Saving healthcare, one uninsured person at a time.
Massachusetts governor Mitt Romney has won high praise for his plan to cover the uninsured. Good for him, but there's still a long way to go.
By Matt Miller, FORTUNE columnist

(FORTUNE Magazine) - Ever since Republican Governor Mitt Romney got his plan for universal health coverage through Massachusetts's Democratic legislature in early April, it has been hailed as a breakthrough - and as the ideal platform for a problem-solving GOPer who wants to be President.

While some of the hype is premature, Romney has in fact devised a promising reform framework that could in time help the nation evolve beyond the employer-based system that now threatens U.S. competitiveness. For the moment, though, Romney's plan is just a framework - key details on coverage, affordability, and funding have been kicked down the road.

Mittcare: Republican Romney signed his innovative Massachusetts health-insurance plan into law on April 12 at Boston's Faneuil Hal
Mittcare: Republican Romney signed his innovative Massachusetts health-insurance plan into law on April 12 at Boston's Faneuil Hall.
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Romney's big idea is to require Bay State citizens to buy health coverage, just as states mandate auto insurance. This isn't new; the late GOP Senator John Chafee of Rhode Island pushed an "individual mandate" in 1994 in an effort to rescue a centrist deal from the ruins of the Clinton health plan.

Since then, think tanks (notably the New America Foundation) and assorted wonks (including yours truly) have touted the model as a way to end the shame of the uninsured without relying on the old-time liberal preference for mandates on employers.

But forcing people to buy health coverage works only if two other features are in place. First, everyone needs access to group risk pools so that sicker folks won't be denied coverage, as happens routinely in the individual market for insurance now.

Romney's new state-sponsored insurance clearinghouse ensures this, giving individuals (and small businesses) access to group rates. The second key to compulsory coverage is to make sure it is affordable - through either low premiums or subsidies. It's here that Romney's plan relies on a magic asterisk for up to 40 percent of his state's uninsured.

Mittcare will be free to those below the poverty line; subsidies taper off as incomes rise to three times the poverty line. But individuals making more than $30,000 and families of four with more than $54,000 are on their own. With solo policies in Massachusetts today running $6,000 a year and family coverage $12,000 or more, even reasonable group prices may be out of reach for many.

Romney told me he's addressing that with reforms "so insurers are able to offer plans for much lower cost." He hopes to shrink individual premiums to $2,400 a year by raising co-pays and deductibles and scrapping rules that require coverage for in vitro fertilization and the like.

Though it's hard to fault Romney for saying the bloated U.S. health system should squeeze costs before he considers fresh taxes for subsidies, the reality of the low-cost plans could be ugly for consumers. A good guess is that Massachusetts goes from 500,000 uninsured today to 200,000 under-insured a few years hence. It's progress but still leaves real problems.

Romney's plan has national implications in two other areas. He's redirecting federal Medicaid dollars and his state's uncompensated-care fund (now given to hospitals) to help people buy private insurance directly - an innovation Ted Kennedy is helping Romney sell even though Romney tried to unseat him in 1994. And Romney's new insurance clearinghouse could become a model that one day makes it safe to shift responsibility for managing and funding portable benefits away from employers.

To be sure, tackling the uninsured is easier in Massachusetts. Fewer citizens lack coverage there, and they tend to earn more. It's also not hard to get overwhelming support when you pretend health care for all can be had with little new cash. In addition, Romney regrettably vetoed a tiny fee for employers who don't offer coverage, undermining the spirit of shared responsibility that will be essential for a national health overhaul.

Still, Romney's plan, with its promise of bipartisan progress at a time Washington is incapable of acting, has state capitols buzzing. Says Tom Epstein, public affairs chief at Blue Shield of California, "It's shaken up the debate overnight."

Matt Miller is a senior fellow at the Center for American Progress and the author of "The 2 percent Solution: Fixing America's Problems in Ways Liberals and Conservatives Can Love." Top of page