Former Massachusetts Governor Mitt Romney is considered the frontrunner for the 2012 Republican Primary, but there’s one issue that may come back to bite him—healthcare.
The Beacon Hill Institute, a conservative think tank at Suffolk that conducts economic research, has garnered media attention for a report it released claiming that so-called RomneyCare took jobs 18,000 away from the state and raised insurance costs.
David Tuerck, Executive Director of the Beacon Hill Institute and Chair of the Economics Department sat down with The Journal to discuss the report’s findings.
“The most important finding in the study is that RomneyCare added a lot to healthcare spending,” said Tuerck, explaining that the study compared state trends to national trends and determined that the measure increased spending by about $8.6 billion.
Half of that total was spent on increased health insurance premiums, and about half was spent on Medicare and Medicaid.
Tuerck acknowledged that the increase in spending in terms of state taxes was small—about five percent. “So, in fact, Romney’s right when he said it didn’t add much at all to the state budget, but what he didn’t consider was how much it added to health insurance premiums and how much it added to the costs of the federal government,” with Medicare and Medicaid.
Romney’s healthcare bill added about $4 billion to healthcare premium since its inception in 2007, which translated into fewer jobs, according to Tuerck.
“If it costs you more now as an employer to hire another person because of increased healthcare—that’s how it translates into fewer jobs,” he said.
The Beacon Hill Institute hasn’t directly studied the national healthcare bill signed into law by President Obama, but Tuerck predicted that it will have a much bigger impact on health costs.
“There’s no place to shift the costs. Under RomneyCare, the state shifted half the costs to the federal government and most of the other half to individual families and policy holders,” he said. “We can’t do that with ObamaCare. There’s no place for the costs to go.”
He said some of the costs will go to higher premiums, but it will be necessary to raise taxes to compensate for the costs resulting from the bill.
Many Republicans, including presidential candidates are calling for a repeal on the healthcare bill, but Tuerck said that this alone is not a solution. “Doing nothing is not a solution, because the situation is a mess.”
He suggested other alternatives, like giving people credits to buy their own healthcare and having health savings accounts, which would not insure against routine medical expenses or injuries like a broken arm, but would cover the costs for any long term hospital visits for serious injuries and medical conditions.
“You would pay in with tax deductable dollars and if you don’t use the money, it accumulates and becomes money that at some point in your life you can liquidate and use for whatever expenses you want,” said Tuerck.
For example, once someone turns 65 and get Medicare or Medicaid, they would no longer have need for their health savings account.
“One of the great problems with healthcare in this country—and ObamaCare worsens this. RomneyCare worsens this—is the third party payer,” he said. “Once you know you’re insured, you have every incentive to overuse the system. Health savings accounts are much more like the insurance you get on your car than these plans like ObamaCare.”
The Romney campaign refuted the report in a Boston Herald article, saying that in the ten years prior to the law premiums increased an average of 6.7 percent per year, as opposed to a 5.8 percent increase per year from 2006 to 2009.
Paul Bachman, Research Director at the Beacon Hill Institute, told the Herald that the Romney campaign used simple averages, while their report used complex trending calculations.
The Romney campaign could not be reached for this article.