Romney’s Transition Leader Favors Implementing Obamacare

Romney’s Transition Leader Favors Implementing Obamacare
June 4, 2012

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)

One of the few Republicans in the country who’s been tirelessly pushing for the implementation of Obamacare at the state level has been tapped to head Mitt Romney’s transition team, should he become president.

Former HHS Secretary Michael Leavitt, and his consulting group Leavitt Partners, are the primary advocates within Republican circles for implementation of Obamacare’s exchanges. It just so happens that his consultancy is one of the major beneficiaries of the taxpayer funded gold mine of hundreds of millions of dollars in exchange implementation grants. But that’s a coincidence, of course.

 Leavitt has said some relatively positive things about certain elements of Obama’s health reform law, suggesting earlier this year that “Obamacare” empowers the HHS secretary “to do certain things that are clearly aimed at trying to move us in the right direction.”

McKeown, who still works with Leavitt at his Utah-based health care consultancy, acknowledged that the former governor does not want to undo one key part of the controversial legislation.

“We believe that the exchanges are the solution to small business insurance market and that’s gotten us sideways with some conservatives,” he said.

The exchanges are not only a matter of principle for Leavitt — they’re also a cash cow.

The size of his firm, Leavitt Partners, doubled in the year after the bill was signed as they won contracts to help states set up the exchanges funded by the legislation.

Over the past year, Leavitt and his staff have repeatedly tangled with conservative and libertarian think-tanks and advocates who oppose him on this point, understanding that there is no such thing as a state run exchange under Obamacare, and that this represents the primary front for states in the battle against Obamacare’s implementation. This hasn’t stopped him from lobbying all over the country for it. Here’s Leavitt speaking last year to the National Governors Association, urging them to implement while failing to disclose his financial stake in doing so.

Speaking to a bipartisan group of governors at the National Governors Association,  the former Republican governor who served as secretary of health and human services in the Bush administration, called the exchanges where individuals and small businesses can purchase health plans “a very practical solution to a problem that needs to be solved.” He warned governors who are reluctant to move forward with their state-level exchanges that their intransigence will only empower federal regulators.

And he said the health care law that passed is a compromise that gives the states the flexibility they need.

“This is a profoundly important time for the states,” said Mr. Leavitt. “States need to lead.” …

The federal law gives the states until January 2014 to set up their own exchanges, with federal oversight. If they fail to do so, their citizens will get access to a federal exchange.

But some Republican governors have been reluctant. They oppose the federal law and say they hope it will be repealed by a Republican president in 2013.

Mr. Leavitt urged them to get moving anyway… He urged the governors not defend their “partisan flags” over the interests of their states.

Thankfully, this has been a push that Leavitt has been losing. A host of Republican governors have turned back his appeal to implement (you can read my own case against exchange implementation here). In fact, their obstinate refusal to implement has become an item of support in the courts for overturning Obamacare. And now most Republican-led states are holding back to see what happens at the Supreme Court, as they should’ve done in the first place.

One can argue about the merits of an exchange absent Obamacare’s rules, regulations, authority shifts, price controls, and taxpayer funded subsidies. But the overwhelming majority of conservative policymakers understand that Obamacare’s exchanges are nothing more than delivery mechanisms for massive taxpayer-funded subsidies and bureaucratic regulations from Washington. What’s more, states which avoid implementing exchanges may be able to avoid the implementation of Obamacare almost in its entirety.

Those who favor implementation have been rebuffed, and they don’t like it. As Michael Cannon notes:

USA Today reports that groups like the American Legislative Exchange Council and the Cato Institute have had much success in discouraging states from creating Obamacare’s health insurance “exchanges.” Even the Heritage Foundation, which once counseled states to establish “defensive” Obamacare exchanges, now counselsstates to refuse to create them and to send all exchange-related grants back to Washington.

In response, Obamacare contractor and self-described conservative Republican Cheryl Smith sniffs: “When you work at a think-tank, it’s really easy to come up with these really high-risk plans.”

Except, there is no risk to states. The only risks to this strategy are that health insurance companies won’t get half a trillion dollars in taxpayer subsidies, and that certain Obamacare contractors won’t get any more of those lucrative exchange contracts.

Smith works for Leavitt Partners. So does David Merritt, who as recently as two months ago, was making the case that Republicans should ignore the positions of governors like Bobby Jindal and Rick Scott and implement exchanges. Neither, of course, notes their financial stake in doing so (but hey, it’s a living).

What’s most concerning about all of this is not that Romney selected one of the few Republicans in the country who backs implementation of Obamacare’s exchanges. It’s what the selection of Leavitt means as an indication of how Romney would potentially “fix” Obamacare if repeal proves impossible. According to Politico, “already, plugged-in Republicans from Washington to Salt Lake City are buzzing that Leavitt could make his own transition next January into the job of White House chief of staff or as a Valerie Jarrett-like personal counselor to a President Romney.”

Should the Supreme Court strike down only a portion of Obamacare, it seems clear Leavitt would be a major voice in deciding how to replace it. And he is convinced that “exchanges are part of the future, no matter what.”

UPDATE: Matt Lewis reached out to Team Romney for response, and they say not to worry.

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)