Romney health plan difficult to copy

It sounds like a simple solution to one of the nation's most vexing problems: how to provide healthcare coverage to the uninsured without raising taxes. Mitt Romney says that as governor of Massachusetts he redirected the money that was already being spent on treating the uninsured in emergency rooms to instead pay for or subsidize their care through healthcare plans.

"Could that work for the nation?" he asked voters recently in Iowa. "Yeah, it could, and my idea is instead of having one person like me impose the Massachusetts plan on everybody, let's have the federal government be flexible with every state so they can create their own plans and use federal dollars in a flexible way."

What Romney does not tell campaign audiences is that his plan would probably be impossible to replicate in most states without a tax increase because Massachusetts had an uncommon advantage: a readily available $610 million "free care pool" that he and the Legislature were able to tap to provide coverage for the uninsured.

That two-decade-old fund - financed in nearly equal parts by assessments on hospitals, surcharges on insurers, and state tax revenue - was being used to provide care for the uninsured in Massachusetts.

Four other states have such a pool and those without one - including Iowa and New Hampshire, the first two states to vote for presidential nominees - would have difficulty adopting the Massachusetts approach without levying new fees on hospitals and insurers to create a similar pool or raising taxes, several policy specialists said.

"It was a great plan in Massachusetts, but the notion that you could do this nationally is simply laughable," said Jonathan Gruber, an MIT economist and member of the Health Insurance Connector Authority board that oversees the Massachusetts program. "If you're going to cover the uninsured nationally you're going to have to raise new funds."

Gruber added yesterday, "He gets credit for a brilliant plan here in Massachusetts but he should be honest about what it takes to create such a plan nationally."

Maryland, New York, New Jersey, and West Virginia have a free care pool similar to Massachusetts', said Robert J. Blendon, a professor of health policy and political analysis at Harvard. Those five states account for about 5 million of the estimated 47 million uninsured Americans, according to Census Bureau figures.

The free care pool in Massachusetts "made it feasible to put this approach together without any discussion of a tax increase," Blendon said.

"In the absence of that, there would have been a shortage of funds," Blendon said. "I don't think in Iowa you'd find enough money to do what we did - and then the situation is: Where would you get that additional money to do this?"

Iowa state Senator James A. Seymour says that he is impressed with the Massachusetts model, but worries that it would require a tax increase to bring it to his state. Currently, Iowa hospitals must absorb the cost of treating the uninsured, he said.

About 10 percent of Iowans, 271,000 people, are without healthcare coverage.

"There would have to be a massive amount of money to come out of Iowa to institute any kind of health reform to cover everybody in our state," said Seymour, a Republican who is a Romney supporter and a member of the state Senate's Health and Human Services Appropriations Subcommittee.

In Massachusetts, about 200,000 uninsured people have enrolled in health plans since Romney signed the program into law in April 2006. Of those newly insured, about 30,000 are paying the full cost of their new insurance, 55,000 have been enrolled in Medicaid, the state and federal program for the poor, and the remaining 115,000 are getting subsidized coverage, with the amount of the subsidy pegged to their income.

The state is using roughly $160 million from the free care pool, along with other state and federal funds, to pay for the $470 million Massachusetts program.

Sally Canfield, Romney's policy director, said the former governor believes that states can replicate the Massachusetts program without raising taxes if they are given more flexibility to spend their state and federal healthcare money.

"We firmly believe you can do this in a revenue-neutral way," Canfield said. "There are these pots of money around that states do receive or their hospitals receive that you can say, 'Let's use that in the best fashion, let's use that more wisely, let's use that to get people into health insurance plans, so they're not using that in a hospital room.' " She noted that it is more expensive to treat people in emergency rooms than to give them routine care.

Romney has also proposed helping states lower their costs by deregulating their insurance markets and overhauling Medicaid for the poor.

He says he wants to provide federal grants to states so they can create insurance programs tailored to their needs, without strict federal rules.

He has also pointedly criticized universal healthcare plans offered by Senator Hillary Clinton, a Democrat, and others as socialized medicine - even though they share key elements of the Massachusetts plan - leading critics to charge that he is turning his back on his own reform.

On the campaign trail, Romney says the idea for the Massachusetts program came from Thomas G. Stemberg, the founder of the office supply chain Staples who challenged him to find a way to give healthcare to everyone in Massachusetts.

Romney and Stemberg have been close since Romney, as the head of Bain Capital in Boston, provided some of the initial cash to launch Staples in 1986.

"We said, 'Gosh, if we're already giving care to everybody and typically doing it an expensive, inefficient way in the emergency room, wouldn't it make more sense to get everybody insured, since we're already spending all that money?" Romney said Oct. 17 in Davenport, Iowa.

Policy specialists say Romney's principle makes sense - money that is being spent on emergency room care would be more wisely spent on enrolling people in health insurance.

But financing the program in states without a readily available free care pool may be more painful than the candidate suggests.

"When we've tried to look at - could other states do Massachusetts did? - they could move toward that," said Diane Rowland, executive vice president of the Kaiser Family Foundation, a nonpartisan health policy research group in Washington. "But they would have a much harder climb because they have a bigger gap to fill."

Michael Levenson can be reached at mlevenson@globe.com.