Mitt Romney, the soon-to-be Republican presidential nominee, has worked hard to distance himself from the Massachusetts health care reform law he championed during his single term as the state's governor. The reason, of course, is that it is a lot like the Affordable Care Act (ACA) President Obama signed into law in March 2010. So, the fact that almost all Massachusetts citizens now have health insurance and costs have been kept to predicted levels loses out to the political need to differentiate himself from Barack Obama on every dimension.
Yet, the health care system has serious problems. How would Romney solve them?
Noam Levey wrote in the Los Angeles Times that Romney "would overhaul the way most Americans get their health coverage: at work." He would give Americans a tax break to buy their own health plans. Insurers would respond by offering choices and bringing "the benefits of competition to healthcare."
"Competition" is one of those short-hand concepts that communicates effectively by evoking an automatic response and avoiding the need for thinking. Everyone "knows" that if competition in the health insurance (or any other) market increases, quality will rise, prices will fall, and all will be happy. Unfortunately, when the concept is subjected to scrutiny -- at least in the case of health insurance -- none of those results turns out to be likely.*
Certainly, insurers can lower their prices to attract customers. But then, they will need to limit their spending in order to produce adequate profits. And to do so, they have only two levers to use. First, they can sell insurance policies to people who are unlikely to need many services and avoid those who are likely to get sick. That way, they keep down their spending on care and have more left over to pay other costs, including promotion, administration, executive compensation, and profit. And, secondly, they can adjust the terms of the coverage. The ACA, if it survives the Supreme Court challenge, will prohibit efforts to discourage people with prior conditions from buying their coverage. Unless Romney were to adopt similar provisions, many people would be able to afford only lousy coverage, which was the case prior to the ACA.
The new law will also eliminate many familiar insurer tactics related to the terms of coverage -- annual and lifetime maximums, rescission of policies for people who use services, among others. Again, unless Romney adopted similar provisions, there is every reason to think insurers would reinstitute those tactics. If the ACA remains in place, however, insurers could do only one thing to serve their subscribers well. They could engage hospitals, physician organizations, and others, first, to introduce payment methods that reward good service and, then, to support the implementation of processes that would help those providers to deliver that good service reliably. Unfortunately, the methods for doing these things are largely experimental, consume lots of time and other resources, and require skill to produce reliably better care at reasonable cost. In the end, the results are uncertain. Some "best practice" organizations have produced enviable results; others have tried and failed.
Although the ACA was no one's first choice, it has much to recommend it. The reforms of private insurance are substantial and real and might stimulate insurers to work with providers to develop improvements. At the same time, it recognizes the fundamental truth that the changes needed to improve the system's functioning will take time and are risky. The law creates new tools that can be used by people of good will to improve care and contain costs.
The other great truth about the ACA is that it actually passed both houses of Congress and became law. The history of failed prior efforts at reform is testimony to the hugeness of that accomplishment. To put it simply: going back to the drawing board in order to pass a better law is a delusion. We need to use this opportunity because we will not have another one soon. In the meantime, the system will continue its deterioration and become still less reliable than it already is -- even for those with good insurance, including physicians themselves when they become patients.
If Mitt Romney is serious about increasing the amount of competition, he will only speed up the system's decline. He needs to stop thinking like a CEO. The goal is not for insurers to make profits or, if they cannot, to disappear. A president's health care objectives must be different: stabilize the health care system by making its financing less volatile, help organizations to improve quality of care and contain spending, and increase the number of Americans who can benefit from what is good about American health care. Increased insurer competition takes us in exactly the wrong direction on all three of those goals.
*For more detail on the limits of competition, see my book, Still Broken: Understanding the U.S. Health Care System. (Stanford University Press, 2010).