusetts grew at 5.1 percent between 2006 and 2009 while the remainder of the states grew at only 4.2 percent annually.

Holtz-Eakin’s first number here is a red herring. For a number of idiosyncratic reasons, health-care spending in Massachusetts has long been higher than it is elsewhere. What you want to know is post-reform growth. And while Holtz-Eakin does include that, he omits the new data that includes 2010 and paints a better picture for Massachusetts — which is, you’ll recall, what set off this conversation in the first place. So here are the updated numbers from Freddy Bauer:

As Bauer notes, “the average family premium in Massachusetts was about $600 more than the average family premium in Texas in 2006 ($12,290 vs. $11,690). In 2010, the difference between average family premiums had declined to less than $100 ($14,606 vs. $14,526).”

As I wrote in my original post, there’s reason to wonder whether these numbers are a blip or a trend, and whether the apparent slowdown in national health expenditures is related to the passage of the Affordable Care Act. But it’s just not credible to say the national reforms weren’t based, in large part, on the Massachusetts reforms, and it’s not appropriate to ignore the most recent data out of Massachusetts in a conversation that is about that data.

If you’re interested in a more persuasive response arguing that Massachusetts might be experiencing a blip rather than a trend, read Peter Suderman — although I would note that the “buy-down” effect he describes is explicitly the point of the various voucher plans conservatives, including Rep. Paul Ryan and Romney, have proposed for Medicare.

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