Romney Provides Common Sense, Not Cheap Talk, On Health Care

Four years ago, President Obama said all the right things about health-care reform.  He talked about "bending the curve" of government health-care spending.  He said that he would make health care more efficient and lower health insurance premiums for every American family.  He promised that health-care reform would be debated on C-Span, with no back room negotiations.

Talk is cheap. What the President and Democrats in Congress finally delivered - ObamaCare - added more taxes, more expensive regulations, and more government spending.  And it was tailor made by lobbyists behind closed doors, along with bought votes in the Senate, through the Louisiana Purchase and the Cornhusker Kickback.

Borrowing a favored Washington tactic, President Obama also robbed Peter to pay Paul, cutting $716 billion out of Medicare to help pay for new health insurance subsidies for the uninsured and a massive Medicaid expansion.

Instead of hope and change, Americans got more of the same.

Take ObamaCare's health-insurance tax.  You can't make anything cheaper by taxing it, but President Obama insisted on the tax so that insurers would pay their "fair share" of health-care reform. But the impact of the tax will primarily fall on the people who buy insurance.  Starting in 2013, employers and consumers will see their insurance bills rise because of the $87 billion health-insurance tax. Raising insurance costs for businesses means less money available for job creation. The National Federation of Independent Businesses predicts that the health insurance tax will cost the economy up to 250,000 jobs and reduce GDP by $36 billion by 2021, with about 60% of job losses falling on small employers.

Individuals and families will also pay more for health insurance.  Congress' Joint Committee on Taxation predicts that "a very large portion" of the tax will fall on consumers.  By 2016, the Joint Committee expects family premiums to rise by up to 2.5% annually.  Over 10 years, that's as much as much as $5,000 for family premiums.

Seniors with Part D plans or Medicare Advantage plans can also expect to pay more.  Actuarial firm Oliver Wyman predicts that Medicare Advantage premiums will increase by $16 to $20 per month ($192 to $240 annually) starting in 2014, and up to an additional $42 per month by 2023. For Medicare Part D, they estimate total increases of $161 annually by 2023.  On average, Wyman predicts over $3,500 in additional per beneficiary costs over 10 years.

Alternately, Medicare Advantage plans could cut benefits to seniors instead of raising premiums.  Think of it as a lose-lose proposition for insurers and seniors.

Ironically, rising insurance costs could lead more young and healthy Americans to drop insurance coverage, especially since they know that they can always buy it anyway when they get sick with no penalty, under ObamaCare's rules.

More employers with healthier groups of employees could also try to avoid the insurance tax by "self-insuring", i.e., paying all their own health care bills. But this would also leave a smaller, sicker pool in the small group markets - raising insurance premiums even more for small businesses.

And this is just a small taste of the additional costs under ObamaCare, most of which, conveniently enough, will fall after this year's presidential election.

We need real change, not more taxes and cost shifting. Governor Romney's health care reforms recognize that small businesses need lower health insurance costs, so they can spend more on developing new products and hiring more workers.  He recognizes that America's health care system is too expensive and uncompetitive not because it lacks enough government regulation or taxes, but because it has too many taxes and regulations, choking off competition and innovation and raising costs.

Governor Romney's approach to health care borrows from the best of what makes America's economy the most vibrant and innovative economy in the world: competition and consumer choice.  He'll put families and consumers in control of their own health insurance, forcing insurance companies to compete for their business.  Because when companies compete, they find better ways to deliver high quality care at lower cost.

It's the kind of common sense approach you'd expect from someone who's actually had to make American businesses work. Not from someone who just spends time talking about it.

Paul Howard, Ph.D. is a Manhattan Institute senior fellow and director of the Manhattan Institute's Center for Medical Progress. He is the managing editor of Medical Progress Today, a blog providing a forum for economists, scientists, and policy experts to explore the scientific, regulatory, and market frameworks that will best support 21st century medical innovation.