Wonkbook: Romneycare is working -- and Obamacare might be, too

at 07:50 AM ET, 02/27/2012

Mitt Romney has been very clear, and very confusing: His health-care reforms are working in Massachusetts, but they're not a good model for the rest of the nation. New numbers out from Massachusetts -- and from the rest of the nation -- suggest he's only half right.


Republican presidential candidate, former Massachusetts Gov. Mitt Romney speaks during a rally at the Park Place Hotel on Feb. 26, 2012 in Traverse City, Michigan. (Justin Sullivan - GETTY IMAGES)
It's been clear for some time that Romneycare succeeded in expanding access to health care in Massachusetts. Over 95 percent of the state's residents are insured. It's also popular. A February poll found that 62 percent approved of the law, and only 33 percent disapproved. Whether it's controlling costs has been less obvious.

MIT health economist -- and Romneycare architect -- Jon Gruber showed that premiums in the non-group market, which was the market most affected by the reforms, fell sharply after the law's introduction. But another group of economists, including Romney-campaign adviser Glenn Hubbard, published a paper showing that premiums in the employer market were rising more quickly than the national average.

But the data used by Hubbard and his coauthors only went through 2008. Fred Bauer has taken another look at the numbers, which now include 2009 and 2010. And now, those same numbers show the situation has turned around. "From 2006 to 2010, employer-sponsored health-care premiums for a family rose about 19% in Massachusetts, while they rose about 22% in the US as a whole," he writes. "Compare that to the period between 2002 and 2006, when Bay State family premiums increased 40% and US family premiums rose only 34.5%." Individual premiums have also been growing more slowly than the national average.

So Romneycare is working. Across the board. But perhaps, as Romney implies, there's something that makes it unsuitable for the rest of the nation.

If that's so, however, we're not seeing it yet. Romneycare's cousin, the Affordable Care Act -- or, as it's more frequently known, Obamacare -- isn't fully in place, and won't be until 2014 at the earliest. But it has passed. And since it has passed, health-care spending has been dropping. Karen Davis, director of the Commonwealth Fund, writes that the most recent spending projections show a "$275 billion (5.6 percent) reduction for 2020, compared with pre-reform estimates. Moreover, that projection represents a cumulative reduction of $1.7 trillion over the 10 years from 2011 to 2020."

You might argue that that's just the recession, but as Davis writes, "the recession doesn’t plausibly explain why projected health spending in 2020 is substantially below estimates made just two years ago." And why the recession having such an effect on long-term spending under Medicare? The latest data shows we're on track to spend $750 billion less than the pre-reform projections suggested. The Medicare cuts in the Affordable Care Act account for barely half of that. If these trends hold, the Affordable Care Act will cost far less than anticipated.

Is this all the Affordable Care Act? Certainly not. The recession is part of it. And perhaps efforts over the last decade to change the health-care system are beginning to pay off. But the passage of the ACA didn't just send a loud signal to the health-care industry that things needed to change. It laid out, in endless detail, how providers would begin to lose money if they didn't change. And so they've started changing. We're seeing more consolidation in the hospital industry. We're seeing doctors join larger group practices. We're seeing efforts to crack down on medical errors and prepare for regulations that will penalize hospitals with high rates of readmission.

It's possible those preparations are beginning to bear fruit. At the very least, as Davis writes, "the dire predictions that the Affordable Care Act would fail to control costs and, in fact, accelerate spending have not been borne out by the early experience. It now appears that both the costs of covering the uninsured and Medicare spending are substantially below pre-reform estimates." If that seems impossible, well, look at the Bay State.

So the Massachusetts reforms worked. And though it's too early to say anything definitively, there's encouraging evidence that the national reforms based on the Massachusetts reforms are leading to positive changes in the health-care industry. Romney is right to defend his signature accomplishment as governor of Massachusetts. But he's wrong to deny its lessons for the rest of the country.

Top stories

1) The government could reach the debt ceiling sooner than expected, reports Seung Min Kim: "The federal government could hit the debt ceiling sooner than expected -- and possibly around the November election -- according to a report out Friday. Lawmakers on Capitol Hill had hoped that last summer’s deal to end the nasty fight over lifting the debt ceiling would ensure the issue wouldn’t resurface until at least 2013. But the Bipartisan Policy Center said Friday that the debt-limit doomsday could come earlier than that...If the United States maxes out its credit limit before the end of this year, that could set up another messy and acrimonious battle during the lame-duck session. Lawmakers already face a dilemma over expiring Bush-era tax rates and a potential fight over preventing the $1.2 trillion in automatic budget cuts that were borne out of the supercommittee’s failure last November."

@TheStalwart: Also important to note that despite gas "winning" the duel in 2011, we did not go into a recession. Despite tsunami + debt ceiling, etc.

2) Gas prices have yet to dim optimism about the economy, reports Ben Casselman: "Rising gas prices are fueling consumer anger and election-year politics, but so far they have done little to damp optimism about the U.S. economic outlook. Prices at the pump have risen in recent weeks as tensions with Iran have sparked fears of a supply disruption, driving up the cost of crude oil. Prices of crude hit a nearly 10-month high on Friday, rising $1.94 a barrel to close at $109.77 on the New York Mercantile Exchange, their highest level since early May. Nationally, the average price of a gallon of regular gasoline hit $3.647 on Friday, according to the auto club AAA, up nearly 27 cents from a month earlier and up 11.8 cents in the past week. Yet despite the increases, Americans grew more confident about the economy in February, according to a monthly survey of consumers released Friday. The University of Michigan's consumer sentiment index rose for the sixth consecutive month, as recent job-market gains overcame gas-price worries."

3) Many states have been slow to implement health insurance exchanges, reports Robert Pear: "States are lagging in the creation of health insurance exchanges, the supermarkets where millions of consumers are supposed to buy subsidized private coverage under President Obama’s health care overhaul. Many states are waiting for a Supreme Court decision or even the November election results, to see whether central elements of the new law might be overturned or repealed. But that will be too late to start work. By Jan. 1, 2013, the Obama administration will decide whether each state is ready to run its own exchange or whether the federal government should do the job instead...Research by the nonpartisan Urban Institute found that 14 states had made significant progress in creating exchanges, 16 had made little or no progress and 20 were somewhere in between."

4) The rental market is booming, reports Motoko Rich: "The housing market remains a potent drag on the economy as home prices continue to slip, foreclosed homes fill some neighborhoods and millions of construction workers scramble for jobs. But one group is sitting pretty: landlords. Unlike home prices, rents have been rising, up 2.4 percent in January from a year earlier, according to recent data, not adjusted for inflation, released by the Labor Department. With few rental buildings erected over the last few years, available units are going fast. Nationwide, the apartment vacancy rate is down to 5.2 percent, its lowest level in more than a decade, according to the research firm Reis Inc...Economists suggest favorable conditions for landlords will continue for at least a year, with employment gradually rising and construction of new apartments remaining constrained."

5) Mitt Romney unveiled his plan for Medicare, report Sara Murray and Neil King Jr.: "Republican presidential hopeful Mitt Romney unveiled a plan Friday to increase the Medicare eligibility age and laid out a time line under which the government would offer a new private option for care. Mr. Romney has said he would offer seniors a choice between the traditional fee-for-service government health-care program and a new option to purchase private insurance, with the cost partly supported by the government. On Friday, he said that shift would go into effect in 2022 and added that he planned to increase the Medicare eligibility age by one month each year...In a report last month, the nonpartisan Congressional Budget Office found that raising the Medicare eligibility age to 67 from 65 would reduce Medicare outlays by $148 billion from 2012 through 2021. By 2035, that would amount to a 5% decrease in Medicare spending. The report also found seniors whose access to Medicare was delayed would pay more for their health care."

@CitizenCohn: Romney describing Medicare changes as "common sense," but the cuts he has in mind would end program's guarantee of access for all seniors

Top op-eds

1) The example of Europe doesn't show the need for austerity, writes Paul Krugman: "Understanding the nature of Europe’s troubles offers only limited benefits to the Europeans themselves. The afflicted nations, in particular, have nothing but bad choices: either they suffer the pains of deflation or they take the drastic step of leaving the euro, which won’t be politically feasible until or unless all else fails (a point Greece seems to be approaching). Germany could help by reversing its own austerity policies and accepting higher inflation, but it won’t. For the rest of us, however, getting Europe right makes a huge difference, because false stories about Europe are being used to push policies that would be cruel, destructive, or both. The next time you hear people invoking the European example to demand that we destroy our social safety net or slash spending in the face of a deeply depressed economy, here’s what you need to know: they have no idea what they’re talking about."

2) The tax code needs reform, writes Lawrence Summers: "The delicate question is how Washington should prepare for serious tax reform during what is likely to be a unique window of opportunity in late 2012-2013. The timing is essential both because of all the deficit reduction activity and because spending side reforms will have a much more difficult time becoming reality if the revenue side is not addressed as well...Leaders in both parties should commit themselves to the goal of tax reform for growth, fairness and deficit reduction. They should acknowledge that every tax expenditure or special break has to be on the table. They should ensure their staffs are compiling a large inventory of options. The relevant Congressional committees should take testimony from experts of all persuasions. And then, right after the election, the negotiations should begin. Nothing that is likely to done during the next presidential term will be more important."

3) It's time to address the shortage of skilled workers, write Thomas Hemphill and Mark Perry: "Following 12 straight years of declines, U.S. manufacturers added 109,000 workers to their payrolls in 2010 and another 237,000 in 2011. And in January of this year, the number of manufacturing jobs increased by 50,000. Yet this vibrant sector is being held back--and not by imports. Instead there is a serious labor shortage. In an October 2011 survey of American manufacturers conducted by Deloitte Consulting LLP, respondents reported that 5% of their jobs remained unfilled simply because they could not find workers with the right skills...Output in manufacturing expanded by 4% in 2011, more than twice the 1.7% overall growth rate of the U.S. economy. For manufacturers to continue this remarkable expansion, it's critical that our shortage of skilled workers be addressed. We cannot afford to let this economic opportunity slip away."

4) The U.S. should set a floor price for oil, writes Thomas Friedman: "No one likes higher oil prices. But -- perversely -- the high price benefits America as we rapidly become a bigger oil producer and it ensures that investments will continue to flow into energy efficient cars and trucks. If we were smart, we would establish today a floor price for any barrel of crude oil or gallon of gasoline sold or imported into America -- and tax anything below it. A stable, sufficiently high floor price serves the environment, our technology investments and our energy productivity. As our producers succeed, we would become increasingly energy self-sufficient, keep a lot more dollars at home for our Treasury, stimulate innovation on renewables and drive down the global oil price that is the sole source sustaining Iran and other petro-dictators. But all of this depends on an understanding between the oil industry and the environmentalists. If President Obama could pull that off, it would be a huge contribution to America’s security, economy and environment."

5) Employee ownership can help revive manufacturing, writes Steven Pearlstein: "When the Brookings Institution issued its blueprint for a manufacturing revival this month, it was noteworthy that one of its four key recommendations was for 'an increased role for workers and communities in creating and sharing the gains from innovative manufacturing.' Germany provides the model for how a high-wage country can still have a globally competitive manufacturing sector, and like most others who have studied it, the Brookings researchers found that employee involvement and gains-sharing is a key to that success. It’s also true here: The data are pretty clear that companies that have some level of employee-ownership have higher productivity and profitability than those that don’t. The best way to revive American manufacturing isn’t to add yet another loophole to the corporate tax code, the latest lame proposal from the Obama economic team. It’s to reach beyond Wall Street and the corporate mind-set and tap into the ingenuity and the entrepreneurial instincts of the American worker."

Acoustic version interlude: Lily Allen plays "The Fear" live on Q.

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Still to come: Obama has adopted much of the Simpson-Bowles plan; some states have been slow to start up health insurance exchanges; NYC puts out teacher data; the House transportation bill faces flack from all sides; and a puppy has its first taste of lime.

Economy

Obama has adopted much of the advice of Bowles-Simpson, reports Jackie Calmes: "Mr. Obama has come to adopt most of the major tenets supported by a majority of the commission’s members, though his proposals do not go as far. He has called for cutting deficits more than $4 trillion over 10 years by shaving all spending, including for the military, Medicare and Social Security; overhauling the tax code to raise revenues and lower rates; and writing rules to lock in savings. But he did so months after the commission’s report in December 2010, and largely without acknowledging that he was borrowing from its recommendations. That caution reflected White House concerns about liberals’ hostility to the plan and, aides say, Mr. Obama’s certainty that Republicans would reject anything he endorsed. The story of how Mr. Obama dealt with Bowles-Simpson illuminates his struggles with the deficit politics that have curbed his ambitions and forced him to confront the limits of his persuasive powers."

The G20 put off making choices on aid to Europe, report Sudeep Reddy, Matina Stevis and Costas Paris: "Officials from the world's leading economies deferred for months key decisions on international aid for Europe as they awaited more euro-zone action to fight the Continent's debt crisis. Finance ministers and central bankers from the Group of 20 advanced and developing economies, after a two-day meeting here, indicated they anticipate an agreement to expand Europe's rescue fund next month. That move 'will provide an essential input in our ongoing consideration to mobilize resources' to the International Monetary Fund, the G-20 officials said in a joint statement Sunday. The lack of significant progress effectively punts further discussion of new international support until the G-20 ministers' next gathering in April. Officials hoped that could lead to a final, confidence-boosting agreement at a summit of world leaders in June."

@zerohedge: G-20 summary: The world has increasingly fewer ideas how to bail out the world

New data is challenging the idea that small companies create more jobs, reports Floyd Norris: "Where are most jobs created in America? Is it in small companies or large ones? For many years, the accepted wisdom has been that it is in smaller companies. But newly released figures from the Bureau of Labor Statistics challenge that notion. 'The most growth in employment has been in large firms,' said Nathan Clausen, the bureau’s economist in charge of the development of the new statistics, which were released this month after more than two years of development. The figures cover employment from April 1990 -- one month after employment reached a high for that economic cycle -- through March 2011, just over a year after employment hit bottom after the 2007-9 recession."

Settlements without admissions are coming under scrutiny, reports Edward Wyatt: "The entrenched practice of allowing companies and individuals to settle federal regulatory charges without admitting that they actually did anything wrong is coming under growing scrutiny by the courts. Two federal judges have questioned such settlements proposed by the Securities and Exchange Commission and this week a third judge held up a settlement offered by the Federal Trade Commission. Judge Renee Marie Bumb of United States District Court in Camden, N.J., blocked a proposed settlement on Wednesday between the Federal Trade Commission and a marketing company based in New Jersey on charges that the company and its chief executive made false and unsubstantiated claims that the use of açaí berry-based products, which they promoted, would result in rapid and substantial weight loss."

@TPCarney: Had Santorum been a senator at the time of TARP, I would've given 10-to-1 odds that he would have voted with the rest of the GOP leadership.

Mock trial interlude: Justice Kennedy presides over Hamlet's insanity trial.

Health Care

An effort to reduce emergency-room visits is drawing controversy, reports Anna Wilde Mathews: "A plan by Washington state's Medicaid agency to stop paying for certain emergency-room visits is prompting pushback from hospitals and doctors, who say they will be stuck with bills for vital care they often are legally required to provide. The new cuts, set for April 1, focus on about 500 diagnoses including common infections, mild burns, strains and bruises. If an enrollee comes to an emergency room and is diagnosed with one of these conditions, the Washington Medicaid program won't pay the hospital and doctors...The move would be the latest cut to Medicaid programs as states struggle to reduce health-care costs--and as the downturn has boosted Medicaid's ranks. Some 43 states have Medicaid initiatives designed to deter unnecessary use of emergency rooms, according to the Kaiser Family Foundation, a nonpartisan, nonprofit organization that studies health issues. Several states now charge patients copays for nonemergency services in an ER."

More states are using ultrasounds to restrict abortion, reports Lena Sun: "Virginia officials backed off last week from requiring vaginal ultrasounds before abortions, but state legislators are still expected to pass a bill that mandates abdominal ultrasounds and adds other significant requirements for women seeking abortions. In recent years, this common diagnostic tool has taken a greater role in abortion-related legislation. Seven states require ultrasounds before abortions. Twenty states regulate some aspect of ultrasound exams, including requiring abortion providers to give women the option to view the image or listen to the fetal heartbeat if an ultrasound is performed...In most states that require ultrasounds, as will be the case in Virginia, women must wait at least 24 hours between abortion counseling and the procedure and make at least two trips -- one for the counseling and ultrasound, and another for the abortion."

@sarahkliff: Had an insanely detailed dream about a House hearing on abortion restrictions. So, that's where my life is at now.

Domestic Policy

New York City released teacher effectiveness ratings, report Fernanda Santos and Robert Gebeloff: "The controversial ratings of roughly 18,000 New York City teachers released on Friday showed that teachers who were most and least successful in improving their students’ test scores could be found all around -- in the poorest corners of the Bronx, like Tremont and Soundview, and in middle-class neighborhoods of Queens, like Bayside and Forest Hills...The ratings, known as teacher data reports, covered three school years ending in 2010, and are intended to show how much value individual teachers add by measuring how much their students’ test scores exceeded or fell short of expectations based on demographics and prior performance. Such 'value-added assessments' are increasingly being used in teacher-evaluation systems, but they are an imprecise science. For example, the margin of error is so wide that the average confidence interval around each rating spanned 35 percentiles in math and 53 in English, the city said."

Adorable animals eating fruits interlude: A puppy tries lime for the first time.

Energy

Momentum is growing for the release of oil reserves, reports Guy Chazan and Jack Farchy: "The Obama administration is coming under growing pressure to cool petrol prices by releasing emergency stocks of oil. wever, critics say this would be the wrong response to the wrong problem at the wrong time...The oil price surge has increased speculation that the US and its allies could repeat the co-ordinated release of crude stockpiles they undertook last summer to compensate for lost supply from Libya. The move led to an 8 per cent price fall. On Friday, Timothy Geithner, US Treasury secretary, said there was 'a case' for releasing crude from the US strategic petroleum reserve, or SPR, 'in some circumstances' - a significant shift for an administration that had previously ruled out another release. What has triggered the change is the steady drumbeat of soaring petrol prices, with the US national average now $3.68 a gallon - a record February high."

The House transportation bill is under fire from all sides, reports Jennifer Steinhauer: "With support for their highway bill crumbling, Republican leaders spent much of a weeklong Congressional recess considering a variety of changes to the bill, including shortening it and thus its price tag, and restoring transit financing, with the hope of blunting the biggest objections and securing the bill’s passage in the coming weeks. The call from on high for changes was an unusual move for Mr. Boehner, who has given extensive latitude to committee chairmen. But since it was presented last month by Representative John L. Mica of Florida, the chairman of the House Transportation and Infrastructure Committee, the bill, a centerpiece of the House Republicans’ jobs agenda, has unraveled like a cheap sweater, with conservatives and liberals pulling equally hard on its threads. The assault illustrated again the difficulties of passing legislation in the divided Congress, even popular bills."

INTERVIEW: Henry Waxman on his plan to cut the deficit and stop global warming.

The EPA pollution regulations are heading to court, reports Brent Kendall: "Republicans on the campaign trail have long bashed President Barack Obama's environmental regulations. This week the battle moves to the courtroom, where several industries and GOP lawmakers are trying to overturn the administration's rules for reducing greenhouse gases. Industry groups, including those representing chemical, energy, farming and mining interests, have brought several challenges to the Environmental Protection Agency's first-ever rules limiting carbon-dioxide emissions. In the lead case, the plaintiffs are challenging the EPA's finding that such greenhouse gases endanger public health and welfare. That finding formed the basis for agency rules that imposed greenhouse-gas-emissions standards on cars beginning with the 2012 model year and set initial rules on permits for power plants and factories."

@daveweigel: Santorum points out that Romney was first gov to agree to C02 caps. Groans and laughter.

Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.

 
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