What Mitt Romney means when he talks about firing insurance companies

at 09:30 AM ET, 01/10/2012


(BRIAN SNYDER - REUTERS)
Mitt Romney heads into Tuesday’s New Hampshire primary taking a lot of heat for telling voters Monday, “I like being able to fire people who provide services to me.” But for health policy wonks, what’s interesting about Romney’s remarks is the part right before that, where the Republican front-runner lays out a theory of how the health insurance marketplace should work. Via ThinkProgress, here’s the full quote:

ROMNEY: I want people to be able to own insurance if they wish to, and to buy it for themselves and perhaps keep it for the rest of their life and to choose among different policies offered from companies across the nation. I want individuals to have their own insurance. That means the insurance company will have an incentive to keep people healthy. It also means if you don’t like what they do, you can fire them. I like being able to fire people who provide services to me. If someone doesn’t give me the good service I need, I’m going to go get somebody else to provide that service to me.

Romney steers clear of discussing health care mandates, noting that he wants Americans to “own insurance if they wish to.” But the argument sounds like a defense of the health-care exchanges in both Romney’s and Obama’s health care laws—marketplaces where individuals can compare and purchase health care plans. The idea behind building an exchange is to organize the way Americans shop for insurance, all in one place, and have insurance companies compete for their business.

Democrats are seizing on the “firing” line as a political liability and, policy-wise, insurance companies likely wouldn’t be a fan of this approach either. If Americans could hire and fire insurance companies as we please - and also could buy insurance “if they wish too” - you would probably see a whole lot of people hoping onto an insurance plan when they’re sick, and then cutting off enrollment when their medical needs subside. That would likely drive up the cost of health insurance. This is the reason why most health plans have open enrollment periods, specific points in the year where subscribers can opt to alter their health insurance policy.

Another policy solution is the one that Romney enacted in 2006: require all citizens, healthy and sick, to purchase health insurance. In other words, the individual mandate.

Massachusetts actually opted to do both under its health reforms: It requires the purchase of insurance and sets up an open enrollment period. That precludes Bay State residents from choosing a relatively bare-bones plan, but switching to a more comprehensive one if they were to require more intensive medical treatment.

 
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