Romney's Healthcare Fix

For more information, click here to visit Mitt Romney Central's health care page.

Romney states that there is no easy fix for America's healthcare crisis. The healthcare crisis is so complicated and enormous, that there is no one simple change, or "magic bullet," that is going to easily solve our healthcare problem.

Romney states that "given the magnitude of the healthcare crisis America faces, small measures simply will not get the job done." What is needed is a fundamental restructuring of the healthcare market.

Unlike many Democrats, Romney believes in free market solutions to solve this problem. A government takeover of healthcare or more regulations of the healthcare industry will be counterproductive and inefficient.

Here is a list of items Romney discusses in a recent speech and in his book, No Apology, that will help ameliorate America's healthcare crisis:

 1) Give Tax Deductions to Individuals Who Don't Have Access to Employer Health Insurance - Romney believes that individuals should be able to have the same tax advantages as an employer when purchasing health insurance. It isn't fair that an individual be penalized with higher rates for health insurance simply because his/her employer doesn't provide it. Such a penalty dissuades many from buying insurance when it is not offered by their employer. Romney wants to level the playing field. Give consumers a choice of going with their employers plan or purchasing insurance on their own on the open market. Don't lock consumers into one path.

2) Allow people to purchase health insurance across state lines - This will increase competition and decrease monopolies of health insurers. It is interesting to note that current law in the U.S. actually allows from insurers to have a monopoly over a given region of the country. Pg 177.

3) Allow Individuals to Form "Purchasing Pools" - Currently individuals not part of an employers group are penalized with much higher insurance premium costs. Individuals who currently don't have the option to buy insurance through their employer are forced to buy a single policy on the "open market" which is much more expensive. Also, allowing individuals to form purchasing pools would give consumers more choice of healthcare plans; no longer would an individual have to take their employers health insurance. Individuals could choose to shop for insurance on their own with a purchasing pool that would have the similar tax advantages and discounts as their employer. Lastly, Romney would soften Obamacare's rule by not allowing an insurance company to deny an individual due to pre-existing conditions if and only if that individual can provide evidence of prior insurance coverage.

4) Encourage a "Consumer Reports" style ratings system for insurance companies - Currently it is very difficult to compare one insurance company with another. Consumers need to have access to a ratings system in order to be better informed. For example, if a particular insurance company has poor customer service, a small network of doctors, or has a habit of declining coverage of certain medical procedures, or simply mistreating their clients, then the public has a right to know. Currently there is no way consumers can discover which companies are truly providing the best customer service or value for their dollar. Romney wants to change that and make the insurance companies more accountable to how they treat their customers. In a similar vein, hospitals would have a rating system in order to establish cost and quality comparisons for the public. Romney knows from his days at Bain when he advised hospitals that some hospitals charge exorbitant rates but have similar quality results when compared to other hospitals in the same area.

5) Modify Health Savings Accounts - Allow consumers to use HSA savings to pay healthcare premiums! This simple change would have a profound impact for millions of Americans. It's hard to believe that laws regulating HSA's currently don't allow consumers to pay insurance premiums with their HSA. On a different note, HSA's help form cost-conscious consumers and motivate consumers to shop around for the best "deal" at the best price. HSA's and co-insurance plans would get healthcare working more like a market. The current healthcare market, is really not a "market" at all because patients have very little incentive to price-compare, and find higher quality at lower prices.

6) Reform medical malpractice - The American Medical Association reports that $200 billion per year is spent by doctors and hospitals practicing "defensive medicine." This is a horrible waste of resources. Romney states that in the regions where medical malpractice reform has occured, the costs of healthcare have indeed gone down. Romney mentions three specific types of malpractice reform that would have the greatest impact on costs 1) limit non-economic damages 2) assign malpractice cases to special health care courts, and 3) awards for medical malpractice should be given according to a pre-determined schedule. Obamacare didn't touch this aspect of reform because of the heavy donations Democrats get from trial lawyers. pg. 181

7) Implement a "Co-insurance system" - With a co-insurance system, patients pay a percentage of the entire bill. This gives patients more "skin in the game" and more of a reason to seek out quality medical care at the lowest possible prices. An important caveat to the co-insurance system is that there must be an "upper limit" on the out of pocket expenses a patient is expected to pay. Pg. 187

8) Implement a "single-fee system" - Currently, we have a "fee-for-service" system where each visit to the doctor's office calls for a new charge to the patient. Romney believes that such a system encourages doctors and hospitals to require patients to return for follow-ups and check ups too often, thus increasing the doctors/hospitals revenue. A single-fee system would pay doctors/hospitals one lump sum of cash for a particular problem, but no extra cash for follow-ups or extra testing/procedures which would encourage doctors not have the patient return so often for care. Romney frankly admits that this system needs to be more fully developed, but that it can be used successfully. Examples of companies that have successfully used the "single-fee" system are IHC in Utah.

9) Mimic IHC, Mayo Clinic, and Kaiser Permanente - This is the most encouraging aspect of Romney's proposals. These health insurers have found a way to deliver care at much lower costs than the nation overall. These companies show that real cost reduction is not just theoretical, but actually possible. Many of these companies have costs of up to one-third less than the national average!

10) Give Block Grants to States for Medicaid - Providing block grants would limit federal laws on how medicaid funding can be used in order to give states more room to experiment and craft their own unique healthcare solutions. Further, block grants would make it so that medicaid would no longer be an "open checkbook" on the federal government.

11) Provide "Innovation Grants" to States for Reform - Innovation grants would be extra funding used by the states for the development of unique healthcare reforms. These grants would be competed for by different states. Romney envisions these grants as the "carrot" that will entice states to begin reforming their healthcare systems, rather than the "stick" of federal laws that forces states to reform or face a penalty. Obamacare currently uses the "stick" rather than the "carrot."

12) Implement Electronic Health Records - Romney disagrees with many proponents of EHR who say that this is a virtual panacea for reducing healthcare costs. Romney believes that this will help lower costs but has to be implemented with all other aspects of healthcare reform otherwise it will not have a large impact on cost savings. Romney envisions an interconnected EHR system that physicians all across the country would have access. Such an interconnected system would help decrease duplicate testing and promote better coordination between doctors.

13) Encourage Americans to have healthier lifestyles - The problem with healthcare costs is not just the system, but the American culture. The high fat western diet coupled with a generally sedentary lifestyle are unhealthy and cause overall expenses in healthcare to increase. Any discussion of healthcare costs would be incomplete without mentioning that individuals have to live healthy lifestyles in order to control the costs of healthcare.

14) Change financial incentives - This is the most important aspect of meaningful reform. Currently, the financial incentives in the healthcare market are all wrong. Our current market encourages overuse and expensive treatment options. There is an abundance of evidence which shows that financial incentives affect physicians treatment decisions and hospitals policies. Most of the above points are geared toward changing the financial incentives for patients and doctors/hospitals In order for healthcare to function more like a true market.

Given Romney's extensive experience in the healthcare field, he would be the most appropriate candidate to fix the U.S. healthcare market into a more cost-effective, free market system. Romney complains in his new book, No Apology, that America's healthcare market is really not a true market where competition keeps costs in check. The goal of all of the above reforms is to get the healthcare market to function more like a true market.