So I bought Romney's new book . I figure that If I'm going to oppose him, I ought to be up to date on my reasons. I think that the combination of mandates and subsidies in Romneycare was an idea worth trying. It must have seemed like a good way to increase coverage and reduce consumer health care costs while preserving a private health insurance market. It hasn't worked out as well in practice. The combination madates and subsidies has created a perverse political incentive within the Massachusetts health care market. Providers can expand their customer base by lobbying the legislature to mandate coverage for more services rather than try to compete for customers based on price. The cost of these mandates are hidden from consumers because it ends up as higher-than-the-national-average premium increases and ends up getting blamed on the mean old insurance companies. To the extent that our current health care system is unsustainable, a national version of Romneycare would make it more unsustainable.
The health insurance system under a Romneycare arrangement becomes an ever more rigid and government regulated form of comprehensive medical care prepayment in which the costs are hidden from the consumer and the benefits go to organized interests. Any attempt to reopen the market by reducing the mandate burden is easily spun as benefiting the same insurance companies that are currently overcharging you. And there is of course no guarantee that lifitng the coverage mandates will lead to lower premiums. For all you know, your employer might switch to a policy with less coverage but no less cost. The risks of change are obvious, the benefits of change speculative, the costs of stasis hidden.
In his book, Romney wrote that he was surprised that "every [italics in original] interest group in the state supported" Romneycare. As well they might have. Everybody gets a cut. Even the insurance companies have their customer base guaranteed by the individual mandate and the coverage mandates shield them from aggressive competition. The politicians even get to posture against the premium increases (and maybe win back some small, certain to be temporary reductions) even as the system they constructed and administer guarantees endless future premium increases. Perversity piles upon perversity.
It might be possible to construct a mandate and subsidy system that works better but it would have to be totally different from Romneycare. It would mean giving consumers more control of their health care dollars (through a combination of HSA's and catastrophic coverage) and forcing providers to compete based on a transparent price system. It would mean creating a mandate and subsidy system that fostered a competitive rather than corporatist health care market. Mitch Daniels in Indiana has shown how such a program can bring down costs even without mandates.