Perhaps that’s wise, as a few paragraphs later, Romney’s plan punches itself in the stomach. He wants to allow each state to develop its own system, but he also wants to allow insurance to be sold across state lines. These proposals, however, are perfect opposites, and including both puts Romney on two sides of the same idea. The point of selling insurance across state lines is that it prevents states from managing their insurance options. The idea behind a federalist system is that states can manage their insurance options. What’s the point of passing a State Experimentation Act if you’re also passing a Contamination of State Experimentation Act?
I imagine the answer is that there is no answer. Selling insurance across state lines is popular in the Republican Party and so Romney included it in his plan. But its appeal to conservatives has always been baffling. Allowing insurance to be sold across state lines is sort of the bizarro-world approach to one-size-fits-all federal regulation. In the federal example, everyone has to abide by a single national standard. That may not be ideal, but at least every state has a say in the regulations. In the across-state-lines plan, everyone has to abide by whichever state has the lowest standards. And California doesn’t have a say in Mississippi’s regulations.
Romney is also going to do something to the tax break for employer-provided health insurance. I just can’t quite figure out what. “The tax code offers open-ended subsidies for the purchase of insurance through employers,” he writes. “This subsidy is unfair — as it doesn’t apply to insurance purchased on one’s own. I propose to give individuals a choice between the current system and a tax deduction to buy insurance on their own. This simple change creates the best of both worlds.” Does it? How?
The simple interpretation of that paragraph is that every individual gets to choose between full deductibility of their employer-provided plan or full deductibility of a plan they choose on their own. But that would be incredibly expensive. So I’m guessing that Romney actually intends to eliminate the employer tax break and create a new deduction for health insurance that everybody gets, which is the more normal way for this reform to be structured. I imagine we’ll find out more tomorrow when he gives his speech announcing this plan.
But at first glance, I’d say Romney made the only move left to him — and to the Republican Party. A capsule history of health-care reform is that Democrats began with single-payer and Republicans, led by Richard Nixon, countered with an employer-based system. Then, in the 1990s, Democrats proposed an employer-based system and Republicans countered with an individual mandate — which Romney actually passed in Massachusetts in 2005. Then, in 2009, Democrats proposed a system based around an individual mandate and Republicans countered with a vague promise to “repeal-and-replace.” They were out of ideas.
The only solution-like proposal left on the table is to devolve responsibility to the states, and Romney is smart to get there first. The question, I think, is whether the GOP unites around some version of this idea or whether Romney has become so radioactive on health care that by proposing a federalist solution, he actually takes it off the table for the Republicans running against him.