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Home Publications Op-Eds & Columns The Health Care Battles in the United States

The Health Care Battles in the United States

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Dean Baker
Caixin Online, July 19, 2012

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The decision by the Supreme Court to uphold the constitutionality of President Obama’s health care plan will cause the presidential race to take yet another bizarre twist. Former Massachusetts Governor Mitt Romney has announced his intention to make the repeal of the health care law one of the central issues in the campaign. The problem Mr. Romney faces in pressing this matter is that he pushed a nearly identical plan into law in Massachusetts when he was governor of the state 6 years ago.

To fully appreciate the absurd nature of the debate over health care reform in the United States it is necessary to go back two decades to see the origins of the Obama plan. Back in 1992 health care reform was one of the major issues in the campaign between the first President Bush and then Governor Bill Clinton.

At the time, there was widespread concern about the growing number of people who were uninsured and the difficult time that even many insured people faced paying their bills if they contracted a serious illness. Virtually everyone agreed that the health care system needed a serious overhaul, the only question was the best route.

At one end of the political spectrum, many Democrats embraced the extension of the Medicare program to the whole population. This is an efficient government run system for the disabled and the over 65 population. It has the advantage that people are familiar with it and it already served a population of close to 40 million people. Also, it was possible to see the success of the system in Canada, a country with a similar social and economic structure.

President Clinton chose not to go this route. Instead he put forward a complex hybrid system that was packaged under the name “managed competition.” This plan would have deliberately strengthened the role of large insurers, with the idea that careful regulation would ensure high quality and restrain prices.

The Republicans also felt that they had to put forward a plan for health care reform. While several Republican plans were proposed, the one that was perhaps most completely developed was a plan by the Heritage Foundation, a conservative think tank with close ties to the leaders of the Republican Party.

The Heritage Foundation’s plan required large companies to provide insurance to workers or pay a penalty. It had subsidies for low and moderate income workers to make it easier for them to buy insurance in the individual market. And, it had a mandate that required that everyone who is not covered by their employer either buy insurance or pay a fine. In other words, it had all the main features of the plan that Congress eventually approved and President Obama signed.

It is important remember this fact in assessing the Republicans complaints that President Obama’s plan is an unconstitutional infringement on personal liberty and that it is socialism. Many of these same people, or their close political allies, in the recent past openly embraced a plan that was identical in all its major features. The issue here is clearly not one of principled opposition. This is an issue of political opportunism pure and simple.

In no case is this more apparent than in Governor Romney’s strident criticisms of President Obama’s health care plan. Most people would consider his reform of the Massachusetts health care system the major achievement of his term as governor. Yet he now wants to denounce President Obama for implementing a similar plan at the national level.

And there can be no doubt about the similarities of the two plans. Jonathan Gruber, an economist at the Massachusetts Institute of Technology who worked closely with the Romney administration in designing the plan for Massachusetts and then went on to assist President Obama in designing his plan said in the strongest possible language that they are in fact the same plan. 

Making the matter even worse for Governor Romney is that the Supreme Court upheld the constitutionality of the mandate on the grounds that the fine for not buying insurance is in fact a tax. And, the Court said that the constitution clearly grants Congress the power to tax.

This poses a problem for Romney because if he accepts the Court’s argument then it means that he had imposed a tax increase on Massachusetts in his term as governor. For Republicans, the insistence that they would never raise taxes has become nearly a religious principle. There is no way that Romney could denounce the Obama mandate/tax increase without implicitly acknowledging that he is guilty of the same sin.

In short, we are about to see a presidential campaign in which the Republicans denounce President Obama for pushing through a health care reform plan that originated with the top policy planners in the Republican Party. Furthermore, we will hear Obama denounced for imposing a ruinous tax increase on the American people by someone who imposed the same tax increase on the people of Massachusetts. It should be an interesting campaign.


Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.

 

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